Employee Benefits

Executive Summary

No doubt that the design and purpose of employee benefits programs have remained unchanged since the past 25 years or so; however, various developments and revisions of these benefit programs have been witnessed to changes occurring in the global business environment. The key elements which have laid a huge impact on the benefit programs include new legislations, changes in employee demographics and immense increase in the healthcare costs. The increase in number of baby boomers (people born immediately after World War II), moving towards the age of retirement and longer life spans are leading to changes in the discretionary benefits employees receive at their workplace. In this regard, the employee pension plan is of immense significance. Moreover, younger employees are required to find a source of affordable elder care (presumably possible with the help of their employers only), as well as, they also need time-off to care for their aging parents

This report aims to study the problems associated with continuing discretionary benefits for employees, and to present to the CEO, recommendations on the problems of rising cost of providing these benefits accordingly. This will allow employees to continue to receive these benefits, while employers can manage the incurring costs. Based on the review of secondary sources of data, three factors are identified, which if adjusted, can contribute towards cost saving for organization, simultaneously, not depriving the hard working employees of their discretionary benefits. Moreover, reducing the administrative costs of discretionary benefit plans can also help the organization to continue providing these benefits. Outsourcing of the benefits function can also help in managing the rising costs of discretionary benefits. A memo of transmittal is also included in the report so as to provide the CEO a quick review on the recommendations.Table of Contents

Executive Summaryii

List of Figuresiv

Memo of Transmittal1

Introduction3

Discussion5

Employee Benefits in the Total Compensation Scheme5

Discretionary Benefits6

Income Protection Programs6

Health Protection Programs8

Paid Time-Off9

Accommodation and Enhancement Programs9

Basic Design Considerations for Discretionary Benefits9

Problems with Providing Discretionary Benefits12

Economic Factors12

Political Factors12

Technological Factors13

Social Factors13

Possible Solutions for the Problem13

Additional Recommendation14

References16

List of Figures

Figure 1: Legally Required Benefits4

Figure 2: Total Compensation5

Memo of Transmittal

To: The CEO

From: Director Human Resources

Subject: Recommendations for managing discretionary benefits

I am pleased to forward my recommendations related to the continual of providing discretionary benefits to the employees of our organization, while reducing costs simultaneously. I have come up to these recommendations after conducting an in-depth research on the given problem.

Because of rise in costs it is becoming a bit complex to maintain the costs while providing discretionary benefits to the employees simultaneously. I would recommend that you look into altering the benefits rather than eliminating them. I have identified three major areas which can be altered and can save the organization a great deal of money. Amongst them first is altering the health plans. Moving from Insurance plan to Health maintenance Organization (HMO) or Preferred Provider Organization (PPO) can reduce costs to a great extent. The limit on the eye care plan can also save costs for the organization.

The second factor is time ...