Final Total Rewards Management Report
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Assignment4.docxRunning head: PLANNING BENEFITS STRATEGICALLY 1
PLANNING BENEFITS STRATEGICALLY 2
Planning Benefits Strategically
Tonya Palmer
Dr. Gary Lorenzo Wash
Total Rewards
March 3, 2019
Planning Benefits Strategically
Benefits planning is an important part of the operational plan of a future-oriented organization. Through a benefits plan, an organization identifies different categories of employees within the organization and determines the total benefits that they are entitled to receive. A benefits plan covers an employee’s basic remuneration in terms of their salaries as well as other common benefits that they may receive such as health insurance and retirement planning. When efficiently designed, a benefits plan can act as a tool that is used to improve employee motivation, and consequently their productivity within an organization. A benefits plan can also be used as a tool for ensuring employees focus on the long term goals and objectives of the organization, by the inclusion of these goals in the benefits program. A benefits package is designed in a way that takes into consideration both the external and as well as the internal factors that affect an organization’s operations. When strategically designed, a benefits program can enable an organization to achieve its long term goals and objective while keeping operating costs are a minimum.
External and Internal Forces that Influence a Benefits Program
An external factor that can influence the impact of an organization’s benefits program includes the benefits that similar organizations give their employees. According to Nickerson and Zenger (2008), employees usually compare their benefits to those of employees from other organizations, and any perceived injustices can affect their motivation. An organization, therefore, has to continuously adjust its benefits program in line with recent trends in its industry. Externally, the performance of the economy and what the benefits an employee receives will be able to do for them also determines how they will perceive the benefits package that they are entitled to. If the government, for example, adjusts the minimum wage, affected companies will have to adjust their benefits packages accordingly. Organizations, therefore, have to continuously adjust their benefits packages in line with changes in the benefits that other organizations provide as well as changes in economic conditions.
Internally, the productivity and workload of employees will also determine their benefits expectations, which consequently may force an organization to make salary and bonus adjustments. According to Kahn and Lange (2014), there is a relationship between productivity and employee benefits. Employees who do more for an organization expect to receive more from the organization by way of bonuses and salary increments. This means an organization needs to consider the productivity of employees when designing its benefits package, as a way of keeping the hardworking employee motivated and encouraging productivity. Internally, the workplace culture also determines the benefits package that an organization designs for employees. Organizations that have a culture of keeping employees motivated are more likely to record higher productivity and as a result, may have higher benefits packages in comparison to organizations that do not. According to Sandhya and Kumar (2011), employee engagement and motivation is one of the most effective ways of improving employee productivity and consequently remuneration. Internally, therefore, how an organization motivates its employee could impact on the structure of their benefits program.
Key Ways that an Organization can Use to define its Benefit Management Philosophies
A key philosophy that an organization can use when designing a benefit program is the identification of the coverage in terms of insurance that employees are supposed to receive and what portion of this will be met by the organization. An organization needs to make a substantial commitment in terms of the insurance coverage that employees will receive from the organization, in addition to the required contribution that the employee themselves is supposed to make. A key consideration made in determining the coverage includes the industry trends, as determined by what competitors are providing, as well as terms that are likely to be offered by insurers.
An organization also needs to consider whether its benefits package is meant to encourage employees to be more productive and motivated. Most organizations now days offer performance pay that is meant to encourage employees to be more productive due to the high bonuses that they will receive as a result (Lemieux & MacLeod, 2009). When designing its benefits philosophy, an organization needs to consider whether, in fact, it should use its benefits program as a way of motivating employees. This will aid in determining the most effective benefits program for the organization that takes into consideration the features of an organization’s industry.
An organization also needs to consider the cost of its benefits program and how well it suits the needs of the organization. An efficient benefit program should be both affordable and competitive for an organization. This means the organization should be able to pay employees on time without delay, but should also have a competitive package that can attract and retain the best talent in its industry. This can also be best done by comparing what other firms in the industry are paying their employees and designing a benefits package that is both comparable and is within the budget of the organization.
Comparing and Contrasting the Top Down and Backing In Strategies of Benefit Management
The backing in approach is used in organizations where decisions are made at different levels in an organization, which makes it difficult for the executives of the organization alone to design the benefits package. This approach involves a strategic planning process that involves the analysis of key problems that the organization may be facing in terms of remuneration and the design of a suitable benefits package that will address all these challenges. The design of the actual benefits package is done through a consultation process that involves many different people in an organization. Using this method, key questions that relate to the problems being addressed are identified and used as a basis of solving the benefits problem that the organization may be dealing with. In comparison to the top-down approach, the backing in approach is more complicated and requires more resources in form of time. It also requires the analysis of key issues facing an organization before the benefits package can be designed.
Outcomes of Strategic Benefits Planning Initiatives
A key benefit of the strategic planning of the benefits program of an organization is improvements in the operational efficiency of the organization, which consequently leads to goal achievement and a reduction in the operating costs of an organization. By designing its benefits package to be in line with long term goals and objectives, an organization ensures employees are well motivated for their various roles and receive comparable salaries to other employees in competing organizations within the same industry. This also enables the organization to efficiently use its resources in motivating employees and consequently improving productivity. Key employee positions that contribute the most to the success of the organizations are identified and competitive remuneration plans can be used to boost their productivity.
The strategic planning of an organization’s benefits program also enables the organization to focus on long term goals and objectives. By designing a benefits package that takes into consideration the strategic focus of an organization, the human resource function of the organization is structured in a way that is focused on the long term goals and objectives of the organization which consequently ensures key organizational activities are designed in a way that emphasizes those goals. This gives the organization a sense of direction that guides its key activities and ensures key organizational resources are spent on the most important activities of the organization.
The strategic planning of an organization’s benefits package also enables the organization to focus on the future and as a result, ensure it is in a position to meet the changing needs of the human resource market. Unfavorable changes may take place from time to time that could not have been foreseen by the organization. Strategic planning enables an organization to plan for these situations well in advance in order to be in a position to handle them when they eventually take place. This ensures the organization is proactive and is able to respond to situations immediately when they arise in an effective way.
Conclusion
Benefits planning plays an integral part in the operations of an organization. Through a comprehensive benefits program, an organization is able to ensure that it provides its employees with a competitive remuneration package that is comparable to industry standards and can act as a motivational tool for improving productivity. Efficient benefits planning also enables an organization to emphasize its long term goals and objectives to employees, which consequently ensures that all organizational resources are dedicated to key goals and objectives that have been outlined in an organization's strategic plan. An effective benefits plan, therefore, ensures that employees are well motivated and are in a position to help the organization achieve its long term goals and objectives. Through the program, an organization is able to define the requirements of each role and as a result, identify suitable candidates for the role and compensate them as per industry standards.
References Kahn, L., & Lange, F. (2014). Employer learning, productivity, and the earnings distribution: Evidence from performance measures. The Review of Economic Studies, 81(4), 1575-1613. Retrieved from https://academic.oup.com/restud/article-abstract/81/4/1575/1576902 Lemieux, T., & MacLeod, W. (2009). Performance pay and wage inequality. The Quarterly journal of Economics, 124(1), 1-49. Retrieved from https://www.nber.org/papers/w13128.pdf Nickerson, J. A., & Zenger, T. R. (2008). Envy, comparison costs, and the economic theory of the firm. Strategic Management, 29(13), 1429-1449. Retrieved from https://onlinelibrary.wiley.com/doi/abs/10.1002/smj.718 Sandhya, K., & Kumar, D. (2011). Employee retention by motivation. Indian Journal of Science and Technology, 4(12). Retrieved from https://pdfs.semanticscholar.org/314b/bb852bc7754df0ecb07f7d3ef2ba36ad0727.pdf
