The flexible compensation plans for part time employees

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INTRODUCTION

This study investigates the flexible compensation plans for part-time employees. There is a need for flexible compensation plans in the present day scenario because a rapid change is taking place both in the work environment and in the workforce. Workers and organizations in the modern business environment, and in the industrialized nations face many challenges including, but not limited to, an unstable economic environment, the recent economic slump, a generally slow rate of growth, an increase in outsourcing, more regulations, and a decrease in worker's benefits.

Although organizations resist change, they must deal with challenges. Change is inevitable, and it is good for most businesses to make their organizations more dynamic, profitable, and efficient.

This would lead the business to adopt a new approach, endorse innovations. And trends, to accept new opportunities even, when the economic situation is shocking.

One of the best solutions possible to manage change effectively is the flexible compensation plan. This plan would help the business in reducing turnover, tardiness, and absenteeism.

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Researchers have indicated that the flexible compensation plan for part-time workers would lead to an increase in the productivity. It would also improve the employees' loyalty to the company, their job satisfaction of the workers, and customer satisfaction.

The majority of the employees working with an organization are paid in benefits, and financial rewards. It is important that these meet the employees' needs.

No interviews will be conducted with part-time employees relating to the subject matter. Hence, the researcher will rely upon the secondary data that is available to complete the research.

Background

Flexible compensation plans permit employees to choose from many alternatives in deciding how their compensation will be allocated. Such plans also help in determining the compensation package that best satisfies the employee's particular needs. Traditionally, a large percent of college students and housewives with children prefer part-time employment. For these groups, flexible compensation plans are not a major concern to them.

Part-time work adds many highly qualified individuals to the labor market. At the same time, their personal needs will need to be addressed. Studies have shown that flexible compensation plans have proved to be successful and the outcomes are positive.

The concept of a flexible compensation plan is to provide for flexibility in the number of hours worked, in addition to fringe benefits. The Human Resource Department (HRD) lays the framework for a specific set of compensation benefits, accruing for the workers during their employment at U.S organizations.

. Therefore, flexible compensation has been introduced to an increasing number of American organizations. The crucial concept of flexible compensation is that the employee can consider different choices, and the organization can provide a package that meets each worker's needs. American companies have traditionally allowed a limited number of one or two forms of flexible benefits to offer to their employees. Organizations often avoid these benefits due to the enormous amount of costs associated with them.

Problem Statement

Companies in the United States are exploring the adoption of the flexible compensation plan for part-time workers. Thus, it has become necessary to analyze the key factors in determining the costs as well as the strategies for implementation.

Purpose Of Study

The purpose of the study is to investigate the effectiveness of flexible compensation, particularly for part-time workers. This paper will illustrate the importance of such benefits and weigh these against the costs associated with the compensation plans.

Research Questions

1-Why is it beneficial for corporations to have a flexible compensation plan?

2-What are some advantages of part-time workers?

3-What type of total compensation, it should companies have in place?

Definitions

Compensation: Most part-time workers are paid on an hourly basis and are not entitled to company benefits, such as extended vacations, company pension and profit-sharing plans, health insurance, and other benefits

Eligible benefits: To qualify as a flexible compensation plan, the plan must restrict the employee's choice of benefits to certain statutory, non-taxable benefits and cash:

Cash

Taxable group-term life insurance in excess of $50,000

Group-term insurance to $50,000

Reimbursement for qualifying medical expenses

Payment of health insurance premiums for employee or dependents (including premiums for personal dental insurance)

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Qualifying dependent child-care services

Vacation days which cannot be refunded for cash

Contributions to 401 (k) plans

Equal pay provisions: The equal pay provisions of FLSA prohibit gender-based wage differentials between men and women employed in the same establishment who perform jobs that require equal skill, effort, and responsibility and which are performed under similar working conditions. The Equal Opportunity Commission (EOC) enforces these provisions, as well as other statutes prohibiting discrimination in employment. More detailed information is available from the EOC's offices which are listed in most telephone directories under U.S. Government.

Flexible compensation plans: As defined in IRS Section 125, a flexible compensation plan means a written plan under which all participants are employees, and the participants have the choice among two or more benefits. The benefits which may be chosen must be certain statutory, non-taxable benefits pursuant to the 1984 Deficit Reduction Act (DRA) and cash.

The term flexible compensation plan does not include any plan which provides for deferred compensation. This, however, does not apply in the case of a profit-sharing or stock bonus plan which includes a qualified cash or deferred arrangement (as defined in Section 401 (k) (2) to the extent of amounts which a covered employee may elect to have the employer pay as contributions to a trust under such a plan on behalf of the employee.

Flexi Time: Flexi time represents different start and end times of a standard day around core hours either on a regular basis or adjusted daily.

Part Time: Part time means working for less than the time scheduled for full-time wherein pay and benefits would be commensurate to the work done. According to the US Department of Labor (DOL), about 32 million people who are working in industries other than the agricultural industries are working part time. While 37% of the people prefer to work full time, the remaining 63% of the people work according to flexible time

Phased retirement: Phases retirement means working part-time or stepping down to less responsibility in preparation for retirement.

Limitations: Time constraint is one important limitation during the course of the study. Due to the limitation of time, the study could not be done in much detail. The available data on the flexible benefits for part-time workers is also limited. There is a need to further research the costs associated with the benefits and the implementation

CHAPTER II

LITURTURE REVIEW

INTRODUCTION

Employee's benefits plan

The literature are taken from the experts in the field who written, interviewed by academic magazines and internet sites. Thus, the experts have provided their concert thought and analysis on the benefits and costs of flexible compensation, the advatages, and the practice for providing compensation plan in the workplace.

In this chapter, the researcher will cite the sources, highlits and describe the cafeteria plan, flexible spending account, and the significant of worker's compensation.

Flexible compensation plan is one of the values that providing to the employees, and give them the option to choose what fit for their needs, also is good opportunity for both employers and employees to reduce the tax bill.

Organization provides numerous benefits to their workers and there is increasing concern about the cost and the benefits, particularly among part-time workers.

According to (Karla Maschmeir 2006), American employers (private and public), spent

$ 596.5 billions on health benefits, in 2005.

Thus, companies offering fringe benefits that would incentive employees by providing such a good opportunity helping them to handle their conflict between work and other personal's obligations need to be done during the work hours. (Langdon, 2009).

These are several types of flexible benefits plan, including cafeteria plans and flexible spending accounts. The researcher have defined the cafeteria plans in chapter one.

Here is the flexible spending account (FSA), is a tax-deferred saving account established by an organization to help workers meet certain medical and dependent care expenses that are not covered under the worker's insurance plan it allows workers to contribute pre-tax dollars to an account set by their employer's, they can later withdraw these funds tax-free to pay for qualify health insurance premiums, out-of-pocket medical costs, day care provider fees, or private pre-school and kindergarten expenses.

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The types of flexible spending accounts are:

Premium just plans, which allow employees to set aside funds to pay medical and life insurance premiums.

Unreimbursed medical expenses a plan, which allows employees to set aside money for projected health care expenses not covered by insurance, Dependent care reimbursement plan, that allow to the employees to put side money for day care dependent children. Worker must show legal documents for the expenses in order to be qualifying for reimbursement from these accounts.

Why introduce flexible benefits?

Many organizations are practicing family-programs to assist workers to accommodate their personal lives with work responsibilities, by offering flexible benefits plan such as family leave, child care support and telecommunicating, in order to enhance retention and keeping good people (Home&Griffet 2005).

A survey was conducted by Hewitt (Human Resources Consulting and Outsourcing), the survey indicated that approximately 75 percent of the companies have been questioned, their respondent as follows: companies offered medical health benefits to their employees who works 30 hours or more per week.Additionly, the survey revealed that only 25 percent offered medical benefits to part -time workers, who works less than 20 hours weekly.

According to the BLS U.S. Bureau of Labor Statistic (2005), there are 18.3% of the workforce in the U.S were of part-time workers.

Human resources professionals and part-timer workers understand the value of the flexible compensation plan. Most organization provides some kind of benefits, where the smellers firms are unable to provide as much as the larger firms (Jason Taylor 2007).

Recent studies released by Hewitt Associate in Lincolnshire, Illinois, found that employers are offering more benefits to part-time workers recently than previously, above 80% they provide vacation, holiday, and sick leave benefits, there are over than 70% offering health care benefits. (HR magazine v.45.p56-62)

Most business relay on part-time workers, those businesses recognizes the value of their contribution to the strategy and business success. In the short term, organizations obviously benefits from sharing costs with workers. But an organization may also choose to cap its future contributions to benefits by passing along increased costs to workers through these plans. (Hewitt).

Some of advantages of flexible benefits schemes are: Employers provide benefits at a defined cost which is fixed regardless of the choice those workers make; allowing them to cap future benefits costs. Hence, workers have a true ideas of the full worth of the benefits package and gives them a sense of control and involvement.

In addition, to the above advantages, it can retain valued workes, for examples, during period of change (including merger and acquisition); flexible benefits can help to harmonies rewards as well.

Employee's turnover is one of the most important issues that most employers have to deal with constantly. That is valued workers in the workforce to demonstrate the issue.52 percent of companies in national survey shows how the turnover has been escalated in recent years, (Wilson, 2000).

A survey of resignation rates conducted by the Saratoga Institute reveals that on average the organization will have to replace one seventh of their workers. Also, researchers consistently believe that competitive pay and provide benefits are the major factors to attract and maintain talent workers, (Rodger W.Griffen/Peter W.Home).

Another factor is that the last decades, the participating of women in the labor force U.S labor force has increased by approximately 50 percent. Thus, married couple and their dependents have lead to additional demand on compensation benefits to meet their families' needs, (Questa media America, 2010).

Furthermore, the issue related to worker's compensation is related to the increased number of U.S companies of hiring part-time workers, and required of them to work initially 1,000 hours(approxmatly-forur month) prior to their enrollment in the cafeteria plan,( Karal.Maschmeir,2006).

If the flexible compensation is implemented in the workplace, it would protect the employees from a high tax liability, it gives them the opportunity for salary reduction option, and can be used to reimbursement expenses (deductible insurance),

(R.G.penner, 2003).

Occasions where terminating the benefits after payments has commanced.In certain extreme cases, the organization may call the workers back to work even the employee is not completely recovered fro the injury. In such situation, an injured individual need to appoint an attorney against the illegal and immoral organization, in order to protect his/her rights.

Worker's Compensation and occupational injuries

Moreover, the health care costs have increased rapidly due to the fact that many workers remained uninformed about their rights to benefits for injuries that occurred at work. It is obligation on the part of the organization to inform the workers about the potential hazard at the workplace.

The importance of worker's compensation for Michigan workers will be described and analyzed.

Historically, the concept of worker's compensation was introduced in Germany in 1856, and adopted by England as well as in most Western Europe, and ratified in Michigan State in 1912.

Today, it is mandatory that every employer in Michigan must provide worker's compensation in accordance with Michigan State law, (www.Michigan.gov).

A survey was conducted by Michigan State University, and W.E Institute for the Employment Research, were involved 5568 employees from 29 different industries on injury prevention and loss control. The result revealed a lower claim by workers who paid attention to safety guide-line and prevention.

(Michigan Business Guide to workers Compensation).

It has been emphasizing that workers must understand the following regarding the worker's compensation as to what, worker's compensation does provide and won't provide:

Worker's compensation does provide these are:

Protection from job loss due to work related injury.

Protection from leaving without income while off work related to injury.

Proper medication care to help worker's covered as quickly as possible.

Worker's compensation won't as stated below:

Fully replace company wages while off work.

Act as a comprehensive medical insurance (only medical cost related to injury/illness).

Furthermore, Michigan has one of the strongest worker's compensation in the nation. For instance, an injured worker in Michigan is entitled to receive 80 percent of the after tax value wage's loss. The calculation of 80 percent is of independents, based on tax filling stautas, number of dependents, and tax rate at both State and Federal levels, the value of benefits would be reduced at the rate of 5 percent annually until be worker reach 65 of age.

Numbers of occupational injured and illness by industry and case types for 2008 are described in the table below:

Table (1)

Industry

Total recordable cases

Cases with days a way from work or restriction

All industries including state &local government

146

72

Private industry

124

61

Good producing

44.5

22

Construction

23

6

Building equipment & contractors

15

19

Manufacturing

37

18

Metal working Machine

10

7

Service-providing

80

41

Source: (www. Michigan.gov)

According to the BLS there were 1,350,82 occupational injures and illness reported in the U.S in 2008, and that 80 percent of the injuries occurred in private industry in which,15% occurred in local government also, 5% in State. See chart below:

Cafeteria plans:

The type of flexible benefits plan is called "cafeteria plan" which enables workers to choose between receiving part or all on worker's nontaxable benefit, receiving cash or other taxable benefits such as stock. According to the Federal Act of 1978, organizations may offer a list of benefits except tuition assistance. Thus, workers may choose to buy benefits from a list of options as described below:

Dental insurance, vision care, life insurance long and short term disability as well. The IRS has set up a number of restrictions on flexible benefits plan.

For example, workers are unable to roll over unused credits or benefits to the next plan year, organization need to be sure that no more than 25 percent of the tax-favored benefits go to highly compensate workers.( compensated workers are those who have greater than 1% of ownership in the firm and over $150,000),www.refrence business .com).

The Internal Revenue Service(IRS) issued guidance regarding the exclusion of part-time,temporary,seasonal and project employees under certain qualifications plan, including 401(K)s plan, that exclude part-time and others non full-time workers. For example, the maximum service is one year require being qualified for participate in 401(K) s plan. The IRS will not challenge an exclusion classification that is defined without indication a certain hours of work, (www.BLS.gov).

Total costs associated with compensation benefits.

The Society for Human Resource Management (SHRM) conducted its annual survey to gather information on the types of benefits offer to their workers. The data indicted that American organization spent about 20% of worker's annual salary on benefits such as worker's compensation and social security, spent 19% on medical plan, dental, prescription coverage, vision, and survivor benefits, also,11% for time not worked benefits (such as vacation, holiday, personal and sick leave), as shown in table (2)

Table (2)

(Average Percentage of Payroll Reflecting Total cost of Benefits)

Types of Benefits

Over all

Small

(1-99) employees

Medium

(100-499)

employees

Large

(500-or more employees)

Differences Based on Staff size

Mandatory

benefits

20%

20%

21%

20%

Not available

Voluntary

Benefits

19%

15%

21%

21%

Large, medium >

small

Pay for not

worked benefits

11%

11%

10%

11%

Not available

Employee Benefits: A survey Report by SHRM (2009)

According, to the (BLS), that indicated there is increase in total compensation benefits for employees, which is increased about 0.5 percent by season, and adjusted from March, through June, 2010.The compensations rose approximately by 1.8 percent, and benefits costs rose 2.5 percent.

It is worth noting that, municipal government provides part-time workers benefits at a lower cost than full-time employees. (Robert, G.E.2003).

According to Susan Chambers, Wal-Mart vice presedent,"the version of the health care plan will cost $23 monthly plus $15 for the workers children regardless the size for the family, these costs are applied to Wal-Mart associate,(full and part time)",

(Sheldon M. Geller, 2007).

The important of providing the basic cafeteria plans have been challenged for more than a decade ago, but the recent recession and financial crisis have made saving to the U.S organization are more crucial(reduce cost). At this point, the most important approach to deal with benefit's costs are long-term cost-saving strategies, health education program to keep health care cost down, and increase premium cost of by working, (raising it from 10 percent to 20 percent over three-years period), the establishment of an accounts that can be used to pay for medical expenses now, and after retirement, (Institute of Management and Adminstration, Feb 2009).The costs of group per full- time workers are overwhelming. The data on the group insurance costs per full time unionized workers are described below.

Table (3) shows the group insurance costs annually and per hours for workers (bargaining units). Table (3)

Average Cost Per FTE Union shop)

Bargaining Unit

Cost Per Year

Cost Per Hour

Safety & Regulatory

$13,114

$6.28

Labor & Trades

$13,514

$6.47

Security

$13,959

$6.69

Human Services Support

$11,238

$5.38

Scientific & Engineering

$13,765

$6.59

Technical

$13,171

$6.31

Institutional

$12,223

$5.85

Human Services

$12,367

$5.92

Administrative Support

$11,847

$5.67

State Police Enlisted

 

$17,694

$8.47SUMMARY

In summary, the literature provides substantial data to support the need and effectiveness of flexible compensation plans. The information provided shows that there is need to provide cafeteria plan and other flexible compensation benefits.

Flexible benefits in the present day situation have not only become very popular among the workers, but they also help the organization as whole in delivering best flexible compensation plans structures, and controlling the costs.

More important, the literature revealed the complexity and the dynamics underlying the flexible benefits, concerns are most clearly expressed on the costs, the cafeteria plan, and the worker's compensation. Both the workers and employers are searching for strategies within this context.

Precisely, the U.S organizations provide numerous benefits to their workers. To maintain talent and skilled employees on one hand, on the other hand, there is increasing concern about the costs and benefits.

Over the last ten years, the labor participation rate has increased considerably.Consequentlly; organizations would like to attract skilled and talented workers for the business success.

It appears that a key benefit to all workers is the worker's compensation due to the number of injuries and illness in the past two years. More importantly, American companies spent 20% of worker's annual salary on benefits, 19% on social security and 11% for vacation and sick leave.

Today, there are several approaches, to deal with costs that associated with the flexible compensation. These are: Long-term startegeis, wellness plan, and increase premium costs sharing by worker, and the creation of accounts that are to be used for medical costs at present and after retirements.

CHAPTER III

Problem Restatement

Over the years the Organization Theorists have been arguing that the economic models are too limited and that the non economic factors play a significant role in influencing the managerial compensation process in a critical manner (Baron, & Cook, 2002). Consequently, the researchers have come up with an idea to that contains various other alternatives so as to describe the aspect of compensation which particularly emphasizes on the sociological aspects like the relationship between the internal labor market and social stratification (Baron & Cook, 2002), the impact of the possession and supervision of the external parties on the compensation plans, (Finkelstein & Hambrick, 2001), the managerial power and the impact of society and ,the social comparison theory. (Allen, 1991) All that on effort to identify the capability of new and unique compensation strategies adopted, by the organizations in the United States for part time workers.

At this juncture, there is a need to know the basis of compensation plans, the level of motivation and commitment among the employees, and the level of satisfaction that derive from such compensations.

Sample and Population

If the study is done using a survey or questionnaire method, the Slovin's formula, (statistic technique) would better suit the study for determining the sample from the population. The study is completely based on secondary sources, and there is no use of Slovin's formula. Thus, the researcher will focus on flexible compensation plans in manufacturing organizations in general, and in the state of Michigan in particular. Therefore, the population of the study would comprise the manufacturing organizations in the United States, while sample would be the manufacturing sector in Michigan.

Data collection

Data collection will be limited in scope to facilities the different between the early study and the data that is available to the researcher. The secondary data has been collected from various literature and initial work. These data will be analyzed and compared without defending or denying its contents and result. Hence, the major source of the secondary data is the literature review in this study.

Thus, the main consideration that will be emphasized is the issues related to flexible compensation at the private sector of manufacturing particularly in the state of Michigan.

Variables and Measures

Two types of variables have been taken into consideration for the purpose of the study. They are the dependent variables and the independent variables. The independent variables are organization culture, society and personality of the employees. The independent variable that is taken into consideration is the flexible compensation plan. Thus, through the study we will be able to reveals how the flexible compensation plan would have an influence on the organization culture, society and the personality of the employees. Culture, society, and the employee's personality.

Figure 2: Dependent and Independent Variable Definition Chart

Data Analysis Methodology

Part of the research that is documented in this paper has taken into consideration the qualitative research methods. (Creswell, 1994). While collection the data the choice and design of methods have been occasionally changed analyzed this would allow the study to examine the significant issues and recommend alternatives to eliminate the unproductive areas of research from the initial research proposal. Again, the objective of the research is to analyze the qualitative data, the variables involved with the Flexible compensation, evaluation of different situations of a particular variable for a specific time period.

Thus, descriptive research are used that will build networks and explains the association of one variable with another variables (The relationship between dependent and independent variables).

Furthermore, the qualitative research is multi-method in nature which involves an elucidative and innate approach to the subject matter (Creswell, 1994). It can be said that the study is done taking into consideration the natural and inherent settings, thereby making an effort to understand and decipher or evaluate and interpret the incident or event in relation to flexible compensation issues.

Therefore, conducting a qualitative research would take the researchers to organize and arrange a number of unified and consistent methods in order to better understanding as well as provides awareness of the subject matter.

Hypothesis

The level of employee performance and satisfaction through the flexible compensation plan will be positively related to the level of reward contingency that employees experience in the plan.

The level of satisfaction and performance of the employees with regards to the flexible compensation will be related in a positive manner to the level of involvement of the employees in the plan.

Inadequate flexible compensation with an organization, consequently, employees will leave the workplace.

CHAPTER IV

DATA ANALYSIS

The data in this chapter will focus on the standard fringe benefits that Michigan workers received from their employers, the group insurance costs per full time unionized workers, and the data relegated occupational injuries and illness in the U.S and Michigan as well. Michigan workers can receive only certain specified or standard fringe benefits. For example: Defined contribution 15.40%,defined benefits retirement 30.125,unemployment insurance 0.15%,workers compensation 1.28%,and FICA 7.65%.: (www.Michigan.gov/dleg.org)

The group insurance costs per full time unionized workers as described in table below(TABLE 1)

Average Cost Per FTE Union shop)

Bargaining Unit

Cost Per Year

Cost Per Hour

Safety & Regulatory

$13,114

$6.28

Labor & Trades

$13,514

$6.47

Security

$13,959

$6.69

Human Services Support

$11,238

$5.38

Scientific & Engineering

$13,765

$6.59

Technical

$13,171

$6.31

Institutional

$12,223

$5.85

Human Services

$12,367

$5.92

Administrative Support

$11,847

$5.67

State Police Enlisted

$17,694

$8.47Source: www.Michigan.gov/dleg.org.

The numbers and cases of injuries and illness in the year 2008, indicates the importance of worker's compensation to protect workers from job loss, and receiving proper medical care to help worker's recovered. For example, there were 1,350,82 occupational injuries and illness reported in the U.S in which 80% of injuries occurred in the private sector and 15 percent occurred in local government and 5percent occurred in the state government.

Worker's compensation and benefits

Historically, the concept of workmen's compensation was introduced in Germany 1856, adopted by England and most Western Europe, and was ratified in Michigan on 1912. (Prior to that year, there were no worker's compensation benefit and rules).

That is, any worker who has injured at work will take an action to protect his or her well-being (e.g. civil/tort action).

It was required that the injured worker has to prove evidence by placing negligence on work place. Indeed; it was difficult on both side and time consuming.

Today, private and public workers (Full-time or part-time) all covered by the Federal government law.

Hence, it is mandatory that every employer in Michigan to provide worker's compensation according to the law, failure to provide workmen's compensation to the workers in the case of injury would be subject to sever punishment plus civil damages and payment of a huge amount of money to the injured individual.

According to the Michigan compensation benefits plan, every employer that employs three or more workers, for 35 hours or more per week for a period of 13 weeks or more, then such employer must provide insurance coverage (mandatory).

The term workers compensation means an insurance system that benefits workers and organization.

.Finding

The benefits are two folds:

Benefits to workers who have suffered any kind of injury or illness during employment with the firm.

Safeguard the organization against costly litigation over claims related to injuries or illness.

At this juncture, Michigan has one of the strongest worker's compensation in the nation. It includes proper and adequate medical treatment, replacement of income loss, vocational rehabilitation.

Every worker in Michigan is entitled receive to 80% of the after tax value wage loss, which is based on medical repot. Hence, the calculation of 80% of loss wages is taking into consideration the following factors: tax filling status, number of dependents, and tax rates at both the State and Federal levels.

According to Michigan law, the easiest method of calculation an average weeks wage is the highest of 39 weeks out of 52 weeks from the previous year prior to the injury. The value of benefits would be reduced at the rate of 5% annually until the worker reach 65 of age.

No worker is entitled to receive benefits greater than 90% regardless of the earnings, and if a worker happened to die on the job, then his or her legal heirs is entitled to receive benefits equal to 50 percent of the state average weekly wage.

Characteristics of employee's benefits.

Summary

Research shows that flexible compensation benefits are the most important factors in determine job satisfaction; this satisfaction is directly related to worker retention and productivity. These flexible benefits are vital to part-time workers (i.e. pension plan, healthy insurance, holiday, vacation payment, etc).

Furthermore, part-time workers understand that the key factors in job satisfaction are:

Benefits package are simple -to-use enrollment technology.

Cost-effective and an attractive.

Workers are to select the benefit they need to protect their lifestyle and families.

Data on the basic expenditure the organizations have on benefits are: 20% annually, 19% voluntary benefits and 11% expenditure on pay for time not worked.

Hence, the total percent of costs are very high as result over 60% of U.S organization planning to reduce worker's benefits

.Furthermore; American organizations are looking for ways to manage costs. The challenges are the escalating expenses of employee benefits, and slow growth of the U.S recession and the financial problems. Here in the U.S for example, there are 30 millions people working part-time would like to receive benefits, and 4.2 million part-time workers (either wanted to work full-time and could not find suitable full-time work or worked fewer hours of a temporary slack in consumer demand).

The figures above about the last groups, revealed there are partially UN employed and partially, but by counting them as fully employed per BLS say critics, the BLS data understate the unemployment rate.

CHAPTER V

RECOMMENDATION

The issue of flexible compensation for part-time workers has become ripe for debate. Policy makers, firms, and workers have covered both sides of the controversy.

The flexible compensation plan is necessary to all part-time workers to meet their immediate needs, provide incentives, and establish loyalty to their employers.

Workers will be able to carefully select alternative options that will meet their needs.

One such alternative option is the concept of the cafeteria style. Cafeteria style is defined as a flexible benefits plan incentive system in which employees can select the fringe benefits from a menu of available alternatives.

The flexible compensation plan has two parts: (a) the bias and (b) optional benefits. Prior to 1996, there was a feeling and doubt in regards to the legality of the flexible benefits plan, but with 1986 tax reform, the doubt has been erased completely.

Today, 22 percent of U.S. firms have a flexible benefits plan for U.S. workers. The study revealed that flexible compensation will attract workers to the firms and improve productivity, the quality and the quantity of the labor force.

The importance of a flexible compensation plan cannot be overstated. If a worker is partially or fully injured at work, the firm is supposed to pay 80% after-tax wages lost. With these benefits, however, workers have lost wages and potential advancement. On the other hand, the amount of loss without a flexible plan is unimaginable.

Michigan law states that a person who is either injured totally or partially would receive the same benefits regardless of the seriousness of the injuries. In the past, Michigan spent less on compensation payments for injured workers. Today, the State of Michigan is increasing its spending on medical claims due to injuries and on its cash benefits for injuries.

The overall cost of worker's compensation benefits has increased, not as a result of an increase in the number of claim's, but due to an increase in the cost of health care. Here, for the sake of the firm as well as the workers, the firm should arrange for vocational rehabilitation and training programs.

These programs would help firms to reduce medical costs and to prevent future injury. Every organization has to face part-time workers' demands for having benefits that cover their dependents. At this juncture, workers request comprehensive information on the benefits that are fair, reasonable, and impartial. Their request will generate a response and the costs are the major concerns. Further, if the response is positive, workers see it as the path of success; in most cases, firms will say that every person is a winner.

The State of Michigan adopted the flexible benefits plan for the part-time workers. However, many workers do not understand the full meaning of the plan. They question the plan's potential benefits, asking what is in it for the part-time workers.

Furthermore, the workers must understand this adoption. To achieve clarity, theorists believe that Michigan's manufacturing firms should ensure the delivery of the following:

A. manufacturing firms should inform the part-time workers of the availability of the flexible benefits and constantly remind them about the coverage.

B. Manufacturing firms should ensure and help part-time workers, not by giving information, but by following up on something and explain thoroughly.

C- Manufacturing personnel are responsible for building trust between the firm and the part-time workers.

D- Manufacturing firms persuade the part-time workers to join the flexible benefits and the advantages.

Recent reports have shown that Michigan has a number of organizations, including the manufacturing sector. The manufacturing sector adopted variable pay, or the pay for performance system. The logic behind it is that most organizations would like every worker in the organization to think performance. This logic would motivate the part-time workers to increase productivity and competition. It would eventually lead to a steady workplace with a maximum output; consequently, the part-time workers would have a high morale. More importantly, the research questions have been answered and analyzed throughout chapter four.

Recommendation For Future Research

In conclusion, the flexible compensation plan for part-time workers would have considerable value for the workers. It would increase their productivity, hence, generating tangible benefits to the firms, retention, tax deduction, and retirements.

Significantly, the national unemployment rate is 9.8%, while the unemployment in Michigan is the highest in the nation. This situation makes it difficult for Michigan firms to offer flexible plans to all part-time workers. That is, the supply of workers in the manufacturing sector exceeds the available funds for providing benefits, and this is one of the major factors of economic stagnation and recession. Thus, the unemployment rate in Michigan is 13.4 percent (higher than the nation average), many workers are struggling and often facing foreclosure, and the prospect of creating new jobs is at the lowest levels.

Limitation and the current economic situation are likely to keep Michigan manufacturing firms high on the agenda of the policymakers in the near future.

Significantly, much data exists on the importance of worker's compensation due to cases of injury and illness. Unfortunately, data on the flexible benefits plans for part-time workers is limited. Therefore, there is a need for further research on the conditions and costs associated with the benefits plan.