At&t's Compensation and Benefits AT&T Thesis

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In the case of retirees of 65 and over, it decreased from 7.5% in 2007 to 6.36% in 2008. The rate to which the cost trend is assumed to decline was maintained at a constant level of 5% in 2007 and 2008.

Given the company's financial situation and the current global economic conditions, it is estimated that the compensation and benefit costs will decrease in the following years. The company estimated the following evolution:

Pension benefits: $4,964 in 2008, $4,841 in 2009, $4,864 in 2010

Postretirement benefits: $2,520 in 2008, $2,636 in 2009, $2,733 in 2010

Medicare subsidy receipts: $120 in 2008, $130 in 2009, $140 in 2010

The company is very active in the stock-based compensation plan. This type of compensation is encouraged by the company's board of directors. The compensation cost in 2005 reached $143, in 2006 it reached $301, and in 2007 it reached $720.

Advantages and disadvantages

The advantages of the pension benefit plans offered by at&T to its employees are more visible for the employees that occupied managerial positions prior to their retirement. For example, the existing cash balance for each employee continues to earn interest at variable annual rate. As a consequence, "those management employees, at retirement, may elect to receive the portion of their pension benefit derived under the cash balance or defined lump sum as a lump sum or an annuity" (at&T, 2007).

There are several disadvantages regarding at&T's offer of compensation and benefits plans. For example, in the case of mergers, the recognition of a new liability or asset by the acquirer does not take into consideration the following items:

Previously existing unrecognized net gain or loss

Unrecognized prior service cost

Unrecognized net transition obligation

Recommendations

AT&T's human resources strategy can be easily deducted from its compensation and benefits plans. For example, the company pays more interest to post retirement benefits that to post employment ones. The company wants loyal employees to work here for as long as possible.

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They want to make their employees want to retire from this company and to dedicate themselves to this company.

The company does not seem to want short-term or medium term employees that are motivated by substantial gains on a short or medium term basis. But this might not be a suitable strategy for the company and the field it activates in, given the economic and financial situation worldwide.

It is recommended that the company modifies the strategy on short-term. The current financial crisis will affect att&T also, and the company must adapt to the new requirements. The company must maintain at least a stable situation for the moment.

This calls for extremely specialized human resources that can think fast and act fast. But such human resources must be motivated in accordance in order to give their best. Given the financial crisis, it is very unlikely that the employees will be motivated by moral incentives rather than financial ones.

Benefits like profit sharing, stock-based plans, maternity leave, contribution to retirement, or vacation pay may not be very useful in the eyes of the employees. Instead, the company should motivate its employees with a series of programs based on bonuses, merit, and commission. Commissions usually determine employees to work more and to work better.

Conclusion

Each employee is motivated by a different kind of compensation and benefits plan. Some are motivated by having a large pension and post retirement income, while others are motivated by the accumulation of large commission in the present. It is the company's duty to establish suitable compensation and benefits plans able to satisfy its employees.

The current financial crisis requires for special measures to be taken regarding compensation and benefits plans. As mentioned above, the company should focus on establishing compensation and benefits plans that can produce effects immediately. The most important type of compensation that can help the company is represented by commission-based.....

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