Describe the key issues in benefit planning, design, and administration.
A number of recurring and contemporary issues surrounds the benefit planning, design, and administration. When deliberating on these issues, planning and design are typically put together in one context while the administration is considered on its own.
Benefit Planning and Design Key Issues
Benefits planning and design contend with many issues due to the dynamic and diversity of benefits. One key issue is how to achieve the intended benefits objective. As affirmed by Milkovich, Newman, and Gerhart (2011), in most cases, the main objective of benefits is to attract and retain employees. To enforce this, the planning and design must come up with an approach, which will maximize the chances of achieving the aforementioned objective. Deciding on the best approach is a complex task since employees hail from divergent cultures and demographics. Also, their preferences are not similar. The type of industry also determines how the main objective will be approached with regard to the services it offers.
Another key issue regards how to prevent undesirable turnover (Milkovich et al., 2011). This may result from designing a benefit package which advances directly proportional with seniority. The package would provide a reward for continuing service thus encouraging employee retention. However, it would deter the progress of other compensation tools such as increasing wages. The progress would be deterred since increasing both the benefits package and the compensation tools would lead to expensive expenditure. Therefore, the compensation tools must be integrated with the benefits package, which is a complex undertaking. Lastly, the issue of external competitiveness is vital in benefits planning. It is obligatory to have current information and understanding of benefits offered by the competitors (Milkovich et al., 2011). To facilitate this, benefits surveys should be conducted in the labor markets to justify which ones carry the key importance.
Benefit Administration Key Issues
Four main key issues face benefit administration. The first issue focuses on determining which individual should benefit (Milkovich et al., 2011). This arises from the circumstance where the employees have different employment statuses such as those employed full time and those working part-time. It also raises the question of whether the employee’s dependents should be covered, and if so, to what extent and under which circumstances. The second administrative issue concerns the flexibility of the plan. It raises the issue of how much choice the employees are offered in selecting their desired packages such as contributions to 401 (k), vacations and health insurance. The third issue regards the financing of benefits (Even & MacPherson, 2015). Three choices are available which include non-contributory, contributory and employee-financed. The administration faces a challenge in determining which choice would favor the employees and the company equally. The last administrative issue concerns legal defensibility of the benefits. Compliance with the tax code is obligatory to ensure that the benefits package does not violate the set rules and regulations.
Challenge issues in 2016 facing Employer’s pertaining to Benefit Planning
Numerous challenges pertaining to benefit planning have been faced by the employers in the past year, 2016. The main challenge revolved around changes in Affordable Care Act. The employers were forced to keep up with the changes to enhance efficiency in their operations. The changes brought new requirements, which the employers were obliged to embrace in order to stay current in the market (Even & Macpherson, 2016). For instance, the new ACA changes required all employers with more than 40 full-time employees to provide benefits.
Another issue was the need to help employed individuals understand benefits. According to Even and MacPherson (2015), with the high diversity in benefits offered, employees find a hard time in choosing the best package. Navigating the benefits and packages without assistance may make clients pick inappropriate packages. To curb this, employers have been forced to employ more HR professionals to educate the employees regarding entirety setting of benefits. The demographics challenge has also been a major issue in 2016 regarding benefit planning. Employees usually fall within different ages and hail from varying demographics. Planning a benefit that fits them all, therefore, becomes a tough undertaking, which is sometimes impossible. For instance, old people may prefer 401k while young people may prioritize vacation benefits.
Unbiased employment decisions was a big issue in 2016 challenging employers regarding planning benefits. The HR professionals play an advocacy role between the employees and the organization. They are tasked with ensuring a high retention of the top talented employees at a manageable cost. However, a consideration is taken on where, through the health records of employees, it is ascertained that a particular employee is costing the organization huge amounts of money due to health issues. Reconsidering the future of such an employee with the company becomes a challenge and raises ethical concerns.
Advice to Employers undertaking the Benefit Determination Process
Employers are obligated to embrace diverse options to enhance their benefit determination process. One key advice is compliance to the laws. Since laws keep on changing, the employers should subscribe to the appropriate industry publications to keep them updated, or else hire professional to provide strategic knowledge. The employers should also invest in technology to facilitate tracking employees’ time and attendance. Another advice would entail outsourcing the administration benefits. This would allow the HR department to focus on their daily responsibilities rather than utilizing most of their time on benefits administration. Outsourcing also gives the organization a chance to work with diverse professionals with expertise on various benefit options.
Lastly, employers should beware that one size does not fit all. In the context of benefit determination process, the phrase implies that one package cannot satisfy all the employees. The employers should provide diverse benefit packages to fit the various employee preferences (Even & MacPherson, 2015). The employers should engage with the employees to establish their priorities and thus plan benefit that aligns to the laid priorities. The initiative will foster understanding and increase employee retention, as they will perceive inclusion in the organization
Even, W., & MacPherson, D. (2015). The Affordable Care Act and the Growth of Involuntary Part-Time Employment. SSRN Electronic Journal. http://dx.doi.org/10.2139/ssrn.2653995
Milkovich, G. T., Newman, J. M., & Gerhart, B. (2011). Compensation (10th ed.). New York, NY: McGraw Hill/Irwin.