Managing Employee Benefits Term Paper

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diverse workforce, the question of employee benefits has become increasingly complex. While salaries themselves remain important, other benefits have become increasingly so as workers seek to balance family work responsibilities in ways that -- when most families had two parents, one of whom stayed at home full time -- had not been dreamed of a generation or two ago. The current still-shaky state of the economy joined with recent corporate scandals have made more and more workers interested in the kind of guarantees about pension plans, 401ks or other retirement that companies are willing to give that are distinct from the company's own stock options. The rising cost of health care has made many employees especially concerned with the kinds of medical benefits that a company may offer. And the desire of many younger employees to have flexible hours so that they can continue their education, be able to contribute their time and expertise to charitable causes, or work from home has also increased the complexity of the issue of managing employee benefits. This paper examines how one company, a large daily newspaper, has tried to strike a benefits system that is simple enough to manage and yet flexible enough to meet the needs of its employees.

Statement of the Problem

In developing an employee benefits system, each company must consider the specific nature of its workforce (including both internal characteristics of that workforce as well as external factors such as the competitive situation in the industry involved). As benefits packages -- aside from strict salary amounts -- become more and more important to workers (and previous research suggests that this is generally the case), companies have been forced to offer increasingly complex and attractive benefits packages. Such packages cost companies money not only in direct terms -- such as matching contributions to 401k programs -- but also indirectly in terms of staff time required to manage these increasingly and varied permutations of benefits programs. However, a good benefits package can certainly pay off in terms of increased retention and loyalty and even increased productivity. This paper examines the effects of a shift in employee benefits at a large newspaper after it was taken over several years ago by an even larger media corporation, embedding the findings about this particular company within the body of recent research conducting across different industries in this field.

Results of Research

The pay or salary that a job offers has for centuries been the most important benefit offered to employees. The reason for this is in part historical: In the 19th century a salary was in most cases the only benefit that was offered. Moreover, salaries are clear-cut: They are easy for the worker to calculate and to compare whereas other benefits -- such as a promise of promotion if a position opens up -- are far less tangible and far harder to calculate the worth of. Finally, it is important to acknowledge that the relationship that exists between any employer and his or her worker is at the most fundamental level an economic one. While an employee may get any number of rewards from a job, the reason that one takes a job is an economic one: If one did not need the money one would undertake the same work as a volunteer or as a hobbyist. And because money lies at the heart of the relationship between worker and employer the question of salary must be central as well.

This having been said, in today's workplace there are a number of other forms of benefits that are important to workers today. If one sets aside salary, medical (including dental) benefits tend to top the list. This is hardly surprising given the cost of medical care today and the assumption made by many that it is only likely to increase in the future. This recent survey of high-tech workers underscores that point. When asked the order of importance of benefits when choosing to accept or reject a job offer, they listed the following benefits in this order:

Medical/dental benefits

8.6

Training/tuition reimbursement

7.6

Additional vacation/personal days

7.4

Retirement/pension program

7.3

Flex-time

7.2

Regular bonuses/reward programs

7.2

Life/disability insurance

6.9

Telecommuting

6.5

Stock options

6.2

Casual dress

6.2

Employee assistance program

5.5

On-site concierge services/employee discount programs

4.1

Child-care/daycare reimbursements

3.5

Note: Responses based on a scale of one to 10 with 10 being most important.

(http://home.techies.com/Common/Content/2001/09/17sb_benetelecom.html).

Such a survey would find at least slightly different results when done with members of different professions; for example, teachers would in all likelihood not stress the importance of training and tuition reimbursement (despite the fact that they are in the education field) because their skills are more likely to stay current than are those of a high-tech worker, who may well depend on being able to get continuous training if she or he is to remain employable. However, two important aspects of managing employee relations are unlikely to change regardless of the particular field one is surveying. The first of these is the fact that medical coverage is going to be important to most workers (especially since with so many of millions of American who are uninsured in today's workplace the need for other members of the household to be insured becomes all the more important). The second of these is that the overall package of benefits is likely to be extremely important in determining employee satisfaction and loyalty (both of which are linked to productivity).

As organizations work to recruit and retain employees, human resources professionals and their employers need to take steps to determine which factors most influence employee motivation and job satisfaction. Employee satisfaction contributes directly to organizational growth and ultimately to the bottom line, the survey said (http://money.cnn.com/2003/12/03/news/economy/jobsurvey/).

Larger Firms Hold the Advantage

The companies that are most able to and most likely to be able to offer the kinds of varied benefits that keep a workforce happy are the largest companies. This should not be surprising, although it does highlight one of the key challenges faced by smaller firms. While larger companies may be more anonymous and less likely to offer certain kinds of personal satisfaction to workers (who may feel that they have less autonomy and that their specific contributions are not acknowledged as they would be at a smaller firm), those larger companies can offer both better salaries and better benefits packages: While the survey cited above found that 74% of those who worked at large companies (defined as having 500 or more employees) were satisfied with their benefits, compared with only 60% of those at medium-sized companies (with between 101 and 499 employees) and only 47% of those at small companies (with fewer than 100 workers). Moreover, nearly nine out of ten employees who said that they were happy with their benefits package said that they were happy overall with their jobs (http://money.cnn.com/2003/12/03/news/economy/jobsurvey/).

Employee satisfaction contributes directly to organizational growth and ultimately to the bottom line, the survey said.

"This survey clearly indicates that it is critically important for small organizations to design comprehensive employee benefits packages," Ken Jautz, the executive vice president for CNN News Group's business news operations, said in a press release.

"Small businesses are the backbone of the U.S. economy, yet they face serious financial and creative challenges associated with providing employee benefits packages" (http://money.cnn.com/2003/12/03/news/economy/jobsurvey/).

Many Companies Still Lag Behind

It is because of worker sentiments like this that companies in ever increasing number of fields are giving greater consideration to the kinds of non-monetary benefits that they offer, understanding that it is the make-up of the entire package of compensation that will or will not keep employees happy. (And a happy worker is one who will not jump ship for a slightly higher salary). And yet, despite the fact that many companies are today doing an excellent job of providing a smorgasbord of benefits that employees can choose among to fit their specific needs, other companies lag behind, either because they do not have sufficient resources to offer the kinds of benefits that they might like to (and that their employees are almost certain to want) or because the management philosophy of the firm has not yet shifted to an understanding of how important benefits (vis-a-vis salary alone) are to so many workers. This was one of the findings in a undertaken in 2001 by the American Institute of Certified Public Accountants, a professional organization that includes a majority of CPAs in the country (http://www.aicpa.org/pubs/cpaltr/apr2001/supps/small8.htm).

One of the key findings of this survey was the fact that while employers are likely to offer more (and more different kinds) of benefits than they did twenty years ago, they are still unlikely to offer a number of benefits that would greatly increase employee satisfaction (and therefore loyalty and productivity) even when these benefits cost the employer little if anything. It is almost as if benefits managers, having added 401ks and a few other benefits to their offerings, are unable to be any more…[continue]

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