Strategy for Benefits Plan

Employee Benefits There are several issues with the current benefits plan, but first the overall benefits strategy needs to be addressed. There is ample literature to support taking a strategic HRM approach, whereby the human resources management strategy closely aligns with the overall strategy of the company (Wright & Nishii, 2007). At present, there appears to be misalignment. HG Enterprises is a graphic design and photography service provider. The organizational chart indicates only two people who might be considered to be creatives, however, the design technicians.

This firm is all senior management and clerical staff. How is this company even making money, when there is nobody to actually do the work they supposedly do? How are there three FTEs on the phone, not including the sales staff, and to whom are they talking? Why is a consultant being hired when there is already a VP of benefits on staff at $120K. This company looks more like a money laundering front than an actual business.

So the first thing that needs to be done is to stop paying people to do nothing -- there's a forest's worth of dead wood in this organization. The second thing that flows from this is that the company is dramatically undervaluing the creative talent, unless of course the CEO and President are the majority of the creative talent on staff.

Normally, the lead creative, even when that person is majority owner, does not take on the CEO role -- it is near impossible to run a business and be the lead creative. But worthy of concern is that HG is more concerned with compensation for her senior people, half of whom appear to do nothing, and none of which are a particular concern. The turnover problems that plague this company are at a lower level. HG is proposing from the outset to fix a problem that doesn't exist.

The problem is that the benefits package is not compelling enough for the actual useful people in the organization, and they are leaving. The HRM strategy has to be to focus on recruitment and retention of the most valuable people in the organization. The revised benefits strategy needs to focus on that, not on enriching those who already receive wealth from the company grossly out of line with their contributions. The three VPs will all be fired, though they may retain their equity stake.

There is good reason for this -- the company will never retain talent if worthless people like the 20-year-old "risk management" girl are being paid enormous sums while contributing no meaningful value. Same goes for the benefits guy -- I would not be here if he was worth anything close to $120K. And what exactly is "Intellectual capital." Retaining good people will only be possible when the absurdities in the compensation structure are eliminated.

The current plan costs for one year are as follows: Salaries HG Life 6 Other Life Health 401K Herein lies part of the problem -- the company does not even know what its benefits plans costs.

What are the premiums on the employee life plans? What are the OASDHI outlays? What is the cost of the health plans for which the company pays 95%? The 401K figure can be budgeted under the assumption that employees will contribute the max, but the company does not even have numbers for the other costs -- this is a good time to note that they also do not have an accountant.

And the utterly unprofessional nature of these numbers, quite frankly, needs to be resolved before meaningful recommendations can be made to HG. These major fundamental issues need to be addressed long before worrying about how the DB plan manager is charging 2.5% on top of the fund MERs, thereby requiring a solid 4-5% annual return just to break even on the plan -- good luck balancing that in thirty years when people start making withdrawals. So the recommendations are as follows. Hire an accountant so we can work with real numbers.

Fire the deadwood at the top of the organization. If the company legitimately intends.