Chris Hylton will present on attracting staff through competitive compensation and benefits plans. He will discuss how to set up benefits and pension plans, deal with seasonal employees, and introduce flexibility. Hylton will cover creating a compensation plan tailored to an organization's mission and culture, developing consistent wage scales, and benefits like life insurance, disability, and health plans. Trends include health spending accounts and flexible benefits. Retirement plans like RSPs and defined benefit pensions will also be discussed. HR strategies to engage employees even without high pay will conclude the presentation.

1. 1
Attracting Staff –
Compensation & Benefits
in Competitive Times
Chris Hylton
CG Hylton & Inc.
info@hylton.ca Tel 800 449-5866
Travel Alberta, Camrose
March 31 3:30 - 4:30

2. 2
1. Creating a Compensation Plan
2. What is actually meant by
"benefits and pension plans"
3. HR Strategies that work
4. RSP and pension plans

3. 3
Chris Hylton is a benefits broker and
HR consultant. He will be talking
about how to set up benefits and
pension plans that will help attract and
retain employees. How to deal with
seasonal employees. New ways of
introducing flexibility into your plans,
and the advantages of RSP’s or
pensions for staff and owners.

4. 4
He will also touch on HR strategies that
you can use to make your organization an
employer of choice, even if you don’t have
the resources to pay top dollar in a hot job
market.

5. 5
1. Creating a Compensation Plan
Compensation is an exchange of money
or something of value for work
delivered
There are many methods of
compensation for staff
Regardless of the method used,
customizing the Plan to fit your
organization is a must

6. 6
How Do I Customize a Plan?
To Customize you need to:
 Know what your mission is
 Know what is important to
your organization's success
 Know what kind of culture
you have or want to
promote
 Make sure the budget is
capable & use the staff for
this

7. 7
Without this link, you may have:
A conflict between you goals and
compensation
No compensation for things that contribute
to the organizations success and visa-versa
No compensation for desired behaviors and
visa-versa

8. 8
Therefore, you need to develop a
Compensation Philosophy
Compensation philosophy means :
• You can see a clear linkage between
the organization’s mission, goals, and
desired behaviours and the
compensation system
• You know where you want your
salaries to be in relation to the market?

9. 9
2. Developing a Consistent
Scale of Wages
To do this you need:
Internal Equity - how jobs are paid
in relation to other jobs within the
organization
External Equity - how jobs are paid
in relation to other companies

10. 10
To achieve Internal Equity…
You need a job evaluation plan to ensure
all jobs are measured with the “same
ruler”
A Factor Point System Is the Most Effective
unless Your Organization Is Small( Under
10 People)
For organizations less than 10 people , a job
ranking system is probably better. This
assumes the organization is not going to
grow

11. 11
A Factor Point System …
Takes all the ingredients you want in your job
evaluation plan and gets information from the
positions in place
It allows you to determine which factors you want
to use and how much weight each factor is worth
Thus it is customized uniquely to your
organization and it is applied consistently to all
jobs now and in the future
It also allows you to determine if a change in job
merits a change in pay

12. 12
A Ranking System …
Ranks the positions according to how much
they contribute to the accomplishment of
the organizations mission
It allows you to determine which is worth
most
It is only effective if the organization is
small (under 10 people)
Clear communication is vital

13. 13
To achieve External Equity…
You need to define your market.
Market is defined as to who you compare
to, it’s your choice. I.E. same department in
Alberta, defined geographic area, similar
band/company in an other province.
You need to define where you want to be in
the market (plus or minus ?%)
Use your market for cost of living
adjustments as well.

14. 14
Now you have consistency
because….
Internal equity – all positions are
measured with the same ruler (job
evaluation plan)
External equity – you use the same
market for all jobs.
Remember: in creating the above you
used your organizations mission,
success factors and culture.

15. 15
Role of Consultant?
Assist with the identification of factors
Link the factors to the
mission,organizations success, culture
and budget
Do salary survey
Create the plan, assist with
implementation and provide ongoing
support; at least a year after
implementation

16. 16
Benefits Agenda
Overview of Benefits
Premiums vs Claims
Retirement Plans

17. 17
What will you do when...
An employee dies or becomes disabled? Will
you feel a sense of financial obligation to the
employee and his or her family?
Trying to attract and retain good employees?
You or your employees travel extensively for
business or pleasure?
You or your employees are confronted with an
expensive dentist bill?

18. 18
Concept of Group Insurance
Nobody expects to die, be injured,
or become ill tomorrow
However, if this does occur it can cause a
catastrophic financial loss
A benefits plan is a low cost solution that can
provide protection for the employee &
employer from catastrophic financial losses
due to death, injury or illness

19. 19
Typical Group Benefits
Employee and
Dependent Life
Insurance
Accidental
Death and
Dismemberment
Optional Term
Life
Short Term
Disability
Long Term
Disability
Health
Vision
Dental
Health Spending
Account
Employee
Assistance Program

20. 20
Why Life Insurance?
Life insurance "creates cash" for
needs such as:
funeral & burial charges
probate fees
taxes at death
income replacement
mortgage
children's education
wealth & estate creation

21. 21
Why Accidental Death &
Dismemberment?
At dismemberment...
– for changes to one's lifestyle
At death...
–extra income to deal with an
"unexpected" loss

22. 22
Why Disability Insurance?
Where would the money come from
if you became disabled?
Savings
Loans
Spousal income
Sale of assets

23. 23
Why Disability Insurance?
Did you know that: Your chances of
winning the Lotto 649 draw is 1 in 13.9
million
The odds of being disabled for >90 days
during your working career are 8 x
higher than the chances of dying during
the same period
The average length of a disability which
lasts over 90 days is almost 3 years

24. 24
The average disability which lasts over 90 days lasts an
average of 2.9 years:
Why Disability Insurance?
2.4
2.2
2.8
2.7
3.2
3.1
3.4 3.4 3.5 3.5
3.3 3.3
2.8 2.9
2.1 2.2
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Years
25 30 35 40 45 50 55 60
At Age
Women Men

25. 25
Advantages of STD or LTD vs
Workers Compensation
STD WCB
24 hour coverage Y N
Covers an illness Y N

26. 26
EI Rate Reduction
Most STD plans are eligible for the EI Rate
Reduction
Savings of $.30/$100 of payroll
Savings applied to employer portion of
premium
5/12 of savings must be re-distributed to the
employee in the way of:
– cash rebate
– new employee benefits
– enhancement to existing employee benefits
– etc.

27. 27
Why Health & Dental?
A "Maintenance Contract" for the
organization's most valuable resource
Peace of mind for employees
A better standard of living
Tax free
Owners & Execs

28. 28
Dentalcare Options
– Deductibles
– Calendar Year Maximums
• $750 to unlimited
– Periodontal Scaling Units
• 6, 10, or 14 units per 12 months
– Recall Examinations
• 2 per 12, 1 per 9, or 1 per 12 months
– Oral Hygiene Instruction

29. 29
How Much Does a Plan Cost?
The cost is based on:
– Demographics of the group
– Level of coverage for each of the
benefits
– The volume of benefits
– Prior experience of your group
– Group size

30. 30
Employee data is the
most critical part of pricing
Basic Monthly LTD Rates Per $100
0
1
2
3
4
Age
20
Age
30
Age
40
Age
50
Age
60
Age Group
BasicMonthlyRate
Males Females
Basic Monthly Life Rates Per $1000
0
0.4
0.8
1.2
Age 20 Age 30 Age 40 Age 50 Age 60
Age Group
BasicMonthlyRate
Males Females
Source Great-West Life
Demographics and Rates

31. 31
2. Claims vs Premiums
Your plan is priced on the basis of your
demographics and your usage
If you are old and heavy users you will
pay more than if you are young and a
light user

32. 32
Advantages to Employer
Established corporate policy in the
event of death or disability
Attract and retain key employees
Increased morale
Reduced absenteeism and increased
productivity among employees
Tax incentives
Hassle-free administration

33. 33
Advantages to the Employee
Basic protection for the employee and
family
Less expensive than individual insurance
Higher standard of healthcare than
otherwise possible
Tax free compensation
Coverage for “uninsurables”
Hassle free administration

34. 34
Common Mistakes
Life Ins & provincial medicare
premiums taxable
LTD benefit
Plan that encourages employees to
spend
No cost sharing
No flexibility

35. 35
Solutions
Have ees pay for Life, medicare and
LTD
Introduce a Health Spending Account
(funded by hi deductible)
Have employees share in paying cost
of claims
- 20% of Rx
- 20 – 50% of Dental

36. 36
Have an EAP
Cost is small
Gives ees access to professionals for free
(to them) and quickly
What are you paying to fix employees
teeth a month? $100 $200 or more ?
The EAP can fix ees heads at a fraction of
the cost

37. 37
Employee as smart
shopper
Traditional plans
paternalistic
Best plans today
encourage
employees to
become
smart shoppers
take ownership of plan

38. 38
Benefit Trends - Health
generic drugs & drug card
may reduce drug costs
no claims forms, paperwork
Internet based administration
Flex plans for small employers
Health Spending Account

39. 39
Benefit Trends - Dental
Cutbacks, cutbacks, cutbacks
Units of scaling
– limit to 4 - 6 max per year
Freq of checkups (account
for 40% of claims)
– 9 months or 12 mo checkups
Fee Schedule
– Reasonable and customary

40. 40
New Benefits
Critical Care
Convalescent Care
New AD&D benefits
EAP

41. 41
Benefit Trends - Flex
Traditional flex plans
are a pain
Health Spending
Account is gaining
favour
Tax effective

42. 42
Health Spending Account
 Health Spending
Account
 Funded by savings
 $ sit in ee name
until spent (18 mos
max)
 used for medical
dental expenses, not
covered by plan
 dental 20% of
basic and 50% of
major restorative
 50% of ortho, or
over max
 vision over $200
 many other
applications
 tax free to ee

43. 43
ASO Plans
Good for employers of 80 employees
or more
Free up your reserves
Keep premiums in your hands
earning interest until accessed
Surplus keep in your hands

44. 44
Role of Consultant?
Look at plan design & Rates
Look at plans that ensure that owners
never pay anything out of pocket that
may be run thru the company
Obtain quotes from other carriers
Consultant is “free” as our fees are
paid by commission by the carriers in
the rates

45. 45
What we need to
commence a Benefits Review
Booklet
Employee data
Experience
Letter of
authority
Premium
History
Idea of any
plan design or
administration
changes you
would like to
make

46. 46
3. Retirement Plans
RSP plan, employer and employee
funded
Defined Benefit Pension, employer
funded
Pros and cons
We would be pleased to provide you
with a range of options

47. 47
RSP or DC Plan
Money contributed by employer, say 5%
of salary
Matched by employee
Invested
Grows over time
Employee gets monthly income at
retirement

48. 48
Money for free
CCRA gives employees back most of their
pension or RSP contributions!!!
For Owners pensions are a great way to get
surplus money held in the Corporation out
of the Corporation tax free
Set up an IPP and recapture the difference
between what the owner paid to his/her
RSP and the increased cost of the IPP

49. 49
Get up to 65% more into your
retirement assets than RRSP
The IPP is like an RRSP in that it uses an
investment account that accumulates over
time to provide retirement benefits.
Unlike the RRSP, the IPP guarantees
monthly pension income.
The amounts are locked-in and may be
used only for retirement purposes.

50. 50
IPP Contributions
Contributions by employer (and
employee) are tax deductible
Benefits are taxed when received
Investment income tax exempt

51. 51
IPP Max Contribution
Age in 2013 Past Service
from 1991
Current Service
40 $61,700 $24,600
45 $104,900 $27,000
50 $161,100 $29,700
55 $222,900 $32,600
60 $290,800 $35,800
65 $553,600 $38,700
Maximum earnings $134,834
Service commenced 1991 or earlier

52. 52
RSP vs. IPP Current/Past Serv

53. 53
IPP Advantages
Greater tax deductible contributions
Creditor protection
Expenses tax deductible
Plan surplus belongs to Participants
Investment returns balanced by
contributions

54. 54
HR Strategies
Employee satisfaction
survey
Job description
review
Career development
Training
Flextime
Let employees
determine how to do
their job
Performance
management
Rewards for
successful behaviour

55. 55
Thank you!
Questions?
info@hylton.ca
Tel 800 449-5866