Indirect Employee Compensation...Will it Become a Thing of the Past?

Indirect Compensation, or employee benefits, have been a major driving force in the decision making process of would be job seekers for decades.  The days are gone, however, of employers offering pension and medical benefits virtually free of charge as they did in the old days.  It used to be that you worked for one company your entire life, and they basically agreed to take care of you for the rest of it when you retired.  My Mom has told me stories multiple times about my Grandfather and the benefits that he used to receive after working at Mack Trucks for his entire career.  Not only did they pay him a hefty pension, but they also provided great health care benefits throughout his career and then into his retirement years.

As our economy continues to suffer from the current recession, and as businesses need to focus their attention more and more on benefit cost-cutting efforts to stay afloat, these life-long benefits packages are slowly becoming, if they aren't already completely, a thing of the past.  Even in the areas of education, which has historically been one of the best professions to work within in terms of level and cost of benefits provided, we have recently seen that employees are being forced to contribute more to these plans in order to keep them than they ever have in the past. 

Cost, especially in the areas of health care and pensions, is probably the main issue with implementing programs of this type, and employers of all sizes are now asking employees to contribute larger portions of their salaries in order to make up the difference.  Much attention has been paid lately to public sector employees due to the low cost, and high level, of the benefits they currently receive.  Recent proposals have called for Public Employees in this State to pay between 12 and 30% of the premiums associated with their health insurance costs, which currently account for about 9% of the State's annual budget.  You can view this article from Philly.com to find more information about the proposal.

Offering a healthy combination of benefits should still be an important focus for companies as they attempt to attract and retain the best talent possible, but the current economic conditions and the rising costs associated with programs of this type will make it increasingly difficult to maintain these programs in the future.  According to this Time magazine article, the trend of paying more but getting less may continue if serious reform of the system isn't able to take place.

Pay and Incentive Systems in Schools...Could it Fix Part of the Problem

Since this is a tough topic to get into right now, I'm going to attempt to remain as unbiased as possible throughout this entry.  The topic of Pay and Incentive Systems came up recently in the text of our Human Resources Management Class here at Kutztown University, and I thought that this would be a worthwhile topic to research, since I've thought about getting into education for years and have many friends and family who are currently, or were at one point in their past, part of the education system.

Unless you've been living under a rock lately, which as on one of the new Geico commercials suggests some people may actually do, you've seen the wars that are being waged between various states and the teachers unions.  Most notable of them all is the one going on in Wisconsin right now, which for a quick perspective on I recommend what John Stewart recently had to say about the topic on the 'Daily Show' via the Huffington Post.

One of the major aspects of this very public debate is the loss of control, or collective bargaining rights, of the unions in the future.  Various groups and individuals outside of the education system, and some inside, have, for quite some time now, called for a more effective way to evaluate, compensate, and retain the best educators in various school systems around the country and many of these unions have quite vehemently opposed any reform of the current system.

One of the aspects of educational reform that many suggest may help to end these wars in the future along with providing more accountability, potential for reward, and an increase in the perception of the professionalism of educators around the country is merit based pay for teachers.  There are many articles out there on the topic, but I'll suggest taking a quick look at two that I've read recently.  The first article is from 2001, well before the market crash of the last few years, and the other is from 2010, just months before everything began to erupt in Wisconsin.

There is still a long way to go with reforming our education system in this country, but the only way that we can make sure that our country is successful in the future is by providing the best education for our students, and rewarding those that do that providing in the best way possible.  Maybe that means that we need to make more of an effort to reform the entire system to include merit based pay?  These articles seem to suggest that it is not only possible, but that it is working in various parts of the country already.