Glencoe Accounting

Unit 3: Accounting for a Payroll System

WebQuest Internet Project

Employees have different goals and are motivated to work for a variety of reasons. You need to know how to pay your employees in a way that is appropriate and that motivates them to do the best job possible. In this online activity, you will learn different ways to pay and motivate your employees.

Approximately 142.8 million people work in the U.S.¹ Whether an individual works for a bank, a coffee shop, or a software manufacturer, he or she requires satisfactory pay and benefits. A Purdue University study shows a direct link between employee satisfaction and a company's profits.² Your task is to create a report that includes employment profiles for three companies. Potential employees who read these profiles will want to know details about company culture, average salaries, benefits offered, and voluntary turnover rates. Be sure you provide a general information section for your readers on benefits common to most companies and the methods often used to keep employees happy. Your report should contain a list of the types of taxes that will be deducted from a worker's gross pay if employed by any of the three companies.

To successfully prepare your report you will need to complete the following items.

• Select three companies of interest to you from the companies listed below. For each company:

(1)   Make a list of the methods used to motivate employees.

(2)   Explain the benefits provided.

(3)   List the average annual pay earned by hourly and salaried employees within each selected company.

(4)   Identify the voluntary turnover rate.

• After reading the articles provided in the general employment resources section below:

(1)   Define ways that companies measure employee morale.

(2)   List the top five benefits most commonly offered to employees.

• Outline the financial and nonfinancial benefits that the company receives for keeping employees happy.
• From the IRS Web site, review the Employment Tax Guidance section for information on payroll taxes.

Companies:

Whole Foods Market

http://money.cnn.com/magazines/fortune/bestcompanies/snapshots/1575.html

www.fastcompany.com/magazine/99/open_customer-whole-foods.html

Yahoo!

http://money.cnn.com/magazines/fortune/bestcompanies/snapshots/1591.html

http://careers.yahoo.com/rewards.html

The Container Store

http://money.cnn.com/magazines/fortune/bestcompanies/snapshots/359.html

www.containerstore.com/learn/index.jhtml;jsessionid=D3GHCRBLZGXJ3QFIAILSM44AVABBQJVC

Starbucks

http://money.cnn.com/magazines/fortune/bestcompanies/snapshots/1267.html

http://money.cnn.com/2006/01/09/news/companies/bestcos_welcomerituals/

REI

www.rei.com/aboutrei/100best.html

http://money.cnn.com/magazines/fortune/bestcompanies/snapshots/1116.html

Microsoft

http://money.cnn.com/magazines/fortune/bestcompanies/snapshots/879.html

http://members.microsoft.com/careers/mslife/essence/default.mspx

http://seattletimes.nwsource.com/html/businesstechnology/2001973671_microsoft07.html

General Employment Resources:

Measuring Morale

www.inc.com/magazine/19970101/1146.html

Revving Up the "P" Word (Productivity)

www.inc.com/articles/2002/06/24280.html

Personalizing Recognition

www.inc.com/articles/1999/05/16635.html

It Takes More Than Pay to Keep Good Workers

www.inc.com/articles/1999/08/13723.html

Managing in Today's Workplace

www.sba.gov/gopher/Business-Development/Success-Series/Vol10/managing.txt

Employee Benefits as a Management Tool

http://management.about.com/cs/people/a/Benefits100198.htm

IRS Employment Tax Guidance

http://www.irs.gov/businesses/small/article/0,,id=98862,00.html#4

To improve your report, consider the following questions and suggestions:

1. Are there differences in the way some companies compensate executives and lower level employees?
2. What are "soft skills?"
3. Describe ways in which companies operate that might hinder motivation in employees.
4. Are there differences in the perks that a mature employee and a younger employee might appreciate? If so, what might each employee prefer?
5. Do the mission statements for the companies you selected refer to employee development?
6. What are stock options?

Here are some suggestions for finishing your report.

• Interview a human resources manager to find out what kinds of benefits are most desired by employees, how often employees are paid, and who handles payroll preparation.
• Obtain a sample of a check stub from a friend or relative (or create one of your own) to illustrate the kinds of deductions that are taken from gross pay.
• Present your profiles in a form that you feel would be most helpful to prospective employees. You may choose to present your profiles in chart format or in a narrative form. Include comparative data in visual form if helpful.

• What benefits do you think a company gains when it provides "perks" like employee fitness centers or onsite daycare facilities?
• Describe voluntary deductions that might appear on an employee's paycheck.
• Why are accurate payroll records be helpful to management?
• What payroll tax report does an employee receive at the end of each calendar year? What information is contained on this report?
• If a business paid gross earnings of $245,358 in a calendar year, what total FICA taxes (employee and employer) should be paid to the government?

When employees accept employment with a company, they agree to a certain rate of pay. They may agree to an hourly pay rate or a salaried annual rate. Salaried employees are generally not paid overtime, but instead work for a set amount, such as $3,500 per month, regardless of the hours required to get the job done. Hourly employees are paid by the hour, based on the hours they work, and overtime rates apply.

Question:

• If you were the payroll clerk for Starbucks where both hourly and salaried employees work, what information would you need to prepare payroll checks on a biweekly basis?

The federal, state, and local governments impose taxes in order to raise funds for such things as government programs, roads, education, and the armed forces. Both the employee and the employer pay employment taxes.

Question:

• What taxes are withheld from employee paychecks?
• What taxes are paid by the employer?

Employment Situation Summary, Dec. 2005. Available at:
www.bls.gov/news.release/empsit.nr0.htm

"Purdue research links employee satisfaction, profits," Sept. 13, 2004. Available at:
http://news.uns.purdue.edu/html4ever/2004/040913.Oakley.sat.html