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Strategic Value of Employee Benefits Programs

Employee benefits are indirect or non-cash compensation that employers provide to
employees. The benefits can either be a legal requirement, such as healthcare insurance and
social security payments or discretionary, such as paid time off. Employers use employee
benefits to attract top talent, inspire employee loyalty, increase productivity, and improve job
satisfaction. These benefits may in turn lead to improved financial performance of the
organization (Klonoski, 2016). With toughening of competition in the job market for talented
employees, human resource (HR) managers are increasingly using employee benefits
programs to present their organizations as employers of choice.

Variables to Consider When Providing Employee Benefits Program
There are many variables that HR professionals should consider when preparing
employee benefits program. These variables include business objectives, costs, regulatory
requirements, demographics, and practices of competitors (Aguenza & Som, 2018). An
employee benefits program that is designed without putting these variables into consideration
risks failing to achieve its goal.
Business objectives
Employee benefits are not just supposed to make employees happy; they are also
supposed to serve the interests of the business organization. If the benefits do not help the
business to achieve its goals, then the benefits may be a waste of the organization’s resources
(Aguenza & Som, 2018). Therefore, it is important that the benefits encourage employee
behaviors which have a direct positive impact on the goals of the organization. For instance,
if the goal of the organization is to increase profitability, then it may need to create an
employee benefits program that encourages employee productivity.

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Cost
The cost of employee benefits program should be proportional to the expected
benefits (Aguenza & Som, 2018). For instance, having generous health insurance and time-
off policies may help the organization to attract talented employees. However, it is important
to consider whether these benefits are worth the cost. If the cost aspect of the program is not
given serious consideration, the business organization risks taking a big financial load that
may have negative effects on other areas of the business.
Practices of Competitors
One of the key goals of employee benefits program is to attract and retain skilled and
high-performing employees. Thus, it is important for HR personnel to find out employee
benefits programs of competing organizations before preparing their own employee benefits
programs. Without such information, the HR professionals risk developing an employee
benefits program that is inferior to that of the organization’s competitors (Aguenza & Som,
2018). Such a program is unlikely to help the organization to attract and retain services of
high-performing employees.
Demographics
Demographics of employees is another variable that organizations need to consider
when developing employee benefits programs (Aguenza & Som, 2018). Employee benefits
programs should address the needs and wants of employees. Among the factors that affect
needs and wants of employees is age. For instance, older employees may be attracted by
generous healthcare insurance and retirement benefits plans. Unlike younger employees who
are more tech savvy, older employees may not be interested on benefits such as working from
home. Women with families may also be more interested in programs that support work-life

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balance than those who are single. Thus, for the employee benefits program to be effective, it
needs to be tailor-made for the needs and wants of employees.
Legal requirements
There are some employee benefits that employers are legally required to provide to
their employees (Aguenza & Som, 2018). These benefits include healthcare insurance and
social security. There are others that employers provide to their employees at their own
discretion. Thus, when preparing an employee’s benefits program, HR personnel need to
know the benefits that they are mandated to provide by law and those that they can choose
whether or not to include in the benefits program.
Income Protection Programs Versus Pay for Time Not Worked Programs
Income protection program is designed to provide employees or their family members
with a certain level of financial protection in the event that they become disabled, suffer from
long-term illness, or die (Marcum, Cameron & Versweyveld, 2018). Pay for time not worked
program, on the other hand, is designed to provide income to employees for days that they
miss work for reasons such as attending a funeral or wedding (Marcum et al., 2018). The two
programs have similarities and differences.
Comparison
Both programs allow employees to continue receiving an income even when they are
unable to work for various reasons. As a result, they allow employees to receive continuous
income. Such income is particularly important for employees who stay out of work for a long
time as it allows them to return to normal life faster once they recover.
Another similarity between the two programs is that they are not mandatory. There is
no law that compels employers to provide the two benefits to employees. Employers usually

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provide the two benefits at their discretion with the goal of attracting and retaining high-
performing employees in their organization.
Contrast
A major difference between the two programs is time of payment. Income protection
programs pay employees on a regular basis. Once the program is triggered through, among
other things, an accident and illness leading to disability, the payment could be done on a
weekly or monthly basis (Marcum et al., 2018). Under pay for time not worked, employees
receive payment only for the days that they miss work. Usually, the days are just one or two
in a given month.
Another difference is that income protection programs are usually funded through
insurance cover. The employer contributes regular premiums to the program. Pay for time not
worked, on the other hand, is purely employer-funded (Marcum et al., 2018). Thus, from an
employer’s perspective, pay for time not worked programs are generally more expensive than
income protection programs.
In addition to the manner of funding, the two programs also differ in their purposes.
The purpose of income protection program is to provide employees and their families with
financial security. Thanks to the program, employees continue receiving an income even
when they are unable to continue working due to illness or disability. Unlike income
protection program, pay for time not worked is not meant to help employees attain financial
security. Rather, the program is meant to help employees have some level of work-life
balance through increasing workplace flexibility.
Other Benefits

Flex time

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Flextime allows employees to change their start and finish time and, therefore, have
more control over their work schedules. Generally, employers that implement flextime have a
core period during which employees are required to report for work. Often this period runs
from 11.00 am to 3.00 pm (Cascio, 2015). Employees can report to work two hours earlier
than the traditional reporting time of 9.00 am and work until 3.00 pm or report to work two
hours late at 11.00 am and work until 7.00 pm. Alternatively, they may report to work for a
few hours of work and then complete the rest of the work in their homes or other locations.
Therefore, flextime does not lead to an increase or a decrease of employee’s working hours.
It only gives employees more control of the location, time, and duration of their working.
Flextime has been found to significantly increase productivity as well as job satisfaction as it
improves work-life balance.
Retirement plan
Thanks to, among other factors, improvement of medical technology, people are
living longer lives. Many workers live two to three decades more after exiting the workforce.
Financial security of life after work is a major concern that workers have. Employers can
guarantee this financial security after their employees retire by having a generous retirement
plan as an employee’s benefit (Lussier & Hendon, 2019). While such benefit may not be a
major consideration for younger employees, it is a key factor that older, more experienced
workers consider when deciding whether or not to leave their job or whether to accept a given
job offer. Thus, retirement plans can help an organization to attract and retain highly
experienced workers. It has also been found to increase happiness and job satisfaction of
employees.
Health insurance

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Healthcare costs are extremely expensive. Each year many people become bankrupted
after paying for expensive medical care. Therefore, it is no wonder that many workers place a
high value on employer-provided healthcare insurance. Such insurance covers the risk of
medical expenses of employees either in part or whole (Lussier & Hendon, 2019). Employers
who provide generous health insurance have a higher chance of attracting skilled and talented
employees than those who provide less generous covers. More importantly, health insurance
is beneficial to the employer because it helps it to have healthy and active employees who are
highly productive and efficient.
Product/service discounts
Product or service discounts involve employers providing their employees with
discounts for the products or services that they sale. This approach is Particular popular with
retail stores. It makes employees feel valued by their employer and increases their morale
(Klonski, 2016). In addition, the approach can lead to increase in sales by converting
employees into customers and advertisers of their employer’s products and services if they
get a great experience with them.
Paid holidays and vacations
Holidays and vacations allow employees to relax and spend some time with their
loved ones and family members. Often employees return from such holidays and vacations
feeling rejuvenated and significantly increase their productivity. Employers can use this
program to increase employee loyalty by pegging vacation time on years of service. Thus, the
more years that an employee remains in an organization the more vacation time that they get.

Employee Benefits Package for Exempt Employee

The three main factors that determine whether an employee is exempt or non-exempt
are time of their payment, amount of payment, and the type of work that they perform.

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Generally, employees who earn over $23,000 are considered exempt employers while those
who perform jobs such as outside sales are considered to be non-exempt employees (Marcum
et al., 2018). Additionally, exempt employees usually earn salaries while non-exempt ones
are paid wages. Most of an organization’s senior employees are usually exempt employees.
They earn the highest salaries in the organization and are not eligible for overtime pay
regardless of the number of hours that they work.
An example of an exempt employee in an organization is a senior information
technology manager. Such an employee usually has experience and skills set that are hard to
acquire in the job market. Thus, it is important for the employer to provide a generous
employee benefits package for such an employee. My proposed employee benefits package
for the senior information technology manager will be composed of life insurance, health
insurance, holiday and vacation pay, continuous education incentive, and a generous
retirement plan that includes stock options.

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References

Aguenza, B. B., & Som, A. P. M. (2018). Motivational factors of employee retention and
engagement in organizations. IJAME.
Cascio, W. F. (2015). Managing human resources. New York: McGraw-Hill.
Klonoski, R. (2016). Defining Employee Benefits: A Managerial Perspective. International
Journal of Human Resource Studies, 6(2).
Lussier, R. N., & Hendon, J. R. (2019). Human resource management functions, applications,
and skill development. Los Angeles: SAGE.
Marcum, T., Cameron, E. A., & Versweyveld, L. (2018). Never Off the Clock: The Legal
Implications of Employees’ After-Hours Work. Labor Law Journal, 69(2), 73-82.