In most companies, more than one third
of the total compensation dollars spent go toward benefits. As important and expensive as benefits are,
companies frequently have a piecemeal approach to these plans and they abdicate
the responsibility to insurance companies and actuaries to take charge of the
company plans and make changes to individual portions without looking at the
plans as a whole system. We recommend
that a systematic approach be taken to the design or redesign of the benefit
plans in order to maximize the investment and the plan's impact on both the
organization and its employees.
Benefit Planning Process
-
Determine
the future environment for the organization
-
What
type of company will it be in the future
-
What
type of workforce will be needed to support that future company
- What
outside forces will have an impact on our future and what changes will they
bring
- Identify
the benefits philosophy
- Paternalistic
— the company will decide what the employees will have and provide the
company's choice of plans to all employees, regardless of need, at the
company's expense
- Empowered
Employees — the company provides a basic level of benefits and permits the
employees to choose the type and level of benefits they desire, allowing
employees to purchase options at the company negotiated group rate
- Combination
— the company takes an approach somewhere between the two described above
-
Determine
the desired benefit outcomes for each type of benefit
-
Health
and welfare protection
-
Income
protection
-
Other
paid time off
-
Leaves
of Absence
-
Retirement
income, capital accumulation
-
Miscellaneous
benefits
- Evaluate
the current benefit plans based on all the above factors
- Determine
what modifications need to be made to current plans to attain desired results
After this process is completed, then
and only then will the organization be ready to design its benefits
package. The design phase is only the
first step in the larger process to design, purchase, communicate, implement
and administer an effective benefits plan.
