ECONOMIC PROTECTION AGAINST HAZARDS ~ SagalaAya

In addition to old age and survivors' insurance and unemployment compensation required by the Social Security Act, and workers' compensation required by fifty state laws, most organizations voluntarily provide a number of other programs designed to help employees when faced with adversity. Among these are (1) guaranteed annual wage, (2) life insurance, (3) health insurance, (4) medical services, and (5) credit unions.

GUARANTEED ANNUAL WAGE

Some progressive managements have long been aware of the value of stable operations and steady employee earnings. The number of managements that have been willing and able to create and administer a private plan to stabilize employment and/or earnings is relatively few_ Perhaps the three best known plans of this type are the systems of the Procter and Gamble Company, George A. Hormel Company, and the Nun-Bush Shoe Company. It will be noted that all three companies are engaged in producing a consumer good.

Most of the private annual wage plans have tree basic characteristics: (1) they guarantee a certain number of weeks of employment and/or wages, (2) they restrict the number of employees who are covered, and (3) they suspend the operation of the plan under conditions of extreme emergency, such as fire, flood, explosion, and strikes. The Procter and Gamble plan, for example, guarantees employment for 48 weeks each year to employees who have 2 or more years of service.

There is no guarantee that the wage rate will not be lowered in the event that an employee must be transferred to another job. Stability of operations and employment has been effected by educating the consumer to buy more steadily, producing to stock during slack sales periods, and transferring personnel from job to job as operations fluctuate.

The Hormel plan guarantees a certain amount of wages rather than employment. Fifty-two paychecks a year will be paid to eligible employees, with a minimum weekly pay for 38 hours. Total wages for the year are established on the basis of the sales forecast. This total pay is divided into fifty-two equal amounts. Actual working hours frequently vary from week to week, but the pay received does not.

Overages and underage of time worked relative to pay received are balanced periodically. The Nun-Bush plan is similar to that of Hormel, providing for a guarantee of fifty-two paychecks. The guarantee. to employees is based on the concept that labor will receive 20 percent of the value of products sold. Thus, the percentage of sales is guaranteed to labor, but the dollar amount is not.

Two organizations are well known for a policy commitment to no layoff. The IBM corporation has had no layoffs in 35 years, and the Lincoln Electric Company, manufacturer of arc welding mach: and electrodes, formally guaranteed that no employees with a minimum of 2 years' of service would be prayed off.

Though the Lincoln commitment is practically devoid of loopholes and can only be changed on 6 months' notice, no covered employee has been slayed off since 1958.

The returns to the company are flexibility in job assignments, employee acceptance of technological changes, a monthly turnover rate at one-sixth the competitive level, and compounded annual increases in productivity of 7.73 percents The company also utilizes individual incentive pay plans, employee stock ownership, and employee profit sharing with shares based on 'Robert Zager, "Managing Guaranteed Employment, merit. Total annual compensation per employee is typically double that of competitors.

LIFE INSURANCE

Life insurance is probably the oldest form of company-sponsored employee benefit. Group life premiums are considerably smaller than those of insurance purchased by the individual. The return to the company of this particular economic service comes from relieving the employee of worry about the security of his or her dependents. Relief from worry should enable a person to devote greater attention to the job and the company. Most life insurance plans include all employees regardless of physical condition and provide for conversion to individual policies without physical examination when leaving the organization.

HEALTH INSURANCE

Accidents and industrial diseases growing out of the job are compensable under state workers' compensation laws to be discussed in Chapter 21. Illnesses and accidents that are not industrially caused are a source of worry and financial strain upon the employee. Various forms of health and accident insurance are provided, some completely financed, and others whose costs are shared with the employee. Showing again the tremendous variety of fringe benefits, the following types of insurance are provided by various firms: