Chapter 12 has described benefits and services as part of the rewards that reinforce loyal service to the employer. The chapter described mandated and voluntary employee benefits and some critical decisions regarding benefits, such as communication, administration, flexible benefit plans, and employees’ participation.

1. Indirect financial compensation can be defined as all employer-provided rewards and services, other than wages or salaries, arising from the following categories: legally required social insurance payments, private insurance, retirement plans, payment for time not worked, extra cash payments other than bonuses based on performance, and costs of services like subsidized cafeterias, clothing allowances, and so forth.
2. Employers provide benefits and services (1) because some, like social security, are mandated by the federal government; (2) to keep compensation competitive with other employers; (3) as a result of negotiations with unions; and (4) to increase employees' productivity.
3. Mandated benefit programs in the private and nonprofit sectors include unemployment insurance, social security, and workers' compensation.
4. Two kinds of benefits many employers provide voluntarily are:
   1. Compensation for time not worked (break time, coffee breaks, clothes-changing time, holidays, sick leave, vacations, and so on).
   2. Insurance protection (health, disability and accident, and life).
5. Retirement income is received from three principal sources:
   1. Social security payments.
   2. Private pension plans.
   3. Private savings, investments, and postretirement employment.
6. The employee Retirement Income Security Act (ERISA) of 1974 is the law regulating private pensions.
7. Employee services are voluntary benefits provided by employers, including stock ownership plans (ESOPs), preretirement planning and other educational programs, child care, elder care, financial services, and help with housing and relocation.
8. To manage the benefit program effectively, follow these steps:
   1. Develop objectives and a benefit strategy.
   2. Involve participants and unions in benefit decisions.
   3. Communicate the benefits effectively.
   4. Monitor costs closely.
9. To avoid administrative nightmares, employers should concentrate on fewer benefit plans and if possible implement those preferred by most employees.