Discussion question

Today, employee benefits programs are highly visible to both employees and man- agement. Benefits executives are frequently described as “corporate firefighters.” Their successes and failures directly affect corporate profitability. Internal and external forces to the organization influence the bottom-line im- pact of employee benefits. (See Figure 20.1.) Internal forces originate from changes in business practices and the human resources function that define attraction, moti- vation, retention, and engagement strategies. These forces include the following: • Corporate restructuring. Mergers, acquisitions, divestitures, and corporate re- structuring efforts can lead to profit centers that are more centralized or more decentralized. Under these circumstances, a successful benefits package must adapt constantly to evolving corporate configurations. • Business reengineering and the quality movement. Process improvement initiatives such as reengineering and total quality are increasingly being applied to the HR function. As a result, benefits departments need to: • Provide service to various customer groups and constituencies. • Streamline work processes. • Provide improved, cost-effective services to their customers. These objectives need to be accomplished even as benefits staff sizes are frozen or reduced. • New corporate cultures. In the “good old days,” the corporation functioned largely as a parent. Employees felt a sense of entitlement because their career and benefits were perceived as the responsibility and domain of management. Today, organizations are replacing the traditional parental employer-employee relationships with partnerships. Career employment, where employees work 20–25 years with the same organization, is no longer the norm. In this new culture, employees assume greater personal responsi- bility for their benefits. They are, for example, paying a greater percentage of benefits costs (e.g., copayments and higher deductibles under health care plans). Additionally, employees increasingly are planning for their retirement and long-term financial security through personal savings and defined contribution plans. Today’s partnership requires employees to use FIGURE 20.1 Forces that influence benefits strategy. Internal • Corporate restructuring • Business reengineering and the quality movement • New corporate cultures • Unions • Cost management • Total rewards philosophy External • Global economy and labor market • U.S. political and legal environment • The Information Revolution EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 11/22/2019 6:21 PM via STRAYER UNIVERSITY AN: 194167 ; WorldatWork (Organization).; The WorldatWork Handbook of Compensation, Benefits and Total Rewards : A Comprehensive Guide for HR Professionals Account: strayer.main.eds-live Copyright 2007. Wiley. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Internal and External Influences on Strategy 485 employer-sponsored benefits programs effectively and to assume responsi- bility for the implications of their choices. • Unions. Depending on industry and geographic region, the development, de- sign, and redesign of benefits programs is influenced heavily by organized labor, which helps shape employee expectations. The most visible arena has been in “smokestack” industries, where active employee and retiree medical benefits have been the focal point of labor negotiations. • Cost management. Despite an apparent stabilization of benefits costs, corporate executives remember the past decade of rapidly escalating and seemingly un- controllable health benefits costs that prompted intense interest and scrutiny from corporate boardrooms, the media, and the federal and state govern- ments. A well-planned strategy can improve overall benefits cost management as well as cost management on a per-plan basis. • Total rewards philosophy. Total rewards can be defined as “all of the tools available to the employer that may be used to attract, motivate, and retain employees.” The concept of total rewards is an effective way to illustrate an organization’s total investment in human capital and to demonstrate the significant invest- ment that organizations make in employee benefits plans. Employees might not always appreciate the costs involved in benefits, but organizations have no choice but to recognize what they are spending and to evaluate whether the investment is worthwhile. In general terms, external forces—domestic and global—demand that corpora- tions develop coherent strategies to ensure their competitiveness and profitability. While many external forces can be anticipated, their specific impact is not easily predicted. External forces include the following: • Global economy and labor market. Country-specific government mandates and regional precedents or cultural norms can define benefits expectations. It is an ongoing challenge in today’s global environment, where new markets are constantly being created, to design and manage a benefits package that bal- ances corporate business objectives with each country’s particular regulations and customs. • U.S. political and legal environment. Government rules, regulations, and court decisions add complexity to the benefits environment. The constraints placed upon organizations by government can increase the difficulty of day-to-day ben- efits administration, and it complicates corporate policymaking and program design. For example, the U.S. federal government might decide to reduce its deficit by taxing benefits—a move that would have profound implications for employee benefits plans. Or state-specific legislation might promote health care reform in scattered regions throughout the country, creating difficulties for em- ployers with operations that cross state boundaries. Unclear court decisions can promote legal challenges to longstanding corporate policies. When legal deci- sions and/or regulations contradict, complexity evolves quickly into confusion. • The Information Revolution. The so-called Information Revolution is continually redefining business operations, success, and productivity. Sales in new micro- markets, customer satisfaction, and reduced cycle times are among the new performance measures being developed and refined. The Information Revo- lution is redefining corporate culture and employee expectations. Employees expect newer, better, and faster services, products, and information from the human resources function. EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 11/22/2019 6:21 PM