Basics of Total Rewards

Company-Wide Benefits

Benefits typically encompass all non-cash payments. That is, they do not include direct cash payment or equity compensation.

Generally, in organizations today:

• There are very few traditional defined benefit pension plans still being offered. Only 16% of private sector employees are given the option and the ones that are typically have union membership, which is not characteristic of new economy organizations. Defined benefit plans are based on tenure and the employee does not contribute.
• Retirement defined contribution plans are almost universal. Companies offer 401(k) matching and profit-sharing plans and deferred compensation plans. New economy organization employees are expected to contribute to their own retirement planning and funding.
• Small and start-up organizations may not offer retirement plans.
• Medical coverage is a requirement and universal in most developed countries but not the United States. Most mid and large-size companies provide health plans and small organizations today are more likely to do so, too. Employees contribute to the cost of the plans. Likewise, long-term disability and other “extra” benefit plans are offered by organizations today with employees contributing to the costs.
• As of January 1, 2015, employers with 50 or more full-time and full-time equivalent employees are required to provide health coverage or make a shared responsibility payment to the IRS. Employer annual healthcare costs per employee are in excess of $5,000 for single coverage and $14,000 for family coverage.