Designing and planning employee benefit program

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Designing and planning employee benefit program

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Designing and planning employee benefit program

  1. 1. Designing and Planning Benefit ProgramDr. G C Mohanta, BE(Mech), MSc(Engg), MBA, PhD(Mgt) Professor
  2. 2. Process of Benefit PlanningDetermining the goals and objectivesAssessing and/or selecting benefitsDesigning the benefits PackageMonitoring the plan
  3. 3. Determining Goals & Objectives of Benefit Plan
  4. 4. Selecting BenefitsAssess current benefits to see where improvements needed or new ones need to be addedSelecting & evaluating benefits is the 1st step in translating goals and objectives of a benefit programOrganizations have some choices in benefits they offerThere are benefits as required by legislationThere are customary benefits common to almost all organization andThere are benefits those can make benefit package unique
  5. 5. Selecting Benefits - LegislationSocial legislation requires that employer make expenditures for health & safety of employeesInsurance to be made to indemnify employee’s loss of income from illness, injury, unemployment & old ageLaw also requires how organization will develop & operate specific benefits, like retirement plansThese expenditures are to be incurred, whether employer wants to incur it or not and whether employee desires the benefit or notLegally required benefits currently cost employers in excess of 10% of payroll cost
  6. 6. Selecting BenefitsAssessing Competition• knowing what benefits other employers are offeringOrganizational Benefit Plan Analysis• comparison of benefits offered currently with needs & preferences of employeesOrganizational Financial Analysis• comparison between direct wages & benefits including its cost and employee need and• employers ability to pay
  7. 7. Selecting BenefitsCollective Bargaining and Benefits• through collective bargaining employees receive the benefits they want and• unions are motivated to convince employees about the value of benefits bargained forWho Should Receive Benefits• part time employees/dependents of employees/retired employees/survivors of deceased employeesEmployee Choice in Benefits• each person to decide what benefits to include & how much to allocate for each, as per flexible benefit plans
  8. 8. Flexible Benefit PlansMix and Match Plans• employee is offered an amount based on salary, seniority & age and he can choose from various benefit optionsModular Plans• Organization offers various optional benefit programs and employee can choose those which best fits his needsCore-Plus-Option Plans have two parts• core part provides health and retirement benefits to all employees &• Optional part provides various benefits - employee can choose from
  9. 9. Flexible Benefit PlansPre-tax Salary Reduction PlansPermits employees to set aside a portion of wages each year on a pre-tax basis to pay for qualified expensesThere are two major types of plans:• Flexible spending Accounts- allows employee to pay for expenses, such as, medical expenses, reducing employees gross income• Premium-Only Plans- allows employee to pay for insurance premiums
  10. 10. Reducing Costs of BenefitsHealth Plans• Changing an insurance plan to a Preferred Provider can reduce costsTime Off• holidays can be adjusted if organization grants holidays those are not required by lawRetirement• changing defined benefit plans to defined contribution plans
  11. 11. Cost SharingHealth Plans• employees to pay a part of their monthly health insurance premiumsTime Off• pay only a portion of salary for certain types of time off or share costs with an insurance plan, as in disabilityRetirement• all types of retirement plans can be made contributory on the part of the employee
  12. 12. Reducing Administrative CostHealth plans can contain 3 features that help in controlling costs• Wellness Programs - programs are intended to reduce future medical claims by keeping employees healthy• Utilization Reviews- reviews evaluate frequency of employee usage and quality of service received• Case Management• Overseeing the expenses of illnesses which add up very rapidly and balancing care and cost Outsourcing the Benefits Function to reduce and control operating costs
  13. 13. Monitoring BenefitsOrganization keeps careful track of what is happening both externally & internallyNeeds & preferences of employees likely to change due to change in organizations work force Surveying employee needs and preferences should be a continuing exercise and not a one-time projectOrganization can not monitor change in costs of benefits provided by outside Insurance CompaniesHence, organizations are developing alternative ways of providing the benefits to employees at lower/stable cost

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