Workers Compensation and Risk Management

p WORKERS COMPENSATION AND RISK MANAGEMENT

2007

1 What can a PEO do that would help an organization manage its risk

One of the most difficult functions of human resource management is that of determining the rates of monetary compensation . It is not only complex , but significant both to the organization and employees Employee compensation decisions are crucial for the success of an organization . From a cost perspective alone , effective management of employee compensation is critical because of the Another reason for studying compensation from the organization 's perspective is to

assess its impact on a wide range of employee attitudes and behaviors and , ultimately the effectiveness of the organization and its units . Compensation may directly influence key outcomes like job satisfaction , attraction , retention , performance skill acquisition , cooperation , and flexibility (Backman J ,Wage Administration : An Analysis of Wage Criteria

Professional Employer Organizations (PEO ) has a very active and critical role to play . There is the broad question of the determinants of compensation relationships . This involves an understanding of various influences controlling compensation , the nature of decision-making bodies and the different traditions and customary attitudes that have developed in individual firms or industries in some cases , the controlling influences may be standards and more of a particular locality or region , sudden change in technology , source of labor supply firm 's competitive standing , and general sales-and-profits prospects of the industry

A decision about compensation rates in a given situation has to be reconciled With a variety of considerations such as when pay rates should be changed and by how much , how they should be distributed among the different employees , and what firms should be covered . Disputes between employers and unions over wages and salaries are often a part and parcel of conflicts over such diversified matters (Beach , D .S ,The Management of People at Work

PEO 's have to formulate a pay package and the quantum of take-home pay that is the net packet , after an employee has paid for his deductions Some of these deductions are savings for old age , like the retirement fund and pension schemes . The balance between what is received now and what he will get on retirement is something that is variable in each case . In an employee 's earlier years , normally children 's education medical treatment , recreation will necessitate a larger income . In his later years an employee will need to provide for his old age , in terms of a house and a steady income to maintain his habituated life style Another related issue is salary and tax planning . In this context organizations have taken recourse to fringe benefits , some of which are taxable . PEO 's have studied these factors in detail before the person is employed . The incidence of tax , either on money incomes or on the taxable income including perquisites , has to be worked out to help manage the risk of organizations (Bowey A .M , Handbook of Salary and Wage Systems

2 Why not just do what a PEO does `in house

Organizations have to...