CHAPTER WARM-UP! If your professor has assigned this, go to the Assignments section of mymanagementlab.com to complete the Chapter Warm-Up! and see what you already know. After reading the chapter, you’ll have a chance to take the Chapter Quiz! and see what you’ve learned.
Today, discretionary benefits represent a significant cost to companies. In 2014, on average, companies spent nearly $15,000 per employee.1 For the same period, discretionary benefits accounted for nearly 23 percent of employers’ total payroll costs. As the term implies, discretionary benefits are offered at the will of company management. Discretionary benefits fall into three broad categories: protection programs, paid time off, and services. Protection programs provide family benefits, promote wellness, and guard against income loss caused by such catastrophic factors as disability, serious illness, or death. Retirement plans assist employees to accumulate wealth as an income source throughout retirement. Paid time off, not surprisingly, provides employees time off with pay for such events as vacations. Services provide such enhancements as tuition reimbursement and day care assistance to employees and their families.
ORIGINS OF DISCRETIONARY BENEFITS In the past several decades, firms have offered a tremendous number of both legally required and discretionary benefits. In Chapter 10, we will discuss how the growth in legally required benefits from a select body of federal and state legislation developed out of social welfare philosophies. Quite different from these reasons are several factors that have contributed to the rise in discre-tionary benefits.