Reference no: EM133142533

Topic: Employee Contributions

Reflect 

What are the points that you have to consider when you are designing a Benefits Plan? Who should be involved in developing Pay-For-Performance Plans and why? Pay attention to the section "Planning and Design of Benefits Programs."  in Chapter 20: Employee Benefit Strategies https://www.erieri.com/dlc/onlinetextbook/employee-benefit-programs#WHATAREBENEFITS?

Task:

Help me make a response to my colleagues' posts. Say whether you agree or disagree with their post based on task 1. Give reasons why you agree or disagree and support the stance.

Colleague's Post:

Team Compensators 

1)  What are the points that you have to consider when you are designing a Benefits Plan?

Benefits can be defined as any supplementary service, such as income protection programs, pay for time not worked programs or other service, provided to retain and attract employees, by employers, as a part of their compensation package (UWIOC, 2022). UWIOC further highlighted that these may include: medical and retirement plans (discretionary income protection programs), vacation or sick leave (pay for time not worked programs) and company housing (company service).  The Society for Human Resource Management (2018) highlighted that benefits account for 40 percent or more of total compensation costs or packages, which means that employers should have a well thought out benefits plan design that meets both employee needs and employer objectives, as employer cost investments are high, and employee benefits are important in the recruitment and retention of employees, which helps to prevent rapid turnover, and extrinsically motivate employees to attain organization mandates.

In light of the aforementioned, it can be said that the design stage of benefits planning is critical to an organization's success. Hence, benefits plans must be carefully analyzed to determine its features. As such, the design criteria includes establishing:

a) Minimum age or length of service requirements before becoming eligible for a  benefit.

b) Possible employee contributions and vesting schedule for the pension plan.

c) Coinsurance, deductible, ceiling requirements and dual coverage for medical insurance and;

d) Options to be included in medical insurance, for example, dental plan, vision care, psychiatric or psychological counselling (Henderson, 2006).

Additionally, Henderson (2006) further explained that critical issues in benefits planning may include: 

a) Current and future roles of government mandated benefits. 

b) Employee demographics and employee preferences and;

c) Employer ability to pay and employee contributions.

2) Who should be involved in developing Pay-For-Performance Plans and why?

Performance-based pay programs in which an employee is incentivized and rewarded for meeting goals or objectives are referred to as "pay-for-performance compensation" (Harrison, 2019). Human Resource managers are involved in preparing the performance based pay program for the business with the help of the finance department, who help to ensure that the plan does not go over the business budget and that the business can support such plans. Harrison (2019) highlighted that the Human Resource Management department are the main members involved because of their role. As such, the Human Resources Management team suggests to the management team how to strategically manage people as business resources. This includes recruiting and hiring employees with specific skill sets to meet the company's current and future goals, coordinating employee benefits and suggesting employee training and development strategies. Subsequent to the development of the plan, same is revised by board members or the executive management team prior to approval.

Before working on a pay-for-performance plan, some research should be conducted to learn about the company's compensation philosophy. Before designing the organization's compensation principles, they must first address some critical questions regarding current compensation packages, for example, can the organization currently afford to implement or sustain same? Additionally, feedback from employees is vital, as plans are designed for their benefit.