Chapter 1

Introduction

Employers and employees are involved in a mutual struggle to balance workplace rights and amenities with employee needs and employer needs and costs. Employees want to work for a company that provides a safe, pleasant environment with benefits so they may enjoy a safe, comfortable life. Employers want a productive, stable, content workforce at a reasonable cost to maximize profitability. Historically, employee benefits are the one area which have the greatest impact on both employers and employees. The federal government mandates that employers provide four types of benefits: social security, worker’s compensation, unemployment insurance, and family and medical leave. Discretionary benefits that employers may also provide include health insurance, paid leave, life and disability insurance, educational funding, and subsidized programs for wellness, childcare, commuting, meals, and recreation. To look at the issue of employer provided benefits in depth brings about several possibilities, three of which are:

1. employers offer specific discretionary benefits as a retention tool to ensure a stable workforce
1. employers offer the discretionary benefits that the company can afford and makes benefit choices based on the cost of providing those benefits
1. employers choose discretionary benefits to be competitive, providing "industry standard" benefits for their industry type and company size

The purpose of this thesis is to show an association between both the size of company and the type of industry with selection of benefits offered to employees.

Throughout most of the industrial era, businesses were generally oblivious to the human and environmental consequences of their actions. Technology has been responsible for eliminating the competitive barriers of geography and company size, while several other common forces cause companies to transform. Deregulation, social problems, and employees themselves also influence the structure of the workplace.

Employers have utilized many strategies to keep good employees, including environmental, relationship, task-focused, compensation, and people-growing strategies. The change in the composition of the work force and escalating employee benefit costs further caused employers to take a serious, critical look at the type of benefits they provide, how they provide them, and how the cost of providing benefits can be significantly reduced.

Compensation for U.S. employees for services provided is divided into two parts: monetary wages and benefits. Employers are required by a myriad of federal and state regulations to provide certain wages and types of benefits for their employees. Because the benefits portion of compensation is the topic of this thesis, definitions of the four types of mandated benefits--social security, unemployment insurance, workers’ compensation, and the family and medical leave act--are detailed in the following paragraphs.

Social security benefits were first mandated by the Social Security Act of 1935. This act was intended to create programs that would protect the wage earners against income loss due to unemployment, old age, disability and death. Unemployment insurance is included in the Social Security Act and provides an income to workers when work is not available. Each state administers its own unemployment insurance, however, the federal government pays for the administration. Payroll taxes support the program.

Worker’s compensation was first enacted by the state of Wisconsin in 1911. The program requires companies to obtain insurance to pay for the medical costs of employees who are injured while on the job.

The Family and Medical Leave Act was signed into law in February 1993. It requires employers of 50 or more employees to provide up to 12 weeks of unpaid leave for the birth of a child or placement of a foster child, to care for a close family member with a serious health condition, or for the employee’s own serious health condition.

Discretionary benefits may be provided by employers, but are not mandated. These benefits are offered in an effort to attract and retain the highest quality work force possible within the company’s resources. These include health insurance, paid leave, life insurance, accident and disability insurance, severance pay, pensions, employee assistance programs, wellness programs, and educational reimbursement. Other discretionary benefits that employers offer in response to specific needs and demands of their employees include elder care assistance, relocation allowances, subsidized meals, recreation facilities, commuting subsidies, and supplemental unemployment, disability, or life insurance plans.

All benefits provided have costs to employers and employees, which also affects the economy and standard of living. Some benefits may be considered cost-effective, (such as a self-insured medical insurance plan) while the expenditure for some other benefits may outweigh the positive effects (e.g., a commute assistance program). In some instances, there may be different or better ways of financing social benefits. Benefit providers and companies are always exploring this issue.

Currently there is renewed governmental interest in health care reform. This might mean new legislation, which could potentially cause massive changes for employers. To absorb increased costs without losing profitability, the cost increases would undoubtedly be passed from providers to employers and on to the workers.

The change in composition of the work force of today and the escalating employee benefits cost have caused employers to take a serious and more critical look at the type of benefits they provide, how the benefits are provided, and the costs involved. According to Herman (1990), companies generally spend in excess of 40% of payroll on employee benefits, including statutory benefits. The single largest benefit expenditure is health care.

Several decades ago benefit plans were designed to meet the needs of the typical employee, usually a man with his wife and children at home. Today, that worker profile is about 10% of the population, while the remaining workers are working couples, with or without children at home, and singles, some with children. Today’s work force is almost 50% female. Potter and Youngman (1995) reported a 1992 Gallup national opinion poll showed that 93% of those surveyed indicated that the benefits offered by a prospective employer were either very important or somewhat important in deciding whether to accept or reject a job.

The purpose of this study was to determine to what extent the selection of types of benefits to offer employees is affected by the size of company and type of industry.

The employers studied were representative of the various industries and company sizes in the greater San Jose/San Francisco Bay Area. The independent variables were the size of company and type of industry. Employers were polled as to which benefits were provided, criteria for choosing benefits, usefulness of the benefit package in recruiting and employee retention, rank of benefits with industry competitors, and priority of benefit cost within the company. The dependent variables were the benefits selected by the companies and offered to their employees, and choice criteria.

The purpose of the study was to explore the criteria used by employers when choosing which benefits to provide for their employees. The questionnaire was sent to the manager in charge of benefits. Companies were selected from the Society of Human Resources (SHRM) membership guide and The Guide to Silicon Valley Careers, published in 1996 by the editors of the San Jose Mercury News. The hypothesis was that, excluding state- and federally- mandated benefits, the size of company and the industry type have the most effect on the choice of which benefits an employer provides for its employees.

The study has importance because it identified issues employers must confront regularly: the ability to attract good employees, ways to retain valuable employees, and the purpose of the benefit package. This information can then be compared to similar studies done in the past and possible trends or patterns identified. This information is not only relevant to the employers of different industries and company sizes, but also to employees, human resource managers, benefit providers, recruiters, insurers and legislators.

The study design was not a controlled study, which limited the ability to assess cause and effect.

The geographic location of the companies surveyed also limited the study. Because only companies in the San Francisco/San Jose Bay Area were included, the results cannot be expected to be automatically true for all other areas and populations in the United States. There is a preponderance of computer-related companies in this area, which is also not typical of other areas and populations in the United States.

The variables studied (company size and type of industry) and generalization of the results also limited the study because there are, undoubtedly, other variables that account for the results. Since the companies were chosen from only two resources, not all companies operating in the Bay Area were eligible for inclusion in the study.

The total number of companies who responded to the questionnaire further limited the sample size. A disproportionate number of computer-related firms responded, limiting the types of industry represented by the respondents.

By definition, the sampling procedure was not truly a random procedure. After the roll of a die, it was determined to include only every third company from The Guide to Silicon Valley Careers. A second roll of the die started the selection process with the first company listed, then the fourth, seventh, etc. To take advantage of the researcher's ability to address letters to a specific human resource person, member names from the local chapter of SHRM were accessed. To increase the total number of companies surveyed to 500, SHRM members with a job title that included Human Resources Supervisor, Manager, and Vice President or any benefits position was included.

Chapter 2

Review of Related Literature

Employee benefits are often in the news, with typical articles offering conflicting thought-provoking opinions. They state such premises as "benefits are a right of employment", "benefits are being taken from employees", or "more companies are offering work and family benefits". One such article by Schine (1995) used data from the 1980 and 1993 surveys of the Employee Benefit Research Institute (EBRI) which compared the percentage of employees receiving benefits in medium and large companies. The focus of the commentary was on the changes being made to benefits plans: reduction in benefits offered to employees and cost shifting from employer to employee. An article by Cowans (1996) stated that "the workplace is becoming more family friendly". According to the article, employers now offer more benefits than they did in 1990. Examples cited were: childcare assistance (21%), flexible scheduling (11%), and adoption assistance (11%).

Employee benefits is a subject of interest to employees, employers and to the state and federal governments. The U.S. Department of Labor (DOL) periodically publishes statistics relating to benefits in conjunction with the Bureau of Labor Standards (BLS). The DOL lists benefits as:

• paid time off (holidays, vacation, jury duty, etc.)
• unpaid time off (leaves of absence)
• short-and long-term disability
• survivor benefits (life, accidental death and dismemberment, and survivor income)
• profit sharing
• health care (medical, dental and vision coverage)
• retirement income plans (defined benefit or contribution plans, stock options or purchase plans)

The federal government mandates that employers provide four types of benefits: social security, worker’s compensation, unemployment insurance, and family and medical leave. Other discretionary benefits are provided in order to attract and retain the highest quality work force possible within the employer’s resources.

• health insurance
• paid leave
• life, sickness, accident and disability insurance
• educational funding
• severance pay
• pensions
• employee assistance
• wellness programs
• child care or elder care assistance
• supplemental unemployment insurance
• subsidized commuting costs, meals, or recreation facilities
• employee discounts on merchandise or service
• relocation allowances

Potter and Youngman also believed that the health care reform debate has again focused U.S. employment policy on the question of whether or not employers should be required to provide their employees with a greater number of specific benefits. They believe that the United States must carefully consider public policy decisions concerning benefits. Because public policy mandates that employers provide specific benefits, labor costs are directly affected, which in turn affects competitiveness.

A paper presented by Johnson (1996) used data from the Employee Benefits Research Institute (EBRI) and the BLS. This paper defined benefits in the following categories:

• Paid leave: vacations, holidays, sick leave, other leave
• Insurance benefits: life, health, sickness, and accident insurance
• Retirement and savings benefits: pension and other retirement plans, savings and thrift plans
• Legally required benefits: social security, Federal and state unemployment insurance, worker's compensation and disability insurance (where required by law)
• Other benefits: severance pay, supplemental unemployment plans

Johnson also defined small establishments as those having fewer than 100 employees. His paper discussed compensation as a key role and incentive. Optimally, that compensation incentive matches the objectives of both the employer and employees. In addition to salary and wages, benefits are an important component in the total compensation package. Policies and mechanics of compensation systems are a signal to employees, which influence their expectations.

Similar to Johnson's definition of establishment size, Wiatrowski (1994) defined establishments with fewer than 100 workers as small establishments. He analyzed data from the BLS comparing large and small establishments. Samples of findings include the following breakdown of the workforce by two company sizes:

Variable Small Large Establishment

Technical/sales/administrative 32.2% 33.3%

Operators/fabricators/laborers 14.7% 20.2%

16-24 year old workers 22.2% 17.0%

25-44 year old workers 51.0% 58.1%

Less than 4 years high school 18.6% 14.3%

4 years college or more 18.4% 22.7%

full-time, full year 61.4% 75.1%

He found numerous similarities between companies, regardless of size of establishment. An example is the average cost of a defined benefit pension plan at small establishments was 1.63 percent of earnings, multiplied by number of years of service, while the average for large establishment was slightly lower at 1.49 percent of earnings, multiplied by number of years of service. He noted that, on average, compensation cost per hour worked at large establishments was approximately $6, and approximately $4 for small establishments.

An important factor to consider in comparing different establishment sizes is the different Federal and State laws and regulations that cover compensation and other labor practices, which often do not apply to, or are modified for, small businesses. Wiatrowski's final comments pointed out there was surprisingly little information by size of establishment, especially for small establishments, as well as very little demographic information on workers in small establishments. He further stated that it appeared that differences in compensation might not be solely influenced by establishment size, but by certain types of industries, occupations, and proportion of unionization.

Burke and Morton (1990) analyzed data from the BLS 1988 Employee Benefits Survey (EBS), which surveyed three million private-sector establishments, all with more than 100 employees. They divided establishments into those who were goods-producing (46%), those who were service producing (33%), and other services (21%). The companies were also divided into two sizes: 100-499 employees (44%) and greater than 500 employees (56%). Their analysis showed:

1. Goods-producing industries (95%) are more likely to provide medical coverage as compared to 85% of service-producing industries. Company size showed little variation in coverage: 88% coverage for smaller companies compared to 91% coverage of larger companies.
2. Three-quarters of employees in goods-producing industries and larger companies are covered by defined benefit pension plans. A defined benefit pension plan obligates employers to calculate retirement benefits using a formula specified in the plan. Only one-half of employees in service-producing industries and smaller companies have defined benefit pension plans.
3. Goods-producing industries were more likely to receive sickness and accident insurance, while sick leave is more prevalent in service-producing industries. However, sick leave was available to 81% of employees in service-producing industries, but only 54% of employees in goods-producing industries.
4. There was a wide variation in benefits coverage within the industrial groups and company sizes. For instance, wellness programs were provided to 17% of employees in both goods-producing and service-producing industries, but only 6% of small companies offered wellness programs, compared to 26% of larger companies.

The conclusion of Burke and Morton’s study was that company size was a more pronounced indicator of differences in number of benefits provided to employees than the type of industry.

Meyer and Fox (1974) stated there is a trend toward uniformity of treatment for all employees under various benefit plans. For example, they stated there seemed to be a trend toward blue-collar workers being eligible for full major medical coverage and for factory workers to receive fully paid two-week vacations. Meyer and Fox also stated that workers are now more likely to receive benefits that had formerly been reserved for executives.

Sweeney (1989) stated that by the late 1970’s 85.3 percent of Americans had at least nominal health coverage. He stated that in the late 1970’s, however, decades of progress toward universal coverage halted, and a decline set in. In 1986 the total number of insured Americans fell to 82.5 percent. Sweeney believed business cycles and the transition to a service economy were only part of the answer. Employers opted to cut back commitments to long-term workers, causing independent contractors and temporary workers to fill the work force. Sweeney also believed the erosion of workplace insurance has taken both a human and economic toll and reforms are necessary to relieve the strain on the health care and retirement systems.

The 1985 EBRI suggested tax laws favoring employee benefits were enacted in the belief that extensive coverage of workers and their families is a desirable social policy. The EBRI also believed tax advantages broadly distribute pensions and health insurance among the lower- and middle-income workers, an indication of success. They further stated that although favorable tax treatment may not be crucial to the existence of some benefits, it is essential to the provision of employee benefits at all income levels.

The Garfield Group (1992) believed that throughout the industrial era, businesses were oblivious to the human and environmental consequences of their actions. Technology was responsible for eliminating the competitive barriers of geography and company size. Several common forces cause companies to transform, and deregulation, social problems, and employees themselves also influence the structure of the workplace.

Yate (1991) pointed out that times have changed since women first entered the ranks of the regular work forces and that companies need to recognize that female workers may have different needs. For example, women workers seek out companies that appreciate the importance of affordable day care and are aware that the lack of child-care is a major impediment to fully productive work.

The influence of occupational characteristics and gender in employer sponsored medical fringe benefits was the topic of research by Secombe (1993). The five dependent variables measured were health insurance, dental care, life insurance, eye care, and sick leave. The data suggested:

1. Men were more likely than women were to receive each medical benefit from their employer.
2. Occupational conditions largely account for gender differences in coverage.
3. Structural conditions of the occupation were more likely to predict the receipt of employer sponsored medical benefits than were human capital attributes.
4. Hazardous working conditions were not compensated for with medical benefits, except for eye care coverage
5. Gender influenced the relationship between several occupation conditions and benefit coverage.

The data used were from the Quality of Employment Survey, collected in 1977 by the Employee Standards Administration of the DOL and included persons over age 16 who worked more than 20 hours per week. In the sample, health insurance is provided for 84% of men and 72% of women, life insurance is provided for 72% of men and 63% of women, and 67% of men and 60% of women receive sick leave. Dental care coverage is provided to 37% of men and 22% of women, while eye care coverage is provided to 31% of men and 11% of women. Additionally, persons who received a higher percentage of benefits were also more likely to work in large firms, to be paid more in salary, have higher earnings. Unionization accounted for higher rates of dental and eye care coverage. In the discussion, it was also noted that the plight of the uninsured has the attention of Congress.

Health benefit satisfaction in the public and private sectors was the topic of research by Davis and Ward (1995). The article addressed the control of spiraling health care expenditures, the results of cost containment strategies being used in health plans, and employee satisfaction. The study was conducted using public and private sector employees for comparison purposes.

Benefit satisfaction was measured on a five point Likert scale and measured only health benefits. Organizational commitment was measured as either affective (emotional), continuance (cost of leaving the organization), and normative (feelings of loyalty or obligation to the organization). Quality and convenience of care were scales that measured the employee perceptions of such items as technical quality of care and convenience of emergency room locations. The results of the analyses revealed that public sector employees experienced significantly greater benefit satisfactions, normative commitment to the organization, and greater quality and convenience of care. The study provided evidence concerning the complex issue of measurements of benefit satisfaction. The significant differences between public and private sector employees is an issue that warrants some attention from management, as public sector employees were consistently higher in levels of satisfaction on several variables.

Also addressing the importance of employee benefits to public sector employees was an article in Public Personnel Management (Bergmann, et al., 1994). The importance of fringe benefits in attracting, retaining, motivating and satisfying employee needs was the focus of the study. The results suggest that, due to the influence benefits have on employee decisions, organizations need to consider the needs and desires of the workforce and labor pool when benefits packages are designed. The article also stated that benefits packages need to be organization specific, as well as congruent with the goals of the organization. Organizations need to shop carefully, educate employees and potential employees, and consult with employees about benefit needs and changes.

Herman (1990) divided the methods that employers utilize to keep good employees into different categories, including environmental, relationship, task-focused, compensation, and people growing strategies. He stated the change in the composition of the work force and escalating employee benefit costs caused employers to take a serious, critical look at the type of benefits they provide, how they provide them, and how the costs can be significantly reduced. Including statutory benefits, companies generally spend in excess of 40 percent of payroll on employee benefits, with health care comprising the single more significant portion.

Williams (1995) did a study that used data from library employees to examine a preliminary theoretical model of antecedents of employee benefit level satisfaction. The variables most highly related to employee satisfaction were benefit administration, contribution cost for medical insurance, and benefit comparisons as perceived from others.

In the study Williams also stated there is evidence to suggest that employee satisfaction has been on the decline since 1970. Her discussion noted that other research showed employees who met three criteria showed more satisfaction with benefits:

1. were more satisfied with their pay
2. had been with the employer longer
3. were less educated

Williams also stated that satisfaction was strongly related to an accurate employee perception of the benefits actually received. The desired benefits included medical, dental, vision, disability and life insurance, holiday, vacation and sick pay, paid and unpaid family leave, medical and dependent care spending accounts, paid educational leave, tax-deferred annuities, and retirement contributions from the employer.

Knoke (1994) did a study of the 1991 National Organizations Survey to determine the extent of employee benefit packages. His research identified three areas of concern: personal benefits (medical, dental, life insurance, pension and drug/alcohol abuse programs), familial benefits (maternity leave, child and elderly care, sick leave and job training), and participant benefits (cash bonuses and profit sharing). He tested the organizations at three organizational levels: human capital investments, organizational capacity, and environmental conditions.

Human capital interpretations emphasized that firms seek to protect themselves against future loss of their investments in increasing employee productivity. Knoke stated that empirical evidence suggests that labor turnover is inversely related to firm-specific human capital investments, whereas actual productivity may be unrelated to employee seniority. Those findings, as well as the difficulty of separating firm and worker investments in human capital, cast doubt on the usefulness of human capital assumptions in explaining variation in benefit provisions.

Another perspective on why firms offer more diverse or generous benefits emphasized organizational capacity, especially the ability to achieve economies of scale. Organizational capacity was identified through establishment size, parent organization and size, average and net compensation levels, profit rate, concentration level (percentage of industry assets), age of the company, worker demand, percentage of employees who were female, white or part-time employees, and unionization. Prior research by Brown, et al. (1990), determined that organization size is strongly correlated with many firms and worker behaviors including investments, training, turnover, wages and fringe benefits.

Knoke stated that firms face complex and unpredictable external environmental processes in tight labor markets and highly competitive product markets. Environmental conditions included complexity (techniques, information and skills needed), uncertainty (difficulty in making long-range plans), competition, average number of future problems within the next three years, benchmarking, institutionalization (governmental involvement), unemployment rates, and economic sector (public, private non-profit, and profit-making). Firms seek to acquire dependable and reliable workforces by offering employees more comprehensive benefit packages, securing a workforce that is committed to the organization.

Knoke measured each benefit as a dichotomy and his results showed that personal benefits had an internal reliability of .87 (Cronbach’s alpha), familial benefits had an alpha of .65 and participant benefits had an alpha of .49. He also stated that 60% of workers employed by firms that offer at least five programs were covered by personal benefits, while less than 25% of employees were covered by four familial benefits, and almost half had neither of the participant benefits. Secondly, he found that the higher the percentage of women, part-time workers, or non-white workers in the establishment’s workplace, the less likely the employer was to offer personal and participant benefits. Thirdly, larger establishments were more likely to provide all three benefit combinations. Additionally, research found that with greater market competition, institutionalization and use of benchmarking criteria, a larger number of benefits were offered to employees. Knoke’s final conclusion was that conventional employee-centered benefits (medical, dental, life and disability) are most widely offered by employers, while family welfare benefits (leave, childcare, and training) were not so pervasive, and bonus plans were least prevalent. Instead, the major prerequisites to more comprehensive benefits appeared to be larger establishment size and market rivalry.

A worker’s willingness to pay for job attributes was measured in a study by McCue and Reed (1996). These researchers used two questions to form the core of their analysis. The first concerned the monetary premia/penalties that workers attach to differences in alternative kinds of work, while the second asked how much heterogeneity existed across workers in their job evaluations. Participants were surveyed in 1979 and asked to respond either positively or negatively as to whether they would accept a given type of work at a certain amount of pay. There were six types of work given: supermarket checkout, national park work, hamburger place, dishwashing, cleaning person, and neighborhood cleanup. The subjects were two groups between the ages of 16 and 22. The first group was over-represented by Hispanic, black, economically disadvantaged non-Hispanic, non-black youth, and military personnel, while the second group was comprised of white, non-Hispanic males who were slightly older with more education. The mean for the first group ranged from $3.75/hour for supermarket work to $5.15/hour to clean neighborhoods. The mean for the white male group ranged from $3.82/hour for working in the parks to $5.55/hour for cleaning. Age, education, and previous work experience represent traditional human capital variables. The theory is consistent that workers with greater human capital will have higher reservation wages. McCue and Reed concluded that it is possible that the differences in wages were picked up in differences in other pecuniary dimensions of the job, such as superior benefits (pensions, health insurance, etc.), promotional opportunities, or faster wage growth. They interpreted their results as evidence that a worker’s valuation of nonpecuniary dimensions of work was substantially larger than previous research indicated. This study illustrated the importance for human resources personnel to address the labor market problem of matching workers and jobs and the implications of employee retention.

Flynn (1995) questioned the use of "employee-friendly" benefits and "hand-holding" programs as effective in recruiting or retaining employees and in increasing productivity. He claims employees are overworked, stressed out, and exhausted so additional benefits do nothing to solve the real problem. Flynn stated that human resources personnel make the mistake of not being partnered with the company. Human Resources need to evolve into the future instead of being paternalistic and "killing with kindness". He backed these statements with the results of a Towers Perrin survey of companies with more than 100 employees. The report showed that: 88% of the companies have an Employee Assistance Program (EAP), 65% have fitness centers, 43% have non-business-related tuition reimbursement, 37% have subsidized lunches, and 10% have onsite dry cleaning and/or hair salon services. Flynn's research addressed three basic questions: cost control or priority, recruitment tool, and productivity.

Flynn's research showed that human resources professionals did not consider controlling benefits costs to be among their top four priorities. He cited surveys by The Hay Group, Malcolm Baldrige Award winners and Fortune "Most Admired Companies of 1995" to support this premise. Further, Flynn quoted EBRI and Gallup Organization surveys of employees that showed people who turned down jobs did so because the salary was inadequate (31%), did not think they would like the job (30%), and were unwilling to relocate (18%). Benefits were mentioned only 7% of the time.

Examples were given of benefits thought to improve productivity or retain employees. It was found that on-site childcare has a definite competitive advantage if it provides back-up care when schools are closed, thus saving lost workdays. Companies must critically assess what they want to accomplish and focus on a strategy. Some solutions may not incur additional costs, such as flextime to accommodate fluctuating workflow. Surveys tended to show that employees wanted back their time as it is the most precious commodity for many people.

Flynn suggested that, in the future, benefit programs will be assessed and overhauled and expects to see more flexible benefits, benefits vouchers, voluntary, and portable benefits.

O'Reilly and Caldwell (1980) surveyed Master of Business Administration (MBA) graduates immediately after accepting jobs and again six months later. They hypothesized the subjects who made job choices on an intrinsic basis (job interest and advancement opportunity) would be more satisfied that those who made choices based on extrinsic job features (salary, location, family pressures). The correlation between the set of eight intrinsic and extrinsic considerations assessed in the first questionnaire and the two variables assessed in the second questionnaire presented several notable relationships that supported the hypothesis. Salary was not highly correlated with job satisfaction, although location was. It is interesting to note that employee benefits were not included in the study, nor were any references cited pertaining to employee benefits. Studies need to be done on whether or not benefits are important variables in employee recruitment equations.

Hewitt Associates issued the results of their survey "Salaried Employee Benefits Provided by Major U.S. Employers in 1990 and 1995" which shows benefit trends. Their conclusion was that all major benefit areas have experienced and expansion in choice during the 1990’s. Examples from the survey are:

Bohl (1996) surveyed 1800 benefits managers (208 responded) with a questionnaire that focused on the newer, non-traditional convenience benefits, instead of the conventional benefits, such as medical and life insurance and paid vacations. Of the respondents, 54% were manufacturers, 38% service and 8% other. Bohl's group hypothesized that a combination of flexible-time policies and worksite conveniences would correlate with positive ratings on an impact scale. Bohl found support for the hypothesis among employees with larger worksites (greater than 1000 employees), who tended to offer more convenience benefits and those who give higher ratings to the impact on productivity and morale. On a scale of five, ratings ranged from 2.89 for small firms (less than 100 employees) to 3.21 at larger firms. On average, the survey respondents had 4.4 workplace conveniences at their company. Some innovative on-site convenience benefits that the survey respondents cited included: massage, mammograms, oil-changes, car washing, barber/hairdresser, shoe repair, floral service, video rental, espresso carts and access to company's parcel service to send packages at Christmas.

Union and non-union workers received different numbers and types of benefits according to a survey by Wiatrowski (1994). He stated that one-fourth of the full-time workers in 1991 were union members in medium and large establishments. However, it was difficult to conclude whether union or non-union workers had "better" benefits or whether their needs were met by a variety of benefits. Other reasons, such as industry type, occupation, and location (urban, rural) may also contribute to the differences in benefit participation. Certain types of benefits had little or no difference between union and non-union workers. These included paid holidays and funeral leave. Wide variation occurred with disability benefits, sickness and accident insurance. Non-union members were less likely to participate in a retirement plan (74%) versus union members (90%). Flexible benefit plans (medical and dependent care reimbursement) were available to a small percent of both union and non-union workers.

Wiatrowski suggested further studies be done using the variables of geographic location, industry type, occupation, and full- or part-time status. He also suggested that variations in benefits for different groups goes beyond plan participation, as plans frequently differ in design.

Chapter 3

Methodology

The subjects involved in the study were various companies in the San Jose Bay Area and were representative of numerous industries and various company sizes. The companies were chosen from two sources. The companies in the first source were chosen from the eight categories listed in The Guide to Silicon Valley Careers. This reference book was compiled by the San Jose Mercury News Business News Department and published in 1996. The book was advertised for sale in the newspaper and several individual company profiles are published weekly in the business section of the newspaper.

The second source was a list of human resource personnel with a title of Benefits, Supervisor, Manager, or Vice President, as listed in the 1996-97 Santa Clara Valley Chapter of the Society for Human Resource Management (SCVC/SHRM) Membership Roster. As a member, the researcher receives this directory each year. These two resources provided a broad spectrum of employers in the Bay Area. Additionally, the use of the SHRM Roster enabled the researcher to send letters to a specific individual, instead of a generic title.

The geographic area represented included Oakland, Hayward and Fremont in the East Bay; South San Francisco, San Mateo, Menlo Park and Palo Alto in the West Bay; and Mountain View, Sunnyvale, Santa Clara, Cupertino, Campbell, San Jose, Los Gatos, and Scotts Valley in the South Bay.

Because the subject of the questionnaire was benefits, the surveys (Appendix A) were mailed to the benefits or HR supervisor or manager at each company if a specific person was not identified through the resources available. The companies surveyed ranged in size from less than 100 employees to greater than 5000 employees.

A cover letter (Appendix B) requested participation in the survey and a self-addressed stamped envelope for returning the completed questionnaire was enclosed. The return envelopes were addressed to the researcher's home address. Each respondent was advised that the study was voluntary, was not being done in connection with any company, and was promised anonymity. A form (Appendix C) was included for the respondent to complete if they wished to receive a copy of the aggregated survey results and/or the opportunity to be entered into a drawing for $50 worth of lottery tickets as appreciation for participation in the study. It took approximately 10 minutes for the participants to complete the questionnaire and they did not incur any costs by participating in the study.

The research was conducted through the use of a questionnaire with eight questions that was mailed to the Benefits or HR management of various companies. The participating companies received the survey during the first week of June and were requested to return them by June 21, 1997. All surveys returned to the researcher by August 18, 1997 were analyzed. Each respondent had the options of entering a appreciation drawing and/or requesting a copy of the aggregated results. All those who returned a request to enter the appreciation drawing were eligible to win $50 worth of lottery tickets if their request was received by June 21. The drawing was offered as an incentive and intended to be a thank you gift.

The survey questionnaire was developed by the researcher and consisted of eight questions. The first question asked the respondent to identify which discretionary benefits their company made available to employees. Questions 2, 3, 4, and 5 asked the respondent to rate their benefit package on a scale of 5-1. It asked if it was useful in recruiting employees (very useful - not useful), useful in retaining employees (very useful - not useful), comparable to their competitor's benefits package (comparable – poor) and priority of cost when choosing benefits (high - low). Question 6 asked the respondent to prioritize ten criteria when determining the choice of benefits for their company. Questions 7 and 8 asked the respondent to identify the type of industry and company size. A section for comments was also provided.

The researcher mailed questionnaires to a total of 504 companies from two resources: The Guide to Silicon Valley Careers and SHRM membership roster. There were a total of eight categories with 728 total companies represented in The Guide to Silicon Valley Careers. After the roll of a die, it was determined to include every third company from the alphabetical listing in The Guide to Silicon Valley Careers, for a total of 243 potential participants. The second roll of the die was a three, so the selection process was started with the first company listed, then the fourth, seventh, etc. The letter and questionnaire were sent in care of the Benefits Manager. The eight categories in the book were then consolidated into four groups: computer, health, education/non-profit/public, and other. 243 surveys were mailed out from this source with the category breakdown as follows:

To increase the total number of companies to approximately 500 and to take advantage of the researcher's ability to address as many letters as possible to a specific individual, the annual membership roster in SHRM was accessed. Choosing only California members with a position in the Benefits Department or a title of supervisor, manager, or vice president of the Human Resources Department increased the total number of participating companies by 265, for a total of 508 eligible participant companies.

The surveys were mailed the first week of June, 1997. Only surveys received by June 21, 1997 were entered into the drawing for the lottery tickets, but all surveys received by August 18, 1997 were analyzed.

The independent variables in this study were the type of industry and size of company and corresponded to questions 7 and 8. Four industry type choices were listed on the survey:

1. computers/software/technology/semiconductor technology/peripherals technology/other high technology
2. biomedical/healthcare technology
3. educational/public/non-profit
4. all other companies

Company size ranges on the questionnaire were:

1. less than 100 employees
2. 101 to 500 employees
3. 501 to 5,000 employees
4. greater than 5,000 employees

The number of benefits was the dependent variable and was determined by the responses to Question 1. Benefits were later grouped into nine categories:

1. Education: tuition reimbursement
2. Family: child care assistance, eldercare, flexible spending accounts
3. Financial: employee stock option purchase plan, 401(k) and/or pension plan, employer contribution/match to 401(k)/pension plan, life insurance, voluntary disability plan
4. Medical: health care, dental, vision, employee assistance program
5. New Hire: relocation allowance or reimbursement, sign-on bonus
6. Subsidy: subsidized meals, employee discounts for merchandise
7. Supplemental: supplemental life insurance, supplemental disability insurance, supplemental unemployment insurance
8. Time Off: sabbatical, personal time off (combined sick and vacation time), paid time off (vacation, jury duty, military leave, sick leave)
9. Wellness: gym or health club reimbursement, gym or health club on premises, wellness program (health fair, weight loss/stop smoking programs)

All responses were treated confidentially and completed questionnaires were returned to the researcher’s home address. As the researcher is self-employed at home, only the researcher had access to the data. The data were entered into the Microsoft Windows 95 Excel program upon receipt and hard copies of the surveys were filed with thesis documents in the home office.

Questions 1 (discretionary benefits) and 7 (type of industry) were nominal data; questions 2 (recruiting), 3 (retaining), 4 (industry comparison), 5 (cost) and 8 (number of employees) were interval data; and question 6 (reasons for benefit choice) was ordinal data, which was ranked on a scale of 1-5.

The discretionary benefits data were categorized into nine groups and compared to type of industry and size of company using a chi-square calculator program developed by Georgetown University and accessed through the World Wide Web (www).

Questions concerning recruiting, retaining employees and cost, as well as the question asking the criteria for benefit choice, were analyzed by ANOVA.

Chapter 4

Results

A total of 508 surveys were sent via the U. S. Post Office on June 5, 1997 and the first surveys were returned on June 12. Table 1 shows when the total of 266 completed surveys and 16 returned unopened surveys were received.

Table 1

Table 1 shows that within two weeks 49% of the surveys had been returned and by July 12, 55% of the surveys had been returned. The last survey was received on August 18, 1997.

Of the survey respondents, 64% requested a copy of the study results and 59% requested entry into the thank you drawing for $50 worth of lottery tickets.

The survey asked participants to check which of the 25 benefits listed their company provided and identify any others provided that were not listed on the survey. Five benefits were provided by greater than 95% of the responding companies. They were:

1. dental 98.5%

2. life 97.4%

3. (tie) health 95.9%

5. 401(k) and/or pension plan 95.1%

In addition, five benefits were provided by less than 20% of the responding companies. Those benefits were:

This study expanded on the five benefit categories defined by the Johnson (1996) study (paid leave, insurance, retirement and savings, legally required, and other benefits) and the six Hewitt Associates (1995) survey categories (retirement, disability, group life, health, childcare and vacation). The nine benefit categories used in this study are listed below with the corresponding benefits from the survey.

1. Education: tuition reimbursement
2. Family: child care assistance, eldercare, flexible spending accounts
3. Financial: employee stock option purchase plan, 401(k) and/or pension plan, employer contribution/match to 401(k)/pension plan, life insurance, voluntary disability plan
4. Medical: medical, dental, vision, employee assistance program
5. New Hire: relocation allowance or reimbursement, sign-on bonus
6. Subsidy: subsidized meals, employee discounts for merchandise
7. Supplemental: supplemental life insurance, supplemental disability (insurance, supplemental unemployment insurance
8. Time Off: sabbatical, personal time off [combined sick and vacation time], paid time off [vacation, jury duty, military leave, sick leave]
9. Wellness: gym or health club reimbursement, gym or health club on premises, wellness program [health fair, weight loss/stop smoking programs]

With legally required benefits, five benefits offered by Bay Area employers matched the basic benefit categories deemed desirable by both Johnson (1996) and Hewitt Associates (1995). Those five basic benefits were dental, life, health, paid time off and pension plan.

The benefits selected by the survey respondents were grouped into categories and then totaled by both type of industry and size of company.

On the survey there were three specific types of industries listed, plus a category labeled "other". The three industry types provided were:

• computers/semiconductor/high-technology (142 respondents - 53.2%)
• biomedical/healthcare (31 respondents - 11.6%)
• educational/public/non-profit (11 respondents - 4.1%)

The "other" category asked the respondent to identify their type of industry. From that category, four additional industry types were identified:

• manufacturing (19 respondents - 7.1%)
• financial/legal (10 respondents - 3.8%)
• service/retail (20 respondents - 7.5%)
• trades/other (32 respondents - 12%)

Table 2 shows the breakdown of all industry types with the mean for each of the nine benefit categories.

Table 2

The types of industry were subdivided so the data could be analyzed by chi-square. Table 3 shows the breakdown of the two categories most represented by the survey responses: computer/high-technology and biomedical/healthcare. The third category includes all other industries.

Table 3

________________________________________________________________________

With 16 degrees of freedom, the chi-square value was equal to 24.06, p > .05 (critical value = 26.30). Thus, there was no statistically significant relationship between the nine benefit categories and the types of industry.

A chi-square analysis was done using the following four industries: computer/high-technology, biomedical/healthcare, manufacturing, and service/retail. Those four types of industry accounted for 79.4% of the total survey respondents. Table 4 shows that subset of industry types.

Table 4

________________________________________________________________________

For the calculation the degrees of freedom was 24 and the chi-square value was equal to 21.08, p > .05 (critical value = 36.42). As with the comparison presented above, this calculation showed that the distribution by four industry types was also not significantly different.

Size of company was divided into four categories on the questionnaire:

• less than 100 (57 respondents - 21.4%)
• 101-500 (130 respondents - 48.7%)
• 501-5000 (63 respondents - 23.6%)
• greater than 5000 (17 respondents - 6.4%)

Table 5

________________________________________________________________________

The chi-square analysis of the nine benefit categories and the four sizes of company showed a chi-square value of 11.41, p > .05, 24 df (critical value = 36.42). As with the types of industry, the benefits provided by the four different company sizes shows no statistically significant difference or relationship.

By combining the group of 17 companies with greater than 5000 employees with the group with 501-5000 employees, three company sizes were created:

1. Small size companies: fewer than 100 employees
2. Medium size companies: between 101-500 employees
3. Large size companies: more than 501 employees

Table 6 shows a chi-square analysis with the three sizes of company.

Table 6

________________________________________________________________________

The chi-square value for this breakdown by small, medium and large company size with benefits was 12.45, p > .05, 16 df (critical value = 26.30). There was no statistical significance of the benefit categories associated with size of company.

Because all the chi-square calculations done on the survey data for this study showed no statistically significant relationship between companies when grouped by size or type of industry and choice of benefits package, this study concluded there was no variation in benefits provided by employers in the Bay Area for those two variables. However, according to the Burke and Morton (1990) study, there was wide variation in benefit coverage within industrial groups and company sizes. Even though the studies disagree on the variables of company size and industry type, they agree on certain specific benefits that are provided. Burke and Morton stated that only 6% of small companies offered wellness programs, compared to 26% of larger companies. The Bay Area study mirrored their study in that respect, showing that 10% of small companies (less than 100 employees) provided wellness benefits, while greater than 26% of larger companies with 501 to 5000 employees provided wellness benefits. Similarly, 96% of all Bay Area companies (both by size and by industry) provided health coverage, compared to the 85% - 95% of companies grouped by industry type and company size in the Burke and Morton study. Further comparison between the studies indicated that 94% all Bay Area companies provided pension plans, while only 75% of goods producing companies offered pension plans in the Burke and Morton study.

The benefits that employees most desired, as identified in Williams’ (1995) study, are also being provided by the majority of employers in the Bay Area study. Those benefits included medical, dental, vision, life insurance, retirement plans, paid time-off, educational leave, and medical and dependent care spending accounts (FSA). Each benefit was provided by more than 70% of all employers in the Bay Area, regardless of industry type or company size.

The respondents were asked to rate the benefit package of their company as to its usefulness in recruiting new employees, retaining current employees, and whether the benefit package was competitive with other companies within their type of industry. On a scale of [5] high priority to [1] low priority, Table 7 shows the mean and variance of each choice. Table 8 shows the ANOVA. Analysis of variance showed no statistical significance between the three choices offered the survey respondents when rating the usefulness of their benefit package.

Table 7

Table 8

Using a single factor ANOVA, the F test showed a value of 13.35. Because the critical value of F was 3.01 at the .05 level, there was significance between the three uses of benefits packages. Table 9 shows a post hoc analysis done using a Tukey-Kramer multiple comparison. The analysis showed there was a statistical difference between recruiting and retaining employees, but not between retaining employees and competitiveness or between recruiting and competitiveness.

Table 9

mean – Recruiting	4.07
n – Recruiting	267
mean – Retaining Employees	3.76
n - Retaining Employees	267
mean – Competitive	4.12
n - Competitive	267
MSW	0.76
Q statistic	3
Comparison: Recruiting to Retaining Employees
absolute difference	0.31
standard error of difference	0.00
critical range	0.01
means are	Different
Comparison of Recruiting to Competitiveness
absolute difference	0.05
standard error of difference	0.08
critical range	0.25
means are	Not Different
Comparison of Retaining Employees to Competitiveness
absolute difference	0.36
standard error of difference	0.32
critical range	0.96
means are	Not Different

There were ten choices listed on the survey and respondents were asked to rank only their top five choices. Twenty-nine percent of the participants answered this question incorrectly or did not answer it at all. Of the 71% who responded correctly, the criteria were ranked on a scale from 5 (high) to 1 (low) and the means and variances are shown in Table 10. Table 11 shows the ANOVA done on all ten reasons listed on the questionnaire.

Table 10

Table 11

Using a single factor ANOVA, the F test showed a value of 43.23. Because the critical value of F was 1.88 at the .05 level, there was a huge significance between groups.

Additional analysis was done on the top three reasons employers choose their benefits and a second analysis was done between the fourth, fifth, and sixth reasons. A Tukey-Kramer multiple comparison was used for each group of three and the comparisons are shown in Table 12 and Table 13. Broker suggestion, employee surveys, and union requirements were not analyzed due to the fact they were criteria for choice with a statistical mean less than 1.00.

Mean – Recruiting	1.71
n-group 1	267
mean - Retaining employees	1.58
n group 2	267
mean - Cost	1.52
n- group 3	267
MSW	2.3
Q statistic	1.88
Comparison: Recruiting to Retaining Employees
absolute difference	0.13
standard error of difference	0.01
critical range	0.02
means of groups 1 and 2 are	Different
Comparison: Recruiting to Cost
absolute difference	0.19
standard error of difference	0.15
critical range	0.28
means of groups 1 and 3 are	Not Different
Comparison: Retaining Employees to Cost
absolute difference	0.06
standard error of difference	0.86
critical range	1.61
means of groups 2 and 3 are	Not Different

Table 13

mean - Employee Requests	1.34
n group 1	267
mean – Competitiveness	1.28
n group 2	267
mean - Management Preference	1.09
n group 3	267
MSW	2.3
Q statistic	1.88
Comparison: Employee Requests to Competitiveness
absolute difference	0.06
standard error of difference	0.01
critical range	0.02
means of groups 1 and 2 are	Different
Comparison: Employee Requests to Mgmt Preference
absolute difference	0.25
standard error of difference	0.15
critical range	0.28
means of groups 1 and 3 are	Not Different
Comparison: Competitiveness to Mgmt Preference
absolute difference	0.19
standard error of difference	0.95
critical range	1.79
means of groups 2 and 3 are	Not Different

In the first post hoc analysis, there was a statistical difference between recruiting and retaining employees, but not between retaining employees and cost or between recruiting and cost. In the analysis of the fourth, fifth, and sixth reasons for benefit choice, there was a statistical difference between employee requests and competitiveness, but not between employee requests and management preference or between competitiveness and management preference. Responses to survey questions 2, 3, 4, and 6 seemed to verify that the two major reasons employers choose to provide benefits are recruiting and retaining employees. However, if employee requests (written and verbal) and employee surveys had been combined into one group, that would have become the reason most selected by employers in the Bay Area when employers choose which benefits to provide for their employees. Because they were individual items on the questionnaire, they were analyzed separately.

In the Bay Area, cost was ranked third, below recruiting and retaining employees. Again, if all employee inputs (verbal, written, surveys) were combined, cost would rank fourth, which is similar to Flynn’s (1995) research. His study stated that cost of benefits was not among the top four priorities for choosing benefits.

Survey respondents reported numerous other benefits provided at their companies. Bonuses, profit sharing, and other stock plans were each listed by six companies. The following benefits were listed by at least one respondent: training seminars, quarterly parties, sports leagues, referral awards, travel insurance, long term care, credit union, masseuse on-site, birthday dinners, medical advice hotline, severance pay, commute subsidy, free sodas and juices, adoption assistance, partner benefits, computer/hardware purchase assistance, and financial assistance. In addition, one company paid all benefit costs and felt that was an additional benefit to their employees. Another company noted that they try to match their benefits overseas with their domestic benefits, to equitably provide benefits for all employees in a global situation.

The Bay Area study is compared in Table 14 with a national survey done by Hewitt Associates. Extending the five year trend to seven years appears to indicate that more benefits are currently being provided throughout various industries and company sizes.

Table 14

Hewitt Associates (1995) showed that, between the years 1990 and 1995, there was a national trend toward providing more benefits for employees. The Bay Area provides all benefits, except childcare options, at levels above the national average. Because the FSA benefit includes an option for dependent care, the Bay Area survey respondents may not have checked childcare as a separate option, thus giving an inaccurate measurement of childcare options provided by employers in this geographic location.

Chapter 5

Summary and Conclusion

The purpose of this study was to explore relationships between such variables as size of company and type of industry in the greater San Jose/San Francisco Bay Area and the selection of discretionary benefits offered to employees. The literature review had indicated that, on a national basis, the type of industry and size of company were variables that predicted the number and type of benefits offered to employees. Adversely, the study results furnished statistical evidence that the benefit packages offered to employees in the Bay Area are not chosen by employers based on the variables of industry type and company size. The reasons employers chose for providing specific types of benefits were varied and showed great statistical differences. The two reasons most commonly stated were to recruit new employees and to retain the current workforce, followed by industry competitiveness and cost.

Surveys: It is speculated that the researcher’s inclusion of a drawing for $50 worth of lottery tickets enticed respondents to return surveys promptly to qualify for the drawing. It was also gratifying to receive a greater than 50% response rate. Judging from the comments made by the respondents, most questions were fairly complete and easy to decipher. The one exception was question 6, which was about the criteria used to select discretionary benefits. It was misinterpreted by almost one fourth of the respondents. Giving an example on the questionnaire might have made it clearer.

Another change on question 6 would have been to combine employee requests and employee surveys, as the total number of responses would have ranked employee requests through all methods--verbal, written and survey--as the number one reason employers chose to provide benefits. Not making that change may have skewed the results, because if the two had been combined and compared to the choices in Flynn’s (1995) research, both study results would probably have been similar.

Types of Benefits: The benefits offered in the Bay Area are numerous and match those provided on a national basis. It was interesting to note the additional benefits that employers offer, such as quarterly parties, referral awards, long-term care, credit union on-site and commute assistance. Further studies about those types of benefits would be of interest and could show the direction that employers are taking in the area of human resources. One such unanswered question is whether or not employers will be offering more "quality of life" benefits to employees.

Types of Industry: The most dominant industry in the Bay Area is the semiconductor industry and the majority of responses were from that industry. It would be interesting to do this study in a geographic location not dominated by the semiconductor industry. Likewise, it would be interesting to study locations where the semiconductor manufacturers are expanding, such as Oregon (Portland), Texas (Dallas/Austin) and Arizona (Phoenix) to see if, when, and how rapidly changes are instituted.

Size of Company: By combining the four company sizes listed on the questionnaire into three sizes (small, medium, and large), there was a more balanced representation of sizes. I had expected a larger number of employers in the fourth category: very large companies (greater than 5000 employees). However, there was no statistical difference in the use of three or four size categories.

Usefulness of Benefit Package: When compared post hoc, there was a statistical difference between recruiting and retaining employees, but not between recruiting and industry competitiveness or between retaining employees and industry competitiveness. It appears that for employers to remain competitive in the Bay Area, they must use their benefits package to recruit new employees while retaining their current workforce. Cost was not a determining factor when employers selected which benefits to provide, but I believe it may be a factor in selecting which benefit provider is contracted to provide the specific benefit. This would be an additional area to study.

Choice Criteria: Question #6 was confusing to about one quarter of the survey respondents. However, based on the information provided by the remaining participants, question #6 validated the answers selected by participants to questions 2, 3, 4, and 5.

Responses to this survey question showed that cost was not the major reason employers select which benefits to provide, as it was ranked after recruiting and retaining employees. Choice of benefits criteria and usefulness of the benefit package were closely related with recruiting and retaining employees ranked the two top choices for both.

One area that had little impact on benefit choice in the Bay Area was union involvement. In the study by Wiatrowski (1994), it was stated that it was difficult to conclude whether union workers had better benefits than non-union workers, or if industry type and location contributed to differences in benefits.

Since only 3.7% of responding companies in the Bay Area stated that union requirements were a criterion used when choosing benefits, it was not possible to make statements correlating union criteria to benefit choice. Apparently, though, lack of union involvement in the Bay Area did not hinder employees from receiving at least as many benefits as workers do anywhere else in the country.

Some comments made by respondents as to why they choose which benefits to provide for their employees included: "we care about/want to enrich our employees’ lives", "focus groups are more useful than surveys", "equity across geographic regions", and "tax smart". Clearly the message regarding choice of benefits is that it is a complex issue. Analysis reflected the fact that the choices differed greatly, but it could not be determined why that difference exists.

Trends: Hewitt Associates (1995) showed that, between the years 1990 and 1995, there was a trend toward providing more benefits for employees. From the data gathered in this research, the Bay Area appears to provide all benefits at levels above the national average with the exception of childcare options. Since the FSA benefit includes an option for dependent care, it is possible respondents may not have checked childcare as a separate option, thus giving an inaccurate measurement of childcare options provided by employers in this geographic location. It is speculated that the number and variety of benefits provided in the Bay Area is due to the specialized and highly recruited workforce more than the result of a national trend.

The results of this study indicated there was no statistical difference in the number and type of benefits being offered to employees due to the type of industry or the size of company in the San Francisco/San Jose Bay Area. This may be due to the fact that the Bay Area has a large concentration of high-technology/semi-conductor manufacturing firms that employ technical people of a highly specialized nature, who expect more than a monetary compensation for their work. A complete benefits package may be one way to offset the cost of housing in the Bay Area, however, studies would need to be done to verify this. It is possible that the benefits expected and received by the employees within the high-technology industry have set a standard that has become the accepted general practice in the local area. Incentives, then, may have become shared, more or less, across the different industries and size of companies in this geographic region.

Because this study did not show a statistically significant difference in the benefits provided in the Bay Area when using the variables of company size and industry type, further research is indicated to see if this is a local aberration or the current result of a national trend. Studies done where semiconductor firms are newly established, such as in the Arizona, Oregon, or Texas regions might show a trend that spreads to the surrounding communities. It is possible that non-high technology companies might provide a complete, varied benefit package, and may do so either before or after high-technology companies provide the same benefits.

Additional studies would be of value to ascertain if there is a chronological trend for inclusion of benefits by high-technology companies when the Bay Area high-technology economy became robust again and workers in demand. Wiatrowski (1994) also suggested that studies be done using the variables of geographic location, industry type, occupation, and employee status (full or part-time). The study done by Knoke (1994) suggested that organizational capacity was responsible for diversity of benefits offered to employees. Establishment size, age of company, worker demand, percentage of female workers, ethnic diversity and compensation levels are variables that define organizational capacity and offer ample variations for study.

Further studies in this field would be revealing, especially using the multitude of variables identified above, as well as dividing benefits into categories such as basic needs and geographically specific (i.e., commute programs). The information acquired from those diverse studies could then be used to educate employees, as well as assist benefits administrators and vendors, human resource personnel, and legislators in their quest to track the current status and predict future trends.

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Appendix A: Benefits Survey

Appendix B: Cover Letter

Re: Research Help Might Win Lottery!

Appendix C: Request to Receive Copy of Results/Enter Lottery Form

Appendix D: Glossary

ANOVA Analysis of Variance

BLS Bureau of Labor Standards

DOL Department of Labor

EAP Employee Assistance Program

EBRI Employee Benefit Research Institute

EBS Employee Benefit Survey

ERISA Employee Retirement Income Security Act

ESOP Employee Stock Option Plan

FMLA Family and Medical Leave Act

FSA Flexible Spending Accounts

HMO Health Maintenance Organizations

HR Human Resources

MBA Master of Business Administration

OASI Social Security's Old Age and Survivor Insurance

PPO Preferred Provider Organization

PTO Personal Time Off

SHRM Society for Human Resource Management

www World Wide Web