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Compensation and Benefits Essay

Subcommittee Benefit Package Report


            The merger of companies found in Atlanta, Davenport and Denver all situated in the United States undoubtedly needs a more comprehensive and balanced benefit package in order to end the conflicts arising in the said locations. These conflicts include animosity among the employees in different locations, requests for travel funds so that employees could meet in one location, additional employees for a comfortable work shifts and sales incentive plan. Hence, a solution of these problems calls for a detailed and informative report of the employee benefit package for Air Wave, Inc.

            In line with that, there are two kinds of employee benefits, and these are discretionary benefits and legally-mandated benefits. Basically, discretionary benefits refer to a subsidy that is granted to a particular company on the basis of a decision made by a government body and this is the opposite of n entitlement or as-of-right benefit (“Glossary of Economic Development Jargon”, 2008, p. 1). For a layman’s understanding, this subsidy depends upon the decision of the company executives and mostly based on profits and performance. On the other hand, legally-mandated benefits are those that are backed-up by laws and statutes usually enacted for the benefit of

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the working class in an effort to strengthen and protect the right to labor. These benefits include Alternative Work Arrangement Plan; social security benefits; disability and life insurance; medical reimbursement; vacation based on tenure, sick time and 13 days paid holiday; as well as winter party and summer family picnics. In case of discretionary benefits, the priority is setting up a travel fund so that employees at different locations can meet at one place over the next six months as well as having a reliable sales incentive plan.

The Proposed Employee Benefit Package

            In order for an employee benefit package to be useful, there is a need to prepare in such a way that it could solve the issues and concerns that are prevalent in the company. Hence, this proposed employee benefit package is designed to realistically answer the issues within the workforce of Air Waves, Inc. as well as improve the working conditions of all people working in the company. With that, careful considerations of the costs, types of benefits offered and cost-sharing options with employees must be done.

            Alternative Work Arrangement Plan is a benefit that must be provided for an employee since protection to the right to labor must be accorded to him at all times as long as it is justified and reasonable. In the case of Air Waves, Incorporated, there is a problem which includes a request for an additional employee in order to have a comfortable time-off or days-off for an employee that is working in a 24-7 work pattern. As such, it is proposed that three shifts must be implemented for all employees that need to work in a 24-7 time or work shifts. This shifting schedule include 8 o’clock in the morning up to 6 o’ clock in the afternoon, 6 o’ clock in the afternoon up to 10 o’ clock in the night or otherwise known as the grave yard shift and 10 o’ clock in the night up to 7 o’ clock in the morning. These work shifts would allow the employees working in a 24-7 work shifts to be comfortable in their work hours and have more time to do personal things. All other employees except managerial ones follow the standard work shift that is eight in the morning up to six in the afternoon inclusive of breaks during work.

            With respect to the social security benefits, employees are entitled to the same based on Social Security Act of 1935 which encourages employees to retire at the age of 65 and provide payments to them (“Legally Required Employee Benefits”). These payments also cover old-age benefits, disability benefits, aid to dependents and survivors, medical insurance, and death benefits (“Legally Required Employee Benefits”). In order to make this plan effective, employers of the Air Waves, Incorporated must see to it that a regular and proper contribution to the Social Security System of the government has been made.

            Moreover, the disability and life insurance could be taken by the company in favor of its employees. The premium of said insurance must be paid by the company amounting to 80 per cent of the same while each employee pay the 20 per cent balance considering that the company is still on the process of improving its sales and profits. Aside from that, in cases of sickness and accidents to any employee wherein physical and health concerns arise, medical reimbursement must be provided by the company in its entirety or the amount stated in the medical bills. There must also be a complete a reliable record for purposes of vacation based on tenure of the employee as well as sick time and 13 days paid holiday leave. Additional schedule for winter party and summer family picnics must also be prepared by the company through its authorized staff and employees.

            Travel funds must also be prepared by the company so that employees could meet twice a year in a common location. With respect to the sales incentive plan, it is proposed that employees are being motivated to increase more sales and target quota every year. For every employee who could reach the target quota for the sales record, he or she must be given 10 percent of the value of the sales while those who exceeded the target quota, 15 per cent must be allocated as an incentive.


            The costs of the said compensation package are allocated as follows:

Alternative Work Arrangement Plan
$102, 000
Social security benefits
$209, 000
Disability and life insurance
$104, 000
Medical reimbursements
$100, 000
Vacation based on tenure, sick time and 3 days paid holiday leave
$206, 000
Winter party and summer family picnics
$50,  000
Travel funds twice a year
$150, 000
Sales incentive plan
$200, 000
Total Costs
$1, 121, 000

            The costs of the employee benefit package on the previous year of Air Waves, Incorporated amounted to $1, 050, 000. Since there is an evident increase of the cost of living allowance at present time, there must be a considerable difference of the previous years budget which is lesser compared to the present budget.

Rationale Used in Choosing the Benefit Plans

            The rationale of choosing the aforementioned benefit plans rests solely on the needs of both the employees and the management. First, the employees must be accorded with the legally-mandated benefits since it is their rights. Second, employees must be given a travel funds for them to get to know other employees located in different locations. There must be activities to increase camaraderie of the employees since they belong to one company despite the differences of locations. Having a good working relationship within working premises makes the working environment favorable and peaceful that could lead to more sales and profits. Lastly, sales incentive plan is a secret tool in order to encourage employees to sell more products of the company. Employees that are not well-motivated can hurt the sales record of the company which is happening at Air Waves, Incorporated.

Concerns about the Benefit Package

            The executives of the company must be aware that the employees are the best asset of the company. Giving them the most competitive salary and compensation package would encourage them to work hard to the benefit of the company. In case of Air Waves, Incorporated, it is not denied that most of the employees are asking for more realistic and competitive salary and compensation package since they actually receive less than they should be paid.

While it is true that the company is still struggling as its merger has been developed over the years, time has come that employees must be empowered and paid well so that performance of employees would improve resulting to increase of profits and assets. In other words, the employees’ needs must not be taken for granted since their services are vital to the company’s success. Having a reliable and competitive sales incentive plan is a primary motivating factor that makes employees work hard to sell more products and attract more clients. Therefore, employee empowerment through implementation of the current employee benefit package must be done through the positive endorsement of the company executives of Air Waves, Incorporated.

Social Security Benefits

The most notable and relevant legally-mandated employee benefit is the social security benefits. In this paper, the said legally-mandated benefits will be discussed with the intention that basic features and provisions of the same can be tackled.


            Social security is a vital ingredient for the social welfare of all Americans. The segment of the society that would be benefited most of the social security are older Americans, workers who become disabled, and surviving individuals in the family. According to Jo Anne B. Barnhart who is the Social Security Commissioner

 in its 2005 message to the people, there were more than 156 million individuals who pay Social Security contributions and more than 47 million receive benefits per month (“Understanding the Benefits”). Basically, the purpose of the law is to add to the financial preparations made by the people for their retirement such as private pensions, savings, and investments. The Social Security benefits are never intended to replace the said financial preparation of a person (“Understanding the Benefits”).

            The Social Security benefits has been tested and proven in the past years to be very relevant and beneficial to the people. There were so many people who are benefited of the said program of the government. There is a proper financial protection for the people when Social Security would be continuously implemented and developed by the government. This is because being self-reliant and financially-prepared for the future is a wisdom that has been proven useful through the years. Therefore, the payment of Social Security tax or contribution is a legitimate and reasonable act by an individual in preparation for a comfortable and well-planned retirement age.

History of the Social Security Benefits

            There is no doubt that inevitable circumstances like illness, disability, old age and death may occur to a person. In most cases, these circumstances are considered a threat to an individual’s financial security. Therefore, there is a need to create a comprehensive and systematic policy in order to protect an individual from these threats to economic security. Going back to the old times, when the Greeks need to make themselves economically- secured, they stock-piled olive oils in order to prepare for any financial threat like death, illness, disability, and old age. In that way, the Greeks could consider themselves as financially-secured. For the medieval Europeans, their form of economic security is the presence of serfs to work the estate and that such could provide their labor. As a result, the idea of charity came into view.

            The family also emerged as closely-tied during the pre-social security benefits era. Family members began to feel responsible for each other. As a result, there is always a funding within families that could be used in times when a family member is sick or when someone dies. Primarily, land is the basic form of economic security for these people since it could be used for farming. Hence, the traditional form of economic security such as charity, land, assets and labor came into view (DeWitt, 2003, p. 1). As the society grows bigger, the use of the said traditional forms of economic security is no longer enough. There is a need to widen the financial resources in order to finance social security benefits for the people. This lead to the formation of formal organizations that caters to social security benefits needs of individuals. The primary forms of the said organizations are called guilds in the Middle Ages (DeWitt, 2003, p. 1).  These organizations are composed of traders and merchants who contributed for a common social security benefits (DeWitt, 2003, p. 1). In the long run, there were formal organizations that cater to social security benefits up to the present times. The Social Security Act was enacted in the year 1935 that was used as the basis of the current Social Security system.

Basic Provisions

            The basic system of the social security involves payment of Social Security tax while working for the benefits of the old aged, disabled, survivors of workers, who have died, and dependents or beneficiaries. Basically, the taxes being paid are not placed in individual accounts but are paid to those who are qualified for benefits. Social Security benefits are also paid more to children than to any other members of the society (“Understanding the Benefits”). The link of an individual to the Social Security is the social security number assigned to the same. In all transactions to the Social Security offices, the same is being used as an official tracker.

However, basic requirements of law are being followed in order to take benefits of the Social Security like submitting valid documents like birth certificate, death certificate and marriage certificates as proofs in case of claims for benefits. Finally, a working individual must also be aware of the trust funds that the Social Security formed based on the Social Security taxes being paid by him. These trust funds are intended to pay individuals who need the same in the meantime. When the time comes that a working individual is qualified to claim for benefits, he can also take advantage of the Social Security benefits under the laws.


DeWitt, L. Social Security Online. (2003). Traditional Sources of Economic Security. Retrieved November 25, 2008, from http://www.ssa.gov/history/


Distance Learning Center Website. (2008). Legally Required Employee Benefits. Retrieved November 25, 2008, from http://www.eridlc.com/onlinetextbook


Good Jobs First Website. (2008). Glossary of Economic Development Jargon. Retrieved

            November 25, 2008, from http://www.goodjobsny.org/glossary.htm.

Social Security Website. (2005). Understanding the Benefits. Retrieved November 25, 2008, from http://www.pueblo.gsa.gov/cic_text/fed_prog/ssundben/ssundben.pdf.

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