Employee Benefit Plans: An Introduction
Employee benefit plans play an important role in creating and maintaining an organization's workers' well-being. It serves as a motivation for employees, resulting in increased production, or as a retention strategy for a firm's task force (Shields, et al., 2015). Therefore, two critical things are required for the organization to establish and develop an effective employee benefit plan. The article examines the internal and external information that an organization needs when establishing and implementing an employee benefits strategy. Furthermore, it discusses the most relevant facts to this planning process as well as the least important aspects. As stated above, an organization through its management requires both internal and external information to plan and develop a workers' benefit plan. External information factors are all considerations that are independent and outside the control of a firm but influences the compensation packages (Shields, et al., 2015). Apparently, they are the factors that an employer is required under the law to provide for his/her task force. On the other hand, internal considerations are factors for the employees' benefit that an employer has discretion or control over. They are dependent conditions, desires, needs of organizations that are controllable by the management or the owners of the firms. However, all these factors are crucial when preparing a fair and just employees' compensation plan.
Internal Information Factors
An essential internal information required when planning and developing an employees' compensation plan is the organization chart. It demands of having a defined organizational structure with specific ranking positions for workers who work at a particular management level, and the exact work they perform. The organization structure must have a clear job description of each post, enabling the management to develop a practical workers' benefit plan (Osibanjo, et al., 2014).
Budget Information
An obvious internal information factor to consider when establishing a benefit plan for the workers is the organization's budget. Apparently, some job positions are demand-sensitive such as those in warehousing, production, customer relation and shipping; hence, the firm will always get money to fill these positions. Again, as the law states, people cannot give what they do not have, the same case with an organization. As asserted by Osibanjo, et al. (2014), managers should ally with all departments more so the accounting office to get full information on the organization's budget before starting the initial planning of the benefit plan.
Skill Levels
In most instances, substantial growth and expansion of a company demand an additional administrative and operational needs, which may not be handled by the current workers. Also, some activities require highly skilled personnel, which may also demand high remunerations. The human resource manager files the documents with the qualifications or expertise of the workers; hence, the employees' benefits planning team should get full information on the employees' educational background and job skill (Shields, et al., 2015). Nevertheless, skills may go hand in hand with physical abilities whereby, some workers may be doing some tasks that demand a lot of energy. Therefore, an organization should have full information on the skills and qualifications of the entire workforce.
Productivity
Another essential internal information is on productivity. For the employees to be productive, it is the responsibility of the management team to ensure that there is a conducive working environment (Osibanjo, et al., 2014). Also, the management team should offer job descriptions to the workers and provide them with morale-building activities. However, by the end of a fiscal year, the executives should acquire adequate information on the productivity of every staff and every department. The information will work as a ground of establishing an effective equation between the marginal cost of production and marginal revenue.
Employees' Satisfaction and Interest
The primary objective of developing and planning an employees' compensation plan is to increase workers' satisfaction. Employees get motivated by either intrinsic or extrinsic rewards; therefore, it is significant to have precise information on what most of them need or desire (Shields, et al., 2015). For instance, some workers may opt extra financial rewards as a token of appreciation, whereas, other may need an annual leave. Therefore, having accurate information on what satisfies the employees is substantial.
External Information Factors
Shields, et al. (2015) asserted that when an organization is developing employee's benefit plan, it is critical to consider what the law states and what is mandatory for the employers to provide to their employees. Mainly, all the workers are entitled by the law a fair compensation and annual leave that is payable. Also, the rules demand that an employer must ensure the working condition of an employee is conducive and secure. It is vital for the company to adhere and follow all the workers' remuneration laws, security and medical Acts, to ensure that an organization operates under a legal framework without breaking and legal obligation.
Labor Unions Demands
In the current labor market, most of the employees have labor unions, which negotiates with the employers on their behalf for compensations and benefits (Osibanjo, et al., 2014). Apparently, the union's demands have resulted in a significant rise in the rewarding of the employees. The leaders of these labor unions have fostered the members' interests in programs that provide security and fairness in compensation. Sometimes, the benefit demanded by the labor unions may not equate with the marginal revenue of a firm. Therefore, the labor unions requirements are essential factors to consider when developing a remuneration plan for the workers.
Competitive Environment
Every organization faces a competitive job market. For an organization to be able to hire and retain its workforce, it has to be competitive and vibrant in the labor market. Apparently, when one firm offers a given benefit to its staffs, the other one must be in a position to provide the same or more. However, this is not easy because organizations vary in financial strengths and abilities. In fact, offering a competitive benefit requires a substantial discussion to arrive at the most practical decision on which benefits to give the workers (Shields, et al., 2015). Consequently, the level and the type of benefits provided by a firm makes the organization either attractive or unattractive.
Economic Changes
The move towards a post-industrial society has brought about numerous changes that demand organizations to offer their employees more benefits. One of the reasons is due to the increasing standards of living, whereby, people desire more favors and leisure, which in turn demands proportionally with the wage rates. In fact, the continuing industrialization and dynamic changes in the standards of living have generated more risks to the employers (Shields, et al., 2015). Most of the employees look for the economic security where they attach their job and benefits with the current economic status. Therefore, before developing any benefit plan for the workers, it is vital for the organization to have adequate information and understanding on all the economic changes in a country and the world as a whole.
The Importance of State Laws and Regulations
The most significant consideration when developing and planning a compensation plan for the employees is following and abiding by the state laws and regulations. The information stipulated in the law is paramount, and it avoids legal suits that may appear against the company from the employees or the government (Osibanjo, et al., 2014). Nevertheless, states laws ensure that a firm operates within the laid down rules, and shows that it cares for all its workers. In the case of breaking one of these standards and the law suits emerge, the company may incur a lot of expense, which may lead to either collapsing of a business or incurring substantial losses. Hence, organizations should gather adequate information on the laws of the state to avoid fines or penalties, or even the withdraw of a license by the registrar of companies.
The Least Relevant Consideration: Paid Time-Off
On the other hand, the least relevant consideration when planning and developing an employees' compensation plan is the paid time-off. Indeed, several advantages accrue to the paid-off benefit plan, such as making the employees feel acknowledged and appreciated in their job, enhance workers' motivation, employee retention and ensuring that the job seekers prefer that organization (Osibanjo, et al., 2014). The payment of the time-off brings a competitive advantage of a firm in the current competitive labor market. However, it is expensive because the employees get paid for the work they have not done, which may increase the cost of production lowering the profit margin of a company. Again, it develops adverse implications for the enterprise, for example, it can encourage employees' absenteeism without genuine reasons. Therefore, it is also considerable for the employers to contemplate on paying the time-offs to avoid massive losses that may result in the closure of an enterprise.
Conclusion
For an organization to plan and develop a practical employee benefit plan, it needs to integrate internal and external information that affects a firm. Certainly, a proper employee compensation plan plays a vital role in ensuring the well-being of employees and the organization is maintained. Several factors stimulate many companies to design and develop their employees' benefit plans as discussed above, which in return motivate the workers, enhance productivity and reduce the turnover rates. Organizations can include the following in their employees benefit plan; employees' remuneration, pensions, social security, health insurance, life insurance, among any advantage that will make the employees' life better (Goetsch, 2014). With a perfect employees' benefit plan, the firm will remain competitive and vibrant in the current dynamic business world.
References
Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper Saddle River, NJ: Pearson.
Osibanjo, A. O., Adeniji, A. A., Falola, H. O., & Heirsmac, P. T. (2014). Compensation packages: a strategic tool for employees' performance and retention. Leonardo Journal of Sciences, (25), 65-84.
Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P., ... & Plimmer, G. (2015). Managing Employee Performance & Reward: Concepts, Practices, Strategies. Cambridge University Press.
