Although the health benefit landscape for organizations has changed as a result of the Affordable Care Act (ACA), assessing the potential strategic value of health benefits remains an important leadership question.
The key features of Affordable Care Act is to help make healthcare more affordable, accessible and of a higher quality. The Affordable Care Act is designed for families, seniors, businesses and taxpayers (HHS,2016)
? For example, are health benefits primarily a cost issue to manage or eliminate?
Health benefits increase yearly, and most of the time the various benefits usually taken away from the employee each year. Before the ACA was signed, employees had a choice of rather or not they wanted to be insured. Health benefits from government agencies like any Department of Family and Children Services (DFCAS) also known as Welfare was free at one point and time. When I was employed with DFACS, if the person were to say they were homeless, they would get approved for all services (Medicaid and Snap AKA food stamp benefits). Now the government has developed various checks and balance to where no free service would be given, not even healthcare. Being penalized at tax time the poverty-ridden person has no choice but to manage the cost issue of health benefits with their everyday living expenses.
?Are health benefits primarily an attraction and retention tool?
Most if not all job seekers out there, look for the pros and cons of benefits, so I would think it'll be an attraction if the benefits are worthwhile. Health benefits are always a retention tool to most employees that need regular checkups and health needs. Or, do they affect productivity and can be considered a potential business advantage? I don't believe health benefits would affect productivity unless an employee is sick and the health benefits will not cover the particular illness. Working at Savannah -Metropolitan Police Department (SCMPD), I see a lot of officers come and go due to Post-traumatic Stress Disorder (PTSD) or job related injuries. The City of Savannah insurance has been either taking a while approving cases or not approving the case at all, making the productivity weak as a whole.
?Evaluate the role of health care benefits in organizations.
Health servicesbenefits can play a role in both small and larger organizations. While some companies do not offer health benefits to part -time employees, some small businesses may be eligible for tax credits to offer insurance coverage to employees (Casio, 2015). According to our readings health benefits continue to be a relevant human resources topic in organizations with implications pertaining to health care costs and legal requirements for the organization as well as the opportunity to create recruitment and retention advantage because of benefits offered (Casio, 2015).
Forbes magazine and other prominent business publications produce an annual report of CEO compensation. Every year, these reports spark a debate among corporate business followers as they examine who were the highest paid CEOs and who received the biggest raise. Each report highlights striking similar themes including: (a) CEO pay rates tended to grow more rapidly than other executives during the last three decades, (b) CEOs are often paid 250 times (or more) than their average employee, and (c) CEO pay may not be dependent upon company performance.
Evaluate executive compensation. Is it too much? Is it justified? Is it equitable?
Overall, is CEO pay for one individual that leads a team to accomplish their strategic goals too high? Yes, I would agree the pay is too excessive, but companies are operating in a system that presumes the contribution of a good senior executive is very, very high. As Mullaney (2015) highlights, "the average pay package for CEOs in 2014 was $22.6 million, up from $20.7 million in 2013 and the average gain in total compensation for the 200 highest-paid U.S. CEOs worked out to 9.1 percent in 2014" (para. 4). Are the CEOs solely to blame for negotiating a sizable compensation package? I believe the answer is no. As Koehn (2014) writes, "blame for this disparity is often directed at boards of directors, particularly their compensation committees. Most board members of public companies are themselves well-paid executives, so they have incentives to approve large pay packages who are effectively their peers" (para. 3).
Is their pay justified? Most research would say no because you would expect the primary reason for the skyrocketing compensation packages to be performance/profit driven. "The current system of executive compensation, with its emphasis on performance, can theoretically constrain pay, but in practice it has not stopped companies from paying their top executives more and more" (Eavis, 2014, para. 5). Mullaney (2015) notes, "variations in company performance account for only about 5 percent of the variation between how much companies pay their top executives, while the number one variable is the size of the company, accounting for 40 percent of the difference" (para. 10). Overall though, any large company requires a team in order to sustain increasing performance. All levels of the organization must work together for the company to reach its strategic goals. This interdependence makes it tough to justify the individual compensation for top executives.
What are the potential factors that contribute to how executives are compensated?
Some experts argue that large executive pay packages are the result of powerful managers setting their own pay and extracting rents from firms, while others interpret the same evidence as the result of a competitive market looking for managerial talent. There are several potential factors that contribute to how executives are compensated. As Eavis (2014) stresses, "data shows that there is a connection between the biggest CEO checks and companies that have been making deals, such as, going public, doing big mergers or divestitures and reorganizations" (para. 5). Additionally, compensation packages could be dependent on the potential financial risk of the company. "Top executives who go to work for companies with more financial distress risk are often paid a substantial premium for putting their careers on line" (Carey Business School, 2013, para. 3).
Other factors could include the CEO's past performance, his/her age, and if they are a succession hire. "An executive's skill level also influences compensation by using a number of factors to assess an executive's ability, including (1) media mentions, or "hits", (2) future return on assets and (3) meeting or beating earnings forecasts" (Carey Business School, 2013, para. 4). Research also shows that younger CEOs are more highly compensated that their older counterparts while those hired outside the company normally receive compensation higher that internally appoint executives.
In summary, in the last three decades, annual CEO compensation has experienced a steady rise into the multi-million dollar range. Is the pay excessive? Yes, but this answer comes with a caveat. The company's board of directors and compensation committee rewards most CEOs on different factors. From the overall size to the present financial position of the company, CEOs continue to receive large compensation packages for their efforts. Given that these large conglomerates would not be successful without the dedicated teamwork of their employees, I think it is amazing that executive boards find their CEO's pay justifiable.