Its all about how to design the benefits for the employees , what strategies can be made for designing the benefits ,the role of administration in administering the benefits and introducing different benefits package ...
Designing and Administering The Benefits by Mahnoor
AN OVERVIEW OF BENEFITS :-
Employee benefits are group membership rewards
that provide security for employees and their family
members. They are sometimes called indirect
compensation because they are given to employees
in the form of a plan.
The benefits package offered by a firm can support
management’s effort to attract employees . Benefits
that are designed to increase in value over time
encourage employees to remain with their employer
1. Legally Required Benefits :-
This requires employers to give
four benefits to all employees
,with only a few exceptions:
i. Social Security
ii. Worker’s Compensation
iii. Unemployment Insurance
iv. Family And Medical Leave
2. Health Insurance :-
Health insurance covers hospital costs, physician
charges and the cost of other medical services .
3. Retirement :-
Retirement benefits provide income to
employees after they retire .
4. Insurance :-
Insurance plans protect employees or their
dependents from financial difficulties that can
arise as a result of disability or death .
5. Paid Time Off :-
Time-off plans give employees time off with or
without pay, depending on the plan .
6. Employee Services :-
Employee services are tax-free or tax-preferred
services that enhance the quality of
employees’ work or personal life .
Designing The Benefits/The benefits Strategy :-
To design an effective benefits package ,a company
needs to align its benefits strategy with its overall
compensation strategy .The benefits strategy
requires making choices in three areas :
i. Benefits Mix
ii. Benefits Amount
iii. Flexibility of Benefits
The benefits mix is the complete package of
benefits that a company offers its employees.
At least three issues should be considered
when making decisions about the benefits mix:
1. Total Compensation Strategy
2. Organizational Objectives
3. Characteristics of the Workforce
1. TOTAL COMPENSATION
Total Compensation Strategy issue
corresponds to the “below market
versus above-market compensation” .
The company must provide a benefits
package attractive to the people.
The Organization’s Objectives also
influence the benefits mix . For instance if
the company philosophy is to minimize
differences between low-level employees
and and top management, the benefits mix
should be the same for all employees .
3. Characteristics Of The Work Force :-
If the firm’s work force consists
largely of parents with young
children, it is likely that child-care
and other family-friendly benefits
will be important .
Once management determines the amount of
money available for all benefits, it can
establish a benefits budget and decide on the
level of funding for each part of the benefits
FLEXIBILITY OF BENEFITS :-
The flexibility of benefits choice concerns
the degree of freedom employees have to
tailor the benefits package to their personal
needs. Some organizations have a relatively
standardized benefits package that gives
employees few options. In these firms, a
standardized benefits package can be
designed for a “typical” employee.
Administering Benefits :-
The HR department usually takes the
lead in administering benefits, but
managers need to help communicate
options to employees , provide advice
occasionally , keep records(vacation
time , sick days), and be prepared to
call on the HR department if disputes
Flexible Benefits :-
Employees have different benefits
needs , depending their martial status
and the presence and ages of children
in the house hold .A flexible benefits
program allows employees to choose
from a selection of employer-provided
benefits such as vision care , dental
care , health insurance coverage for
dependants, child care, legal services
and contributions to a retirement plan .
The most popular flexible benefits plans
1. Modular Plans
2. Core-Plus Options Plan
1. Modular Plans :-
Consist of a series of different bundles of benefits or
different levels of benefits coverage designed for
different employee groups.
Consists of a wide array of other benefits
options that employees can add to the core.
The core is designed to provide minimum
economic security for employees, and usually
includes basic health insurance , retirement
benefits and vacation days . Core-plus
options plans give employees “benefits
credits” that entitle them to “purchase” the
additional benefits that they want .
Challenges With Flexible Benefits :-
Flexible benefits offer employees the
opportunity to tailor a benefits package
that is meaningful to them at a reasonable
cost to the company . However they do
pose some challenges to benefits
Employee who make poor
Benefits Communication :-
Benefits communication is a critical part of
administering an employee benefits program.
Many employees in companies with excellent
benefits packages have never been informed of
the value of these benefits and are therefore
likely to underestimate their worth .Traditionally,
benefits have been communicated via a group
meeting during new employee orientation or a
benefits handbook that describes each benefit
and its level of coverage .In today’s dynamic
world of employee benefits , however , more
sophisticated communication media (such as
videotape presentations and computer software
that generates personalized benefits status
reports for each employee) are needed