Question

We all know the cost of benefits typically increase year over year. For the past three...

We all know the cost of benefits typically increase year over year. For the past three years, those increases to benefits cost have grown more than what is comfortable for the employer to absorb. You are the Benefits Manager for a start-up company struggling to survive. You know that offering benefits may help you attract, retain and motivate a workforce…but you are not so sure about which discretionary benefits your workforce would prefer. Your company employs a diverse population of mostly young professionals (in their 20's and 30's) who are not very knowledgeable about benefits, but they think having benefits is a good idea. As the Benefits Manager, you are faced with making strategic and difficult choices about which discretionary benefits to drop because funds are limited and the annual increases are just too high (after years of double digit expense growth in discretionary benefits). You must make strategic choices on behalf of your organization. Rank order discretionary benefits, starting with the ones you would most likely drop and going up toward the discretionary benefits you would least likely drop. Explain your reasoning why and how you chose the benefits to drop.

Homework Answers

Answer #1

There are several company benefits available to the Employees like vacation leave, sick leave, dental insurance, social security pension health insurance and 401 K plans

The discretionary company benefits for the employees are the ones which are not mandated by law.

There should be a proper alignment with the organisations total rewards strategy. Tax incentives and the real cost of the benefits offered must be considered.

Employee characteristics like demographics is also an important parameter to decide the benefits.

The employees for this startup company is mostly young professionals in their 20s or 30s.

Employee perceptions about the benefits offered and a benchmarking against the benefits offered by the competitor companies is also important.

The plants should be easy and simple to understand and if possible the employees should be given a choice whether to be a part of the overall benefits plan or not.

example, medical insurance coverage for the parents of the employees may not be necessary because the employees would not value it too much , however the cost for such an insurance would be high.

Sumanahalli, young professionals would like to eat out more often than having the same food everyday. Therefore, the startup company can remove the cafeteria or increase the food prices to contain company costs.

It is important that the company communicates these changes effectively to the Employees and implements them in consultation with the employees.

So the company can more likely drop the cafeteria or health insurance for its employees.

The startup company should least likely drop incentives which will affect the young employees of the company like cellular phone and broadband internet connection.

It is likely that the young professionals at the company value these incentives offered by the company much more.

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