Page 674 - Business Principles and Management

C HAPTER 24 A SSESSMENT

CASE IN POINT

CASE 24-1: The Benefit of Benefits
Joanne Wilkens and Teresa Soto were exercising on stationary bicycles in
the health and fitness center of the Wainwright Company. The company
added the fitness center a year ago and both employees have used it exten-
sively ever since. They use the equipment and take several fitness classes
taught by on-site fitness personnel. In addition, they have completed a
number of health-and-wellness programs the company has started offer-
ing. Joanne and Teresa are both pleased with the effects on their overall
health and fitness levels. Today, however, as they exercised, they discussed
an article in the company’s online newsletter.

Joanne: The article said that the average employee in the company
receives total compensation of $36,500 a year. I can’t believe
that. I think I’m close to the average in salary, and I’ll only
take home a little more than $28,000 this year.
Teresa: That’s right. What they don’t say is that we have a lot of money
deducted from our checks each month for taxes, insurance, and
the retirement plan.
Joanne: As a matter of fact, the article says the company contributes an
additional $9,000 on average for each employee to pay for ben-
efits. That makes over $17,000 difference between what I take
home and what the company says I receive in compensation
and benefits. I can’t imagine what benefits we get that cost that
much money. There must be a mistake in those figures.
Teresa: Let’s stop in at the human resources office when we’re fin-
ished here. Maybe they can explain the difference.

THINK CRITICALLY
1. If the newsletter information is accurate and if Joanne is paid about
the average amount for all employees, can you explain the difference
between the compensation figures?
2. Should employees consider the amount that is taken out of their
paychecks each month for taxes, insurance, and pensions as part of
their compensation? Why or why not?
3. If you worked in the human resources department, how would you
explain the difference between the salary and benefits the company
says it pays and the amount of money Joanne and Teresa take home
in their paychecks?
4. Although the company’s fitness facility and programs are a benefit
for employees, should they be considered part of the employees’
benefits costs? Why or why not? How do employees and the com-
pany benefit from the addition of a fitness center and health-and-
fitness programs?
5. Why do you believe that many employees are like Joanne and
Teresa and don’t recognize the total cost of employee benefits?
What should a company do to avoid that problem?

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