How Would you Handle the Selection of the Employees' Benefit Package?
Selection of Employee's Benefit Package
With high inflation rate and soaring prices of everything around us, attractive Employees Benefit Package play a vital role for the employees in making the right selection of a job. An employee compensation package consists of two components one is the fixed income in the form of basic salary and other is the deferred income in the form of employees benefits. At times the percentage of the basic salary is lower than that of the latter nevertheless the overall compensation package can still be very attractive.
There are numerous benefits that an employer can offer to its employees. Most common ones are the medical or health insurance, retirement plan, tuition fees and paid time-off. Previously, almost in every organization there used to be one package for all, in many organization still the similar scenario is prevalent. With the changing dynamics no longer one-for-all and all-for-one package is viable. Employees want perks and benefits as per their needs. The disadvantage of mono package is that it can leave the employees disgruntled and dissatisfied if he is drawing lesser basic salary and is unable to use the coverage amount fully. According to Beam and McFadden (2001) with the introduction of cafeteria plan in some organization employees now have the privilege of choosing the package of their own choice. Companies allocate and declare the coverage amount to its employees so that they can use and opt for the package that best suits their needs.
More and more companies are now focusing on devising competitive package to attract and retain the current pool of resources. Switching among companies have become very common. It is almost impossible to break this chain .However strategies can be applied to stay ahead of the competition and retain the current workforce.
The changing work dynamics is also forcing companies to revise and evaluate their policies from time to time. Joining of more women into workforce has made the maternity benefits an essential part of the compensation plan. Organizations where the number of women is considerably high then other then the maternity paid leaves and hospital bills, facility of day care centre is also seen in some organizations. With the availability of the trained and reliable staff, women workers can work dedicatedly without the care of her new born.
1. Describe the selection process you would use to make the most cost-effective and employee-friendly decision.
From the given information it is evident that a certain budget is already being allocated for the employees' benefit package and there must be no additional expense in changing or modifying the package. However the allocated amount is not specified. Assuming it is X also assuming that the insurance provider currently is Y.
Firstly the understanding of the employees' need is very important. I would assign a subordinate to interact on one-on- one basis with the employees to determine the desired compensation package they are looking for in the following year. Questionnaires can also be distributed to get better understanding of the employees' needs and wants. Knowing their expectations for new policies would aid in making the decision which they value the most. It would not be just any package .It would be customer-driven, the benefits that they can reap in the short and long terms. Based on their feedback and company's budget a coverage amount would then be decided (Dubrin,2008).
Plans marketed by companies other than Y would be evaluated for making a comparison among different plans. Package that makes more sense to the organization goals and employees' preference would be selected as an option.
There would not be any change in the coverage amount however the new policy would be flexible so that an employee can choose on its own from the available options. In most medical insurances dental and optician expense are not covered .The new policy would be such that if an employee thinks that his dental expense would be more in the subsequent year then he can keep the option open and pay the bill from his coverage amount and the difference from his pocket.
Employees at times don't have the knowledge required to evaluate the services, they look for support and candid opinions. Being a HR Director I would make sure that the employees gets a holistic view of the insurance plan before accepting and agreeing on one.
2. Identifythe information you would need to make this decision.
Three different sets of information would be necessary in making the right decision:
Firstly the information of the current employees benefit package .This information will be helpful in analyzing the policy loopholes and how it can be avoided in the new policy. Should the company hire the same provider or another?
The second set of information would be of the employees' profile. Their family structure, salary, performance .If the employee has many dependents then life insurance plan would be of utmost benefit for him .In case he is single and has some kind of chronic disease then the medical or health insurance would be of prime importance.
The last set of information would be the extensive evaluation of all the plans and policies being bombarded and marketed by the insurance providers. Assessment of each policy would give great material in deciding on which policy to accept and which one to reject.
3. Discussthe ramifications of your decision on employees.
As employees' interests and preferences are taking into consideration in every step of the decision making process this would make them happy and contend with the current organization. By repeating the same process every year would make them more loyal to the company and would raise their morale. The affect of the exchanged positive energies would be evident in their work in the form of a higher productivity. They would perform well in the interest of the organization .Key and talented employees would continue to work with the same dedication and the thought of leaving the organization for another one would never cross their minds. This attitude would further draw the attention of the talented pool of employees from the industry towards the very organization.
4. Evaluatethe factors that influence your selection of a package.
According to Atchison, Belcher and Thomsen (2010) there are various factors which would influence the selection of the package:
1) Employees' Demographics Employees' age, life cycle, gender, geographic location, income would greatly affect the selection of a package. The package attractive for one may not hold the same value for other.
2) Company's Budget Every decision would be made in keeping the company's budget in mind
3) Economic Factors This factor plays a huge role in the selection of a package. If the business is down due to social or political factors, then the company would not be able to meet the projected sales target .Unavailability of funds would hinder the selection of the high yielding benefit package.
4) Company's Goals and Objectives Selected package must be in align with the company's goals and objectives.
5) Competition in the Market Consideration of what benefits other rival firms or market is offering is important. In selecting the package. It must be competitive to retain the talented workforce and attract the prospective employees.
6) Employee's Current Performance If the employee is performing surpassingly well then he surely deserves a custom built package. This will lure others into performing with the same zeal and energy.
7) Government Rules and Regulations What percentage of the benefit must be offered is depended on the imposed rules and regulations by the government .If the rule says that 5% must be allocated under disability insurance then the company must follow it.