One significant and pricey endeavor for employers is to manage and control employee benefits. In general, employers should grant compulsory benefits like Social Security deposit, employee’s compensation insurance, and unemployment insurance, the majority of the remaining benefits are un demanded and decided by the employer. Benefit programs differ vastly, but commonly it involves medical insurance, life and disability insurance, paid-time-off benefits, retirement income plan benefits and educational assistance programs.
The critical factors in the total compensation cost involve choosing benefits and design. There are some cases where the total compensation cost takes 40 percent or more for the benefits.
Employers should come up with well-designed benefits plan design that fulfills both the requirements of an employee as well as the aims of the employer due to the importance of investment of the employer on the employee benefits during recruiting and retaining.
Determining the Organizational Objectives and Budget for Benefits
The identification of the objectives is the first and essential step when it comes to the designing of an employee benefits program. It will give all the required guidance needed to select and design the benefits program. Typically, this procedure does not result in a series of particular benefits that are offered but it rather gives an overview of the company’s objective of offering benefits keeping the needs of both employee and the employer in mind.
The organization’s business strategy will enable the efficient development of the benefits goals as these goals become the source of attaining the overall aim of the organization. The factors that must be considered while developing the benefits objectives are the size of the employer, location, industry as well as the collaborative bargaining decisions.
It is important to determine and manage the given budget for allocating the benefits as employers are given the limited cost to spend on the benefits of the employees. If an organization has already developed a benefit plan, they need to evaluate the benefit-cost as well as projected cost and form an annual budget spreadsheet highlighting the benefit-cost. The increasing cost of the given benefits like health insurance will have a great impact on the benefits that an employer can offer.
Performing a Needs Assessment
A needs assessment is carried out to learn about the best possible benefits and design, which are decided as per the requirements of the employees. This assessment involves an employer’s view of employee benefit requirements, opponent’s benefits practices. A more current method is to conduct market research when planning employees’ benefits. The general market procedure involves information given by the employee in the form of survey designs such as interviews and questionnaires.
Companies should evaluate the available workforce demographics to help in finding out the demands of different kinds of employees. Younger workers prefer more paid time off, while elderly employees hold more importance on their retirement income plans.
Paid medical leave is emerging as a must-offer benefit for employers. To ensure the grant of paid medical leave from the employers to the employee’s many regional laws is being passed. Employers are required to keep themselves updated regarding the local requirements.
Constructing a Benefits Plan Program
The employer requires articulating the new benefit program design after the completion of the need assessment and gap analysis. The collected data from every possible resource in step 2 will take the employer to start organizing the benefits according to the preferences and priorities. Then, the distribution of these prioritized benefits is tested against the benefits budget by the employers.
Certain factors must be considered due to the complexity of this step. Should changes be done to the current benefit plan to manage the cost? Should we eliminate the underused or ignored benefits that employees no more utilize? What is the confined cost or benefits budget? How to place cost containment features? Should employees be asked to contribute and how much? Is there a need for a third party or broker for certain programs or they can be administered in-house?
These are some of the evaluations that an employer must take into account to determine what benefit offerings should be added, changed or removed.
Articulating the Benefit Plan to Employees
Communication plays an important role in the planning and management of the benefits. Buy-in is the critical component of the employee’s comprehension of the benefits. The absence of buy-in may result in the futile efforts of the employer, no matter how smartly planned to reach the employee’s need. Furthermore, the input of employees is vital as it is used in designing the benefits process, so employers should acknowledge the employees about how their feedback may influence their benefits plan.
Determining The Effectiveness Of The Benefits Through Periodical Evaluation Process
An important step towards the benefits management procedure is analyzing the benefits strategy program periodically. A timely assessment of the benefits program must be done to ensure the fulfillment of the company’s objective and employee development. The benefits offered to vary with the changing nature of the workplace that includes the dynamic nature of the economy, business culture, regulatory atmosphere, and working population. Therefore, the employer’s responsibility encompasses developing goals, take measures to evaluate the benefits programs and alter them as per requirement. The effectiveness of the benefits program can also be evaluated by employers by considering external factors and benchmarking data. They can also make use of employee’s full-scale need assessment and surveys to identify the efficiency of their benefit plan.