Exam 3 Notes
Which is more common?
401K is more popular than regular pension plan From employer's perspective, they are quite happy
Compensation Today
92% of firms linked pay increases in base wages to individual performance (merit pay) 84% reported using variable pay (not built into pay) that also linked to individual performance Employee engagement levels have fallen across the globe Trading lower wages for wage stability?
What do employees care about? (not in a particular order)
-work - life -comp - equity -safety + health -respect -recognition -advancement -feedback -involved - sense of importance
Top STEM countries
#1 China #2
Problem: Changes in Benefit costs over time
% or Payroll: 1959- 24.7% 1969- 31/1% 1991- 28.2% 2000- 27.4% 2010- 30.2% 2014- 31.6% Both public and private pension plans are underfunded. (chap 12 folder, Underfunded Private/State Pension Plans)
Workers' Compensation Equation
(0.75)(avg. weekly wage)(% of disability) = weekly benefit
Competitor Offerings
-At market -Above market -Below market -UA: adopt w/out deliberation -Survey data from US Chamber of Commerce -BLS -Employee Benefits Research Institute -Int'l Foundation of Employee Benefit Plans --Certified Employee Benefits Specialist (CEBS)
Corporate Directors
A board of directors provides strategic advice, usually 8-11 directors -CEO picks board of directors -CEO doesn't want ideas to be challenged, wants support Companies want outside directors, those perceived as less biased. -investors want this -want board to challenge CEO There is considerable risk as stockholders may sue directors -hold directors individually responsible In exchange for the risk, directors are well rewarded, typically $240,000 for 30-40 hours of work per month
Workers' Compensation
A form of no-fault insurance, covers injuries/diseases arising from employment. Benefits given for: -medical care -temporary/permanent disability payments to help with lost wages -survivor death benefits -rehabilitation and training, for those unable to return to their former career Costs vary over time States vary in the size of payout for claims -some states provide "second-injury funds" Covered by state laws. No federal oversight. Reduces litigation delays an costs Relieves charities of financial burden Maximizes employer interest in safety and rehabilitation through experience rating mechanism -the more accidents you have, the higher the premium Promotes transparent study of causes of accidents (rather than hiding fault) Reduces human suffering
Scientists and Engineers in High-Tech Industries
A second problem centers on equity -scientists and engineers compare themselves with others who graduated when they did they receive compensation beyond base pay with more than half getting bonuses -post-hiring bonuses are paid for patents, publications, and professional licenses orgs devote energy to developing perks for this unique group
Advantages and Disadvantages of Flexible Benefit Programs
ADVANTAGES: 1. employees choose packages that best satisfy their unique needs 2. Flexible benefits helps firms meet the changing needs of a changing workforce 3. Increased involvement of employees and families improves understanding of benefits 4. Flexible plans make introduction of new benefits less costly. Any new option is added merely as one among a wide variety of elements from which to choose. 5. Cost containment: organization sets dollar maximum; employee chooses within that constraint DISADVANTAGES: 1. Employees make bad choices and find themselves not covered for predictable emergencies 2. Administrative burdens and expenses increase 3. Adverse selection: employees pick only benefits they will use; the subsequent high-benefit utilization increase its cost. 4. Flexible benefit plans are subjective to nondiscrimination requirements in Section 125 of the Internal Revenue Code.
Employee Benefits Definition
Are that part of the total compensation package, other than pay for time worked, provided to employees in whole or in part by employer payments. EXAMPLES: -health and life insurance -pension -workers' compensation -vacation Employee benefits can no longer realistically be called "fringe benefits"
Workers Compensation, why is only 50% of what used to be earned sufficient?
Argument in favor of buying accident insurance, to supplement getting workers compensation.
Why can't you contribute to a Thrift Savings Plan (TSP) when you are no longer at an organization?
Because you are no longer employed. Any employer sponsored plan, once no longer employed, employee loses qualification to gain employer contributions. But you can take what you, as the employee, invested.
Behavior Equation
Behavior = f (M,A,E) M= motivation A= ability E = environment
Retirement and Savings Plan Payments
Both defined benefit and DC plans are subject to stringent tax laws -to qualify for deferred compensation tax exemption, an employer cannot freely choose who will participate in the plan --hence, "qualified" deferred compensation plan A cash balance pension plan = DB -annual employer cash contribution + interest = promised cash balance
Supervisors Definition
Caught between upper management and employees. Must balance need to achieve organization's objectives with importance of helping employee morale suffers.
SS- Medicare
Center for Medicare & Medicaid Services (CMS) Medicare Part A: Hospital insurance: $1,408/benefit period: 1. 1-60 days 2. 61-90 days 3. 91+ days Medicare Part B: Medical Insurance ($1,735/yr + $198 deductible -> 20/80)
Health Care: Cost Control Strategies
Change the structure of the delivery systems -high deductible plans shift costs onto employees -Health Savings Accounts funded w/ employee's pre-tax $ + employer's contributions Provide incentives for healthy behavior -annual exam -primary care physician -regular exercise -employee wellness challenge = employer HSA contributions?
Cost Containment
Common Cost Containment Opportunities: -probationary periods -benefit limitations -co-pay: fixed or % -competitive bids for program admin/delivery -deny service -outsourcing is a common cost containment strategy (hiring vendors to administer benefits program) -negotiate lower fees with healthcare providers -wellness programs (incentives) -discounts for staying healthy -surcharge for smokers -employer serving as its own "insurance company"
Base Salary
Compensation committees are important in determining executive base pay -for retention purposes A common committee approach is setting compensation in the middle of best/worst major competitors -higher compensation for those likely to be raided
Medical and Medically Related Payments
Dental Insurance: -60% of employers with 500 or more employees provide some coverage -at 2000, cost was $219 per employee -cost expected in coming years due to shortage of dentists Vision Insurance: -dates back to a 1976 contract between the UAW and the big three automakers -78% of employers offer a vision plan -most plans cover partial costs
There are two types of equity, or fairness:
Distributive justice: -fairness in the amount that is distributed to employees Procedural justice: -fairness of the procedures used to determine the amount of rewards -a key element in fairness is communications A pay-for-performance system should comply with existing laws
Workers' Compensation: Dual Capacity
Dual Capacity: legal doctrine that applies to the relationship between employers and employees An employer may fills the role for an employee that is completely different from its role as employer An employer may meet its obligation under workers' compensation laws and be exposed to tort claims Employer as (1) employer and (2) as healthcare provider *case law* EX: chiropractic employer Employer as (1) employer --> worker's comp + (2) product liability due to mfr of defective product
Equity Theory
Employees are motivated when perceived outputs are equal to perceived inputs a disequilibrium in the output-to-input balance causes discomfort if employees perceive that others are paid more for the same effort, they will react negatively PREDICTIONS 1. they pay-performance link is critical, increases in performance must be matched by commensurate increases in pay 2. performance inputs and expected outputs must be clearly defined and identified 3. employees elevate the adequacy of their pay via comparisons with other employees SO WHAT? A. performance measures must be clearly defined, and employees must be able to affect them through work behaviors B. if payouts do not match expectations, employees will react negatively C. fairness and consistency of performance-based pay across employees in an organization is important D. since employees elevate their pay-effort balance in comparison to other employees, relative pay matters. *relative pay matters *performance measures must be clearly defined
Legislation: Consolidated Omnibus Budget Reconciliation Act (COBRA) 1984
Employees who resign or are laid off through no fault of their own are eligible to continue receiving health coverage under employer's plan at a cost borne by the employee
Factors Influencing Choice of Benefit Package
Employer Factors: 1. Relationship to total compensation costs 2. Costs relative to benefits 3. Competitor offerings 4. Role of benefits in: attraction, retention, motivation 5. Legal requirements Employee Factors: 1. Equity: fairness historically and in relationship to what others receive 2. Personal needs linked to: age, sex, marital status, number of dependents
Defined Benefit (DB) Plans
Employer provides a pension in either -fixed dollar -percentage of earnings, seniority Benefit amount takes average earnings of last 3-5 years -pays about half -30-80% adjusted for seniority Benefit determined by a formula
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Enacted in 1985 Applies if 20 or more employees Extends health insurance coverage during certain events An employer can charge individuals up to 102% of the premium. 18 month coverage
Popular Perks Offered to Executives
Exhibit 14.5
Defined Contribution (DC) Plans
In defined contribution (DC) plans, the employer sets up an investment account for each participating employee When the employee retires, the benefit is based on: -employee's contributions -employer contributions -any gains (or losses) in investments
Change in Executive Compensation Components
MEDIAN CHANGE Salary: (2012-2013) 3.0% (2013-2014) 2.9% Bonus: (2012-2013) 3.9% (2013-2014) 3.3% Long Term Incentive: (2012-2013) 5.9% (2013-2014) 7.1% *as tax legislation changes, components of executive compensation packages also change
CEO pay and company performance aligned in a broad sense?
Metrics should be very clear and specific, more specific than merely company performance. To appropriately determine pay for performance based on meeting specific and predetermined targets.
How much retirement income to provide?
Pension level depends on the answers to five questions: 1. what level of retirement should be a target? -expressed in relation to pre-retirement earnings 2. should social security be factored in? 3. should other income sources be considered? 4. how does seniority factor into the payment? 5. what can the org afford?
Legislation: Tax reforms 1982, 1986
Permit individual retirement accounts (IRAs) for eligible employees. Established 401(k) programs, a matched-contribution saving plan (employer matches part or all of employee contribution) that frequently serves as part of a retirement package
Legislation: Maintenance Act 1973
Required employers to offer alternative health coverage (ex: health maintenance organizations) options to employees
Role of Benefits in Attraction, Retention, and Motivation
Retirement benefits increase w/ each year of service Full eligibility not offered until a specified years of service has been met Vacation time, savings, profit-sharing, and stock purchase plans w/ increased benefits as seniority increases Only two benefits slow employee turnover: pensions and medical insurance Day care, elder care, on-site fitness centers = Perception that firm cares about employees = Increased employee engagement (helping other employees) -Hawthorne experiment
Designing a Pay-for-Perfromace PLan
The pay model suggests effectiveness depends on three things: -efficiency -equity -compliance Efficiency involves three areas of concern: -strategy -structure -standards Strategy: -the plan must support corporate objectives -should link well with HR strategy/objectives -how much increase makes a difference Structure: -is org structure decentralized, allowing flexible variations on a general plan? Standards: -the key rests on standards -concerns include objectives, measures, eligibility, and funding
Health Care: Cost Control Strategies- Walmart
Walmart picks physicians and surgeons based on outcome Walmart covers travel and medical costs to bring employees to select doctors at top hospitals for some surgeries, such as orthopedic and spine procedures, and cancer care Outcome: Employees spend less time in hospital, need less expensive follow-up, and return to work more quickly Many avoid surgery altogether, as Walmart's selected surgeons recommended other options
Few Employees Responsible for Most of the Cost
Wellpoint: 7% of its 29 million customers account for 63% of its medical costs Purdue: -177 or 0.84% drove 34% of claims -less than 50% get an annual physical exam
Four major issues in setting up a benefit package:
Who should be protected or benefited? How much choice should employees have among an array of benefits? How should benefits be financed? Are the benefits legally defensible?
How do you make compensation and benefits appealing for special groups to attract the right candidates?
Without over compensating: "research paper question, not answered" SEC investigates package: article with an example of this
Social Security: Supplemental Security Income
aged, blind, and disabled, who have little or no income to meet basic needs for food, clothing, and shelter unrelated to employee benefits
What Theories Say
expectancy, equity, and agency theories focus on the nature of the exchange many compensation practices recognize the importance of a fair exchange before you pay, understand what motivates each individual employee
A well-designed plan linking pay to behavior
generally results in better individual and organizational performance Alfie Kohn and other critics argue that extrinsic rewards (money) reduce intrinsic rewards (enjoyment of the task) substantial evidence indicates pay should be tied to performance
Measuring Performance
Are employees building knowledge they need? -must be able to measure knowledge accumulation Measure what matters Pay for what matters
Backdating
Backdating: Prices provided from the past and pick a day where the price is close to low and write that date as the issue date, issue price. To get millions of shares and retaining them. Illegal. If the issue price is higher than the market price, you save more money. open market.
Executive Compensation What the Critics and Press Say
CEO pay averages $14.3 million -many critics feel this is unjustifiable -wages in other counties are much lower -others argue pay reflects changes in the market or that executives earn their increases Compensation differs at not-for-profit firms -officers rarely make more than a million/year -a large fraction of total compensation is allocated to expense accounts and benefits Some experts think an informed board of directors can rein in executive pay Increased government regulation is an alternative
Top 10 Chronic Diseases for Payers: CDC
Cardiovascular: $317 billion Smoking-related: $300 bill Alcohol-related: 249 bill Diabetes: 245 bill Alzheimer's disease: 223 bill Cancer: 171 bill Obesity: 147 bill Arthritis: 128 bill Asthma: 56 bill Stroke: 33 bill
Can companies pay engineers/scientists more depending on the school they graduate from?
Companies do not seem to pay employees who come from top schools. Experience, skills, and capabilities speak louder than merely the school they graduated from.
Top Four Benefits
Compensation Benefits Job Security Work/life Balance
Legislation: Fair Labor Standards Act 1938
Created time-and-a-half overtime pay. Benefits linked to pay (ex: social security) increase correspondingly with those overtime hours
Shareholder lecture questions and answers
Decisions are usually made for strategic purposes, not for executive comp. "put the people we want on the board and put pressure on the CEO to make strategic decisions"
Administering the Benefit Program
Employee Benefit Communication: -Revolves around 4 issues: 1. What is communicated 2. To whom 3. How it is communicated 4. How frequently -The most common method is the employee benefit handbook -Effective communication involves repetition and consistency --'e-benefits' are a huge trend
IBM Dual Ladders
Exhibit 14.8 *the managerial ladder offers a promotion path with increasing responsibility. the technical track rises with increasing technical responsibility
FMLA paid leave not in all states?
FMLA is not required to make leave paid. Some states pass laws to ensure leave is paid, but not all states have.
Board of Directions Definition
Face possibility that disgruntled stockholders may sue over corporate strategies that don't pan out
E-benefits
Hands-on HR benefits transaction: $35.65. Intranet HR benefits transaction: $16.38. Call centers saved Kellogg $105 million while improving service. Less than 5% of 'Ees fully understand their benefits package
General Health care
Health Maintenance Org (HMO): -exclusively w/ hospitals and MDs at negotiated rates. Employees limited to only these providers Preferred provider organization (PPO): -lower rates w/ in-network providers. controls number of diagnostic w/ out-of-network provides -higher rates w/ out-of-network provides Point-of-service plan (POS): a hybrid plan combining HMO and PPO benefits
Benefits Planning and Design Issues
Is "Benefit X" the most effective way to achieve my compensation objective? Can Benefit X attract the employees I want to hire or can I use some other compensation tool that better meets the needs of the employees I want to hire? Decide the role of benefits and integrate them into the overall compensation package. -include strategies for ensuring external competitiveness and adequacy of benefits. -know what your competitors' offer -there is no magic formula for defining adequacy --the answer may be a relationship between benefit adequacy and cost effectiveness --are employee benefits cost justified? --59% of employers are shifting costs to employees through higher deductibles and copays
Low STEM majors?
Less than 20% study stem majors in college 60% to 30% way more males going into STEM than women, despite all ethnicities
Lont-Term Inceptives and Capital Appreciation Plans
Long-term incentives are declining Stockholder angst over how options are granted and exercised -Passage of the 2010 Dodd-Frank Act signals that executive compensation will be monitored Illegal backdating allegations -Responsibly linking compensation to stock price is effective -Vested stock options have long-term incentive *backdating is taking advantage to fake stock option dates
Legislation: Family Medical Leave Act 1993
Mandates 12 weeks of leave for all workers at companies that employee 50 or more people
Deferred compensation question:
Once put in your retirement, cannot touch it. Company goes bankrupt can you get that money back? -yes, but it may take time and you may not get all of it back. Vendors are top of priority list, employees are low.
Executive Compensation What Academics Say
One explanation is social comparisons -market forces raise everyone's base pay, including executives --criticized due to the individual increase in the spread between CEOs and average employee salaries -another tactic is to explain the level of executive wages --the worth of CEOs should correspond closely to some measure of company success
HIPPA: Pre-existing Condition
Pre-existing condition = a condition for which medical advice, diagnosis, care, or treatment was recommended or received within the six-month period ending on the enrollment date in any new health plan. Requires health plans to cover an individual's pre-existing conditions after 12 months. Employees must be given credit for previous coverage that occurred w/o a "break in coverage" of 63 days or more Insurers and group health plans must provide certificates of creditable coverage to individuals that certify their creditable coverage COBRA coverage counts as creditable coverage
Scientists and Engineers in High-Tech Industries
Professionals: FLSA: this category includes any person who has received special training of a scientific or intellectual nature and whose job does not entail more than a 20% time allocation for lower-level duties -80% of time has to be spent on scientific stuff
What ? Wasn't Asked Previously
Progressive companies now ask, "what do we want out compensation package to do" -designed to serve incentives and motivators, rewards that influence employee behavior -some workers value other job rewards, such as empowerment, recognition, and opportunities for advancement
Second Injury Fund
Relieves employers of liability when: -pre-employment injury + work-related injury = disability greater than that caused by the latter alone EX: Diabetes -> fall -> broken leg = workers' compensation covers broken leg, but not diabetes
Scientists and Engineers in High-Tech Industries
Special Compensation problems: A graduate's knowledge is valuable but becomes obsolete in approx. 5-6 years (then is outdated) -there is a parallel between pay increases and knowledge obsolescence When salary plateaus arise, many make career changes a dual-career ladder provide two ways of progressing in an organization
Special Groups:
Special groups share two characteristics: 1. they are strategically important to the company 2. their positions hold built-in-conflict
Top Management Definition
Stockholders want healthy return on investment. Government wants compliance with laws. Executives must decide between strategies that maximize short-term gains at expense of long run vs directions that focus on long-run.
Supervisors
Supervisors meet the demands of upper management and needs of employees. Incentives must be given to entice employees to accept the challenge -some don't want to manage their friends One compensation strategy puts base salary of supervisors at an amount exceeding the top-paid subordinate, usually 5-30% Other methods are to pay supervisors for scheduled overtime or to use variable pay. -meet goal to receive pay
Downsizing morale breaking
Survivors guilt Increased workload When am I going to get laid off? mindset. some start looking for a new/more secure job.
Workers' Compensation
Temporary disability benefits begins after 3-7 days Medical care begins immediately after injury occurs Permanent partial / total disability benefits to workers Rehabilitation and training benefits for those unable to return to pre-injury careers Survivor benefits for workers who die (dependents)
Employee Retirement Income Security Act (ERISA)
The early 1970s found orgs misused retirement funds or required long vesting periods ERISA passed in 1974 as a response -does not require a pension plan -but if there is one, it must follow ERISA rules -designed to achieve two goals: --to protect 100 million active participants, and --to stimulate the growth of such plans
5-6 years of reduction in education, how to combat this?
There are many programs available to keep education up to date.
Why the Growth in Employee Benefits?
Three new mandated employee benefits (New Deal - 1930s Great Depression): -Workers compensation (state) -Unemployment (federal) -Social Security Act of 1935 (federal): medicare + old age, survivor, and disability insurance (not part of "above") -Employee retirement income security act (ERISA) of 1974 -FMLA of 1993 -Patient Protection and Affordable Care Act (2010)
Why CEO perks when they can afford it themselves?
To feel special and enjoy their status. Safety: drivers, security (if injured or die can have negative impact on stock price) Not about whether or not CEOs can afford it. Jack Welch (retired): -access to aircraft, cars, groceries, flowers, private security, game tickets, country club passes -why? to say thank you for being a successful CEO for GE.
CEO pay differentials in US?
Unions can strike Unless all individual shareholders come together, it is hard to make a difference In US executives and consultants get away with many things. Different managerial philosophy Disney example, heir complains and makes noise, company couldn't care less
Why the Growth in Employee Benefits?
Wage and Price Controls: during WWII and the Korean War -strict limitations on wage increases led unions and employers to provide benefits Unions flexed their new negotiation rights acquired from the Wagner Act of 1935. -1940s NLRB rulings allowed unions to negotiate employee benefits -Several benefits common today started here (pension plans, unemployment, vacation plans, and guaranteed annual salary
Legally Required Benefits
Workers' Compensation Social Security Unemployment Compensation FMLA COBRA HIPAA *Benefits are affected by statutory or common (case) law, many imposed by tax laws
Agency Theory
both sides of the exchange relationship will seek the most favorable exchange possible and will act opportunistically if given a chance place part of the executive's pay at risk to motivate the executive (agent) to act in the best interests of the shareholders (principals) rather than in the executive's own self-interest
Motivation Theory (Maslow)
incentive pay is motivating to the extent it is attached to achievement or recognition performance-based pay may be demotivating if it impinges upon employees capacity to meet basic needs (exhibit 9.4)
Do employees more readily agree to develop job skills because of pay?
the answer is unknown new skills will help employees on current and future job demands evidence points to paying for skill may not increase productivity but may imporove quality
Motivation theories (Herzberg)
to motivate high performance, pay must be beyond meeting basic needs pay must meet basic needs before it can function as motivator (exhibit 9.4)
Legislation: Discrimination Legislation
(Age Discrimination in Employment Act, Civil Rights Act, Pregnancy Disability Act, various state laws) Benefits must be administered in a manner that does not discriminate against protected groups (on basis of race, color, religion, sex, national origin age, pregnancy)
Trends in Social Security Taxes 1980-2009
*LOOK AT IMAGE* exhibit 13.6 graph on website: https://www.ssa.gov/oact/cola/cbb.html -absolute tax instead of progressive tax
Components of an Executive Compensation Package
-base salary -annual bonuses -long-term incentives -benefits -perquisites *the disconnect between pay and performance of the nation's top executives has been a source of contention for over 30 years -paid based no performance of respective firms -very few executives are paid
Do people stay in a firm (or leave) because of pay?
-poor performers leave when pay is based on individual performance -group incentive plans may lead to more turnover of better performers -dissatisfaction with pay may cause turnover -even the way an organization pay may impact turnover (signaling and sorting)
Procedural Justice Rules
-voice -correctability -consistency -bias suppression -representativeness -accuracy
Components of a Total Reward System
1. Compensation wages, commissions, and bonuses 2. Benefits vacations, health insurance 3. Social Interaction friendly workplace 4. Security stable, consistent position and rewards 5. Status/Recognition respect, prominence due to work 6. Work Variety opportunity to experience different things 7. Workload right amount of work (not too much, not too little) 8. Work Importance work is valued by society 9.Authority/Control/Autonomy ability to influence others; control own destiny 10. Advancement chance to get ahead 11. Feedback receive information helping to improve performance 12. Work Conditions hazard free 13. Development Opportunity formal and informal training to learn new knowledge skills/abilities *there is growing sentiment for letting workers choose their own "blend" of rewards from the thirteen listed here
Executive Compensation What Academics Say
1. If the CEO is truly underpaid: -a compensation consultant is hired to survey actual competitors. the consultant reports to the board that the CEO is truly underpaid. salary is increased to a competitive level. 2. If the CEO is not underpaid and the firm is doing well: -a compensation consultant is hired. specific firms are recommended to the consultant as "appropriate" for surveying. the consultant reports to the board that the CEO appears to be underpaid. salary is increased. Worst of all: 3. If the CEO is not underpaid and the firm is doing poorly: -a compensation consultant is hired. the CEO laments w/ the consultant that wages are so low for top management that there is a fear that good people will start leaving the firm. of course, no one ever asks why the firm is underperforming if it has such a good management team. the consultant recommends a wage increase to avoid future turnover.
What Behaviors Do Employers Care About?
1. how do we attract good employment prospects to JOIN our company? 2. How do we RETAIN these good employees once they join? 3. How do we get employees to DEVELOP SKILLS for current and future jobs? 4. How do we get employees to PERFORM WELL while they are here?
Workers' Compensation
2015: Private sector employers paid $940 per employee per year for workers' compensation protection Construction industry: $2,630 Leisure and hospitality: $582 Occupational diseases: -exposure to dust, silica, asbestos, radiation (homer Simpson)
Health Care: Cost Control Strategies
3 general strategies: Change design or administration of health insurance policies: -deductibles. name brands w/ high co-pays -shared premium payments -maximum benefits for specific diseases/procedures -no double payments by employee and spouse's plans -auditing provider chargers -preauthorization for certain procedures -mandatory 2nd opinion for surgery -self-service online benefit administration -incentives for visiting certain providers
Defined Contribution (DC) Plans
401(K) Plan: -savings plan where employees can defer pretax income -employers matching and contribution differ significantly Employee Stock Ownership Plan (ESOP): -employer makes a tax deductible contribution of stock shares or cash to a trust -the trust allocates stock to employees based on earnings Profit Sharing Plan: -this can be considered a DC pension plan if the distribution of profits are delayed until retirement
Defined Contribution (DC) Plans
401(k) -private sector 403(b) -public schools, 501(c)(3) orgs, 501(e) cooperative hospital service orgs, & certain ministers -annuity contracts & mutual funds 457 -state or local government
Retirement Plans
64% of workers have access to retirement coverage, only 49% participate Employees rank retirement as important Two genetic retirement plans are: -defined benefit plans (pension plan), and -defined contribution plans Many orgs shifted to 401(k) plans -dollar contribution is known and controllable
Life Insurance
75% of employees have paid life insurance -typically 1x or 2x annual salary -most premiums are paid by the employer -30% include retiree coverage Nearly all of forfeitable upon quitting Some offer a core coverage + option to buy additional coverage
Behavior Triangles
Ability triangle: -selection -recruitment -training Environmental obstacle triangle: - org design -org development -hr planning Motivation triangle: -performance management -compensation -culture Environmental obstacles: -unions -economic conditions -public policy/legislation
SS Old-Age: Survivor Benefits
An employee with 40 credits will have qualified family members for survivor benefits (72 to 100%) -nondisabled widow -divorced spouse at age 60 -unmarried children -stepchildren, grandchildren, or adopted children -dependent parents at age 62 or older
Individual Retirement Accounts (IRAs)
Are a tax favored retirement savings plan that individuals can establish themselves *IRAs do not require an employer to set them up
Wage Components
Base Pay (least risky) Definition: -the guaranteed portion an employee's wage package Risk: -As long as employment continues, this is the secure portion of wages Across-the-Board Increase Definition: -wage increase granted to all employees, regardless of performance. Size related to some subjective assessment of employer about ability to pay. Typically an add-on to base pay in subsequent years. Risk: -some risk to employee since at discretion of employer. but not tied to performance differences, so risk lower in that respect. Cost-of-Living Increase Definition: -same as across-the-board increase, except magnitude based on change in cost of living (ex: as measured by the consumer price index CPI) Risk: Same as across-the-board increases Merit Pay Definition: -wage increase granted to employee as function of some assessment of employee performance. adds on to base pay in subsequent years Risk: -two types of risk faced by employees. size of total merit pool at discretion of employer (risk element), and individual portion of pool depends on performance, which also is not totally predictable --permanent Merit Bonused (aka lump sum bonus) Definition: -As with merit pay, granted for individual performance. does not add into base pay, but is distributed as a one-time bonus Risk: -three types of risks faced here. Both types mentioned under merit pay, plus not added into base -requires annually "re-earning" the added pay --not permanent *companies are moving toward compensation programs higher on the risk continuum.
Second Injury Fund
By reducing these potential costs of hiring a worker with a preexisting disability, the SIF is intended to reduce discrimination against persons with disabilities in hiring and compensation EX: WWII veterans Funded through a surcharge on employers workers' compensation net deposits, net premiums or net assessments A fund established by the state for the purpose of compensating a partially disabled employee who sustains another injury The fund may pay the entire amount or a portion of the total amount These funds exist to aid employers who hire disabled workers SIFs gained further attention after WWII as a way of ensuring that employers would not be dissuaded from hiring veterans with disabilities. Some have argued that SIFs are no longer necessary due to enactment of the ADA, which prohibits discrimination against persons with disabilities win employment and requires employers to provide reasonable accommodations to persons with disabilities on the job. An injured employee must have a permanent, pre-existing disability to trigger liability of the SIF The prior disability must be "of such seriousness as to constitute a hinderance or obstacle to employment" Pays medical bills of injured employees when the employer fails to insure its workers' compensation liability. If the employee is killed, burial expenses and death benefits in the form of weekly payments to the surviving spouse or dependents of the employee are paid if the employer is uninsured.
The Value of Employee Benefits
Companies spend trillions on benefits -yet a typical employee recalls only 15% -employees undervalue benefits Some say benefits are taken for granted -yet they drive job satisfaction One study says employees don't want more benefits, rather a choice of benefits -perceived value rises when employers offer a choice or flexible benefit package
Compensation Can't Do It Aline
Compensation should be sufficient, making recruiting and hiring possible Compensation needs to retain good employees After hiring and retaining, concentrate on building knowledge and skills $$ is not the solution to all problems Employers must motivate employees to perform well on their jobs
Commonalities in State Workers' Compensation Laws (Issue: Most Common State Provision)
Compulsory (required 47 states) Elective (optional 3 states) Self-insurance coverage (48 states): All industrial employment -NOT COVERED farm labor, domestic servants, and casual employees usually exempted -compulsory for all or most public sector employees (47 states) Occupational Diseases: -coverage for all diseases out of and in the course of employment -no compensation for "ordinary diseases of life" *states have similar coverage, with differences occurring primarily in benefit levels and costs. Note who are not covered*
Traditional IRA
Contributions are pre-tax Contributions are fully or partially deducible, depending on your circumstances Amounts in traditional IRA are not taxed until distributed U.S. charges 10% penalty on early withdrawals: age 59 and under -exemptions: first time home purchase, medical & educational expenses, disability or death, health insurance -W/D must begin once you are 70.5
Cost Relative to Benefits
Cost/advantage of a Benefit X Forecasts of rising costs in future years Rising costs of benefits are expected to be paid by employer Cost centered approach: armed with published forecasts of anticipated costs for Benefit X and determine the cost commitments If forecast suggests future cost containment may be difficult, Benefit X should be offered to employees only on cost-sharing basis.
Why the Growth in Employee Benefits?
Employer Impetus: Many of today's benefits were employer initiated. -traced to pragmatic concerns about employee satisfaction and productivity -UA -benefits slowly became a costly entitlement (cost sharing strategies) Cost effectiveness of benefits. -employee benefits are not taxable -group-based benefits come at a lower cost (volume discount) - (healthy/unhealthy individuals) +/- Life insurance policy is updated every 3-5 years
FMLA
Enacted in 1993 Applies if 50 or more employees Up to 12 weeks of unpaid leave Most state legislatures are moving toward some form of paid family and medical leave. Eight states offer paid leave: -WA -OR -CA -MA -CT -NY -NJ -RI
Health Insurance Portability and Accountability Act (HIPPA)
Enacted in 1996 Designated to: -lessen denial for preexisting condition -prevent discrimination on the basis of health Privacy provisions added compliance problems Applies to all employers offering group health HHS enforces HIPPA
Distributive Justice (Equity and Equality)
Equity: -is giving everyone what they need to be successful -appears unfair, but it actively moves everyone closer to success by leveling the playing field Equality: -treating everyone the same. Every team member receives the same amount of rewards to encourage teamwork -aims to promote fairness, but it can only work if everyone starts from the same place and needs the same help
Executive Benefits and Perquistites
Executives typically receive higher benefits than other exempt employees ERISA requires they not be too far above others, the plans must also: -cover a cross-section of employees -provide definitely determinable benefits -meet vesting and nondiscrimination requirements Companies are being required to place a value or perquisites (perks)
Maturity Curve: Years since last degree relative to salary
Exhibit 14.7 -orgs rely heavily on external market data in pricing scientists' and engineers' base pay. the result is the use of a maturity curve
Major Requirements of ERISA
General requirements: -employees are eligible from age 21 but may require one to three years of service Vesting and Portability: -Vesting: the amount of time an employee must work before an employee earns a right to a present or future payment, asset, or benefit -Portability: the ability to transfer an employee's vested retirement account balance when changing jobs Pension Benefit Guaranty Corporation (PBGC): -employers must buy insurance from the PBGC who guarantee payment of vested benefits The Pension Protection Act of 2006 (PPA): -allows employees in publicly traded firms the freedom to sell any employer stock purchase either through deferrals or with after-tax contributions -defines pension plans less than 70% funded as "at risk" plans
HIPPA Nondiscrimination
Group health plans and insurers may not determine enrollment eligibility based on an employee's health status, medical history, genetic information, evidence of insurability, or disability Health plans may not create rules that would limit eligibility for initial enrollment, terminate continued eligibility for currently covered employees and beneficiaries, or require higher premiums based on any of said reasons.
Who are not eligible for Social Security? 96% of Americans are, what about the 4%
Haven't earned the 40 credits Never worked, independently wealthy Disabled and unable to work, or choose not to work (staying home with kids)
Benefits Options
Historically, benefits lagged behind other rewards, such as merit pay, in importance. -benefits surveys are very important for employee satisfaction -employees value healthcare more than ever As health care costs increased, so did their popularity as benefits. Benefits are now listed as the top reward contributing to employee satisfaction. HR professionals need to understand benefits are important to workers.
Social Security: Unemployment Insurance
Historically, the maximum number of weeks for UI was 26 weeks -many states extended that from 1958-61 -Emergency Unemployment Compensation program extended benefits to as long as 53 weeks from 2008-2013. Now 26 weeks. Weekly benefit amounts are based on earnings over the past year, up to a state maximum. ---------------------------- *Unemployment benefits are 'charged' against the most recent employer: -federal tax: 6% of first $7,000 per worker -punctual employer payment of SUTA (state) tax results in a FUTA tax credit of up to 5.4%, resulting in a FUTA tax rate of 0.6% --an employer owes FUTA taxes if paid at least $1,500 in wages during any calendar quarter in the current or previous year -reduce hasty hiring -a benefit administrator should audit pre-layoff behavior and compliance with UI requirements
Benefit Administration Issues
How should benefits be financed? -Noncontributory (employer pays total costs) -Contributory (costs are shared with employee) -Employee financed Are the benefits legally defensible? -Does it comply with hundreds of arcane sections of the tax code? -There are so many rules and regulations, develop a checklist and perform regular audits.
Legislation: Employee Retirement Income Security Act 1974
If an employer decides to provide a pension (it is not mandated), specific rules must be followed. Plan must vest (employee has right to both personal and company contributions into pension) after five years' employment. Pension Benefit Guaranty Corporation, as set up by law, provides worker some financial coverage when a company and its pension plan go bankrupt
Wage Components
Individual Incentive Definition: -sometimes this variable pay is an add-on to a fixed base pay. the incentive component ties increments in compensation directly to extra individual production. while measures of performance are typically subjective, this form of variable pay differs because measures of performance are objective Risk: -most risk compensation component if sole element of pay, but often combined with a base pay. no or low fixed-base pay means each year employee is dependent upon number of units of performance to determine pay Success-Sharing Plans Definition: -a generic category of pay add-on (variable pay) which is tied to some measure of group performance, not individual performance. not added into base pay. distinguished from risk-sharing plans, below, because employees share in any success -performance above standard- but are not penalized for performance below standard Risk: -all success-sharing plans have risks noted in above pay components plus the risk associated with group performance measures. now individual worker is also dependent upon the performance of others included in the group. Profit Sharing Definition: -add-on linked to group performance (team, division, total company) relative to exceeding some financial goal Risk: Profit measures are influenced by factors beyond employee control. less control means more risk Gain Sharing Definition: -differs from profit sharing in that goal to exceed is not financial performance of organization but some cost index Risk: -less risk to individual than profit sharing because performance measure is more controllable Risk Sharing Plans Definition: -generic category of pay add-on (variable pay) that differs from success sharing in that employee not only shares in the success but also is penalized during poor performance years. penalty is in the form of lower total compensation in poor corporate performance years. reward, though, is typically higher than that for success-sharing programs in high performance years Risk: -greater risk than success-sharing plans. typically, employees absorb a "temporary" cut in base pay. in performance targets are met, this cut is neutralized by one component of variable pay. risk to employee is increased though because even base pay is no longer totally predictable
Overall Compensation for the Top 5 of 2014
John Hammergren -Mckesson -131.2 million Ralph Lauren -Ralph Lauren -66.7 million Michael Fasciteli -Vorando Reality -64.4 million Richard Kinder -KinderMorgan -60.9 million David Cole -Honeywell -55.8 million While, these compensation levels may seem high to you, in comparison to years past when figures regularly topped 100 million, it appears compensation levels have moderated
Materialistic Employees
Materialistic: -concerned about pay level Low Self-Esteem: -want little pay for performance Risk Takes: -want pay based on performance Risk-Adverse: -want less performance-based pay Individualist: -want pay based on individual performance
Professional Employees Definition
May be torn between goals objectives, and ethical standards of their profession (ex: should an engineer leak information about a product flaw, even though that information may hurt corporate profits) and demands of an employer concerned more with the profit motive. *when both characteristics are present, employers tend to find distinctive compensation practices to meet the needs of these special groups.
Workers compensation given to families of an employee who died? Especially not being the sole provider of that house? Does this change if a family makes a certain amount of money?
Michigan up to 6,000 for funeral expenses and 500 weeks of earnings for dead spouse. Missouri up to 5,000 for funeral expenses. Weekly death benefit is paid at 66 2/3% of the deceased employee's average weekly wage for the year immediately following the funeral. Dependent child receives benefits until age 18, until full time student age of 22. If child is physically or mentally incapacitated, benefits for life. Spouse: -for life until remarried -if remarried, gets a lump sum
Social Security Old-Age Benefits
Monitored by Social Security Administration 2015: more than 64 million Americans received SS benefits Social Security tax: 6.2% + Medicare tax: 1.45% Employer + employee contribute 7.65% each on wages up to $137,700 The amount of earnings required (qualification) for a quarter of coverage (QC) in 2020 is $1,410. An employee may earn a maximum of 4 credits per calendar year The quarter coverage (QC) is the basic unit for determining whether a worker is insured under SS. No matter how high your earnings may be, you can not earn more than 4 QC's in one year https://www.ssa.gov/oact/cola/QC.html An employee must earn at least 40 credits to be eligible to receive retirement benefits An employee does not lose credit when he/she change jobs for become unemployed Credits accumulate over the course of employment
Expectancy Theory
Motivation is the product of three perceptions; expectancy, instrumentality, and valence Effort -> Performance -> Outcomes EXPECTANCY: if I exert a lot of effort, will I perform well? INSTRUMENTALITY: if I perform well, will I receive outcomes? VALENCE: will the outcomes be satisfying? PREDICTIONS 1. job tasks and responsibilities should be clearly defined 2. the pay-performance link is critical 3. performance-based pay returns must be large enough to be seen as rewards 4. people choose the behavior that leads to the greatest rewards SO WHAT? A. larger incentive payments are better than smaller ones B. line of sight is critical- employees must believe they can influence performance targets C. employee assessments of their own ability are important- organizations should be aware of training and resource needs required to perform at target levels *people choose the behavior that leads to the greatest reward
Social Security Earning and Credits Question
Must earn 40 SS credits, each year you can earn 4 credits. Earn when you work and pay Social Security taxes Must earn. Credits are based on total wages and self-employment income. Amount of earnings for 1 credit may change each year 2021: SS/Medicare credit for every $1,470 in covered earnings each year. Must earn $5,880 to get maximum credits per year. Extra credits do not increase benefit amount. The average of your earnings over your working years, not the total number of credits you earn, determines your monthly payment will be when you receive benefits. Politicians debate SS endlessly. It changes each year. 6.25%, employer pays 6.25%
Social Security
Nearly every American worker is covered Money for benefits comes from -employees, employers, and self-employed (have to pay twice the amount) Money collected today pay for current retirees -if retiree passes away, payments go toward beneficiary -managed by federal government -retiree's numbers rise, with no corresponding increase in contributors -3 workers: 1 retiree (difficult to support due to decreasing ratio, more and more retirees and fewer and fewer workers due to fewer babies being born and rising life expectancy).
Cascading link between organization strategy and employee behavior
Organizational strategy is the guiding force that determines what kinds of employee behaviors are needed
Access to Selected Benefits (Civilian Employees)
Paid Holiday: 75% Paid Vacation: 74% Paid Sick Leave: 65% Short-term Disability: 36% Health Insurance: 72% Life Insurance: 40% Retirement: 68% Defined Benefit Plan: 25% Defined Contribution: 56% Dental Insurance: 47% Vision Care: 26% Childcare: 11% Wellness Programs: 39%
For the 10 chronic disease for payers?
Paid by individual employers and employees. Not CDC. Research is paid by everyone who pays taxes. Paid for by grants from the federal government. Which are tax payer sponsored. Private research centers also do researches. Paid for by private donations. Can also be sponsored if applied for. Takes 15 to 20 years to commercialize a drug. Extremely expensive process. Who sponsors: -US tax dollars -All tax payers own some portion of intellectual properties. Much more complex process.
Bonuses
Play a major role in motivating short-term performance, given to 90% of executives Bonuses are smaller than in the past -short-term payouts sometimes have dire long-term consequences -new financial measures to lessen subjectively -new objective measures of performance
History
Plymouth Colony: 1636 retirement program American Express: 1875 pension program Montgomery Ward: 1910 group health and life insurance 1915: Iron and Steel Employees worked 60 to 64 hrs/week -1930: 54 hrs/week Pre-1929: Employees were responsible for own medical costs 1929: Blue Cross concept of prepaid medical costs Pre-1935: Only WI had unemployment insurance for employees who lost jobs through no fault of their own Pre-WWII: Very few firms paid hourly employees for holidays 1935: US government required retirement income protection under Social Security Present: firms charge higher premiums to smokers Walmart handpicking physicians and surgeons for employees
HIPPA: Privacy
Privacy. April 2003 A covered entity may not use or disclose protected health information except as authorized by the individual who is the subject of the information or is explicitly required or permitted by the rule Covered entity = health plans and healthcare providers Usage of protected health information for purposes of treatment, payment, and operations Protected health information = individually identifiable health information that relates to an individual's past, present, or future physical and mental health. Health information is individually identifiable if it reasonably identifies an individual
Short- and Long-Term Disability
Private sources of disability income: 1. Salary continuation plans 2. Long-term disability plans -short-term illness is covered by PTO -sort-term disability (STD) pays a percentage of an employee's salary for temporary disability -long-term disability (LTD) plans take over when short-term plans expire. --usually underwritten by insurance, provides 60-70% of pay for two years, up to life
The Patient Protection and Affordable Care Act (2010)
Requires individuals to maintain minimal essential health insurance coverage or pay a penalty unless exempted for religious beliefs or financial hardship. Employers must enroll new employees or face a levy.
Social Security
Response to the Great Depression (1930s) -business failures and high unemployment Benefits fall into four categories: -old-age, survivor, and disability insurane -medicare -unemployment insurance -supplemental security income
Reinforcement Theory
Rewards reinforce (motivate and sustain) performance rewards must follow directly after behaviors to be reinforcing behaviors that are not rewarded will be discontinued PRECITIONS 1. performance-based payments must follow closely behind performance 2. rewards must be tightly coupled to desired performance objectives 3. withholding payouts can be a way to discourage unwanted behaviors SO WHAT? A timing of payouts is very important
Healthcare Cost - CDC Estimates
Roughly 60% of Americans have at least one chronic condition Four in 10 adults have more than two Many patients have trouble taking their medicines as prescribed and slip back into poor health habits - or go untreated until they end up in the emergency room Chronic conditions account for roughly 90% of the nation's $3.3 trillion in annual health-care spending , much of it for in-hospital care
Workers' Compensation
Scheduled injuries: loss of a member of the body -AL: $37,000 for loss of hand -IL: $280,000 for loss of hand Nonscheduled injuries: general injuries that make working difficult or impossible -back and head injuries
SS disability benefits
Seriously disabled employees and family members receive benefits Disability: "Inability to engage in any substantial gainful activity because of a medically determinable physical or mental impairment(s) -that is expected to result in death, or -that has lasted or is expected to last for a continuous period of at least 12 months Eligibility: -Recent Work Test: age 31 or later: work during 5 years out of the 10-yr period ending with the quarter your disability began -Duration of Work Test: Age 42: 5 yrs Age 50: 7 yrs Age 60: 9.5 yrs
Social Security: Unemployment Insurance
Social Security Act (1) authorized federal government to fund states to administer unemployment compensation (2) established a federal unemployment insurance trust fund Federal Unemployment Tax Act authorized the collection of both federal and state payroll taxes from employers The federal share covers administrative costs + job training, labor market data, and workforce development The state share may be used only to pay benefits States vary re: eligibility & amount of benefits Most employers are required to contribute Employee files claims w state office
Benefit Administration Issues
Who should be protected or benefited? There are a variety of employees and statuses: -Are there probationary periods? -Which dependents are covered? -Should retirees be covered? -How about survivors of deceased employees? -What coverage is extended to employees with disabilities? During layoffs? Strikes? -Should coverage be limited to full-time workers? Will employees have a choice of benefits? -A standard benefits package offers no choice -The other extreme is "cafeteria-style", or flexible benefit plans -Most companies are offering some choices -Flexible plans may increase employee recognition of benefit value -The biggest trend is to offer "market-based" or "consumer-driven" health care --High Deductible Plan (employee pays all of first $3-6k) --Once deductible has been met, employees pay 10 to 35% of any additional medical service --Employers sets an out-of-pocket max ($6-12k, single or family, after which employer pays all medical fees --Designed to encourage employee to shop around for best price Even firms that are not considering a flexible benefit plan are offering greater flexibility and choice. -Optional levels of group term life insurance -Availability of death or disability benefits under pension or profit-sharing plans -Choices of covering dependents under group medical plan -A variety of cash distribution and investment options under profit-sharing and retirement plans
Roth IRA
You cannot deduct contributions If you satisfy the requirements, qualified distributions (of principal) are tax-free You can make contributions to your Roth IRA after age 70.5 You can leave amounts in your Roth IRA as long as you live The account must be designated as a Roth IRA when it is set up
SS Old-Age Benefits
Younger retirees are predicted to have a longer life expectancy than older retirees Actuaries predict taking a lower monthly benefit sooner would lead to earning about the same total benefit over one's lifetime as an individual who put off retirement to claim a higher monthly benefit Full retirement age for employees born after 1960 is 67. -each year you delay retirement adds ~8% to monthly check -incentives are given to delay retirement age
Goal Setting Theory
challenging performance goals influence greater intensity and duration in employee performance goals serve as feedback standards to which employees can compare their performance individuals are motivated to be extent that goal achievement is combined with receiving valued rewards PREDICTIONS 1. perfromacne-bsed pay must be contingent upon achievement of important performance goals 2. performance goals should be challenging and specific 3. the amount of the incentive reward should match the goal difficulty SO WHAT? A. line of sight is important employees must believe they can influence performance targets B. performance targets should be communicated in terms of specific, difficult goals C. feedback about performance is important D. performance-based payouts should be contingent upon goal achievement *incentive reward should match goal difficulty *line of sight: employees must believe they can impact performance targets *feedback is important
Life insurance?
cheaper to buy life insurance in the open market opposed to through your employer. With employers, everyone is in the same pool, and everyone pays the same price. averages out everyone else and their circumstances. to guarantee everyone gets coverage. only good for 2 or 3 years. rates are adjusted. causes you to buy a new policy. as age goes up, policies and health risks go up. buying at age 20 or 30 is way cheaper than waiting.
Number of special characteristics to qualify to be part of special group?
live in tension, being pulled in different directions Executives keep direct reports in line, lots of responsibility, report to CEO and board to ensure they are happy with their performance, oversee CEO.
Agency Theory
pay directs and motivates employee performance employees prefer static wages (salary) to performance-based pay if performance can be accurately monitored, payments should be based upon satisfactory completion of work duties if performance cannot be monitored pay should be aligned with achieving organizational objectives PREDICTIONS: 1. performance-based pay must be tightly linked to organizational objectives 2. employees dislike risky pay and will demand a wage premium (higher total pay) in exchange for accepting performance-based pay 3. performance-based pay can be used to direct and induce employee performance SO WHAT? A. performance-based pay is the optimal compensation choice for more complex jobs where monitoring employees' work is difficult B. performance targets should be tied to organizational goals C. use of performance-based pay will require higher total pay opportunity *agency theory depicts employees as agents who enter an exchange with principals - the owners or their designated managers both the employer and employee are stakeholders of the org, and the compensation paid to the employee is the agency cost the employee will try to get an increased agency cost whereas the employer will try to minimize it hence, the compensation should be decided in such a way that the interest of both the parties can be aligned
TI (Bell Labs, INtel) Technical Ladder
senior fellow = 5 people = sr. vp fellow (1%) = vp distinguished member TS = decides product strategic roadmap senior member TS Member group technical staff -minimum 5-6 years -entry level, must spend min. 50% of time on technical matters -super motivational tool. only 20-25%
Compensation Today
trend today toward less stable and less secure compensation packages the very compensation systems today contributions to instability and insecurity -how does this fit with who you are? -can you implement this as an HR/Comp Manager?
Motivation Elements
what's important to a person offering it in exchange for some desired behavior -employees prefer pay systems influenced by individual performance, cost of living, seniority, and the market rate -FLEXIBLE COMPENSATION is based on the idea that only the individual employee knows what package of rewards would best suit personal needs
Experts estimate that every dollar spent on a performance-based pay plan
yields $2.34 more in organizational earnings failure arises if incentives work too well -employees may exhibit rewarded behaviors to the exclusion of other desired behaviors -Google Waymo -Mylan Epipen -Wells Fargo
Probably more traditional IRAs than Roth IRAs Question:
you can convert Traditional to Roth IRA and vice versa.
