Reference no: EM132889306

Improving Performance at the ABC Corporation

The New Benefits Plan

The ABC Corporation's competitive strategy is "To use superior customer service to differentiate the ABC Corporation properties and thereby increase the number of purchase rate of the customers and boost revenues and profitability." HR manager Alima Taylor must formulate operational policies and activities that support this competitive strategy by eliciting the required employee behaviors and competencies.

While the ABC Corporation's benefits in terms of things like holidays and health care) were comparable to other corporates', Alima knew they weren't good enough to support the high-quality service behaviors her company sought. Indeed, the fact that they were roughly comparable to similar firms didn't seem to impress the ABC Corporation's employees. Sixty percent of them consistently said they were dissatisfied with their benefits. Alima's concern (with which the CFO concurred) was that dissatisfaction with benefits contributed to low morale and engagement, thus inhibiting the ABC Corporation from achieving its strategic aims. Alima, therefore, turned to the task of assessing and redesigning the company's benefits plans.

As they reviewed the benefits numbers, Alima and the CFO became concerned. They computed several benefits-related metrics for their company, including benefits costs as a percentage of payroll, sick days per full-time-equivalent employee per year, benefits cost/competitor's benefits cost ratio, and workers' compensation experience ratings. The results, said the CFO, offered a "good news bad news" situation. On the good side, as noted, the ratios were similar to most competing organizations'. The bad news was that the measures were well below those for high-performing service businesses. The CFO authorized Alima to design and propose a new benefits plan.

Alima knew there were several things she wanted to accomplish. She wanted a plan that contributed to improved employee morale and engagement. And, she wanted the plan to include elements that made it easier for her employees to do their jobs-so that, as she put it, "they could come to work and give their full attention to giving our customers great service, without worrying about child care and other family distractions."

The new plan's focus was a proposal for much better family-friendly benefits. Because so many of each company's employees were single parents, and because each company had to run 8 hours a day, Alima's team proposed, and the board approved, setting aside a room in each company for an on-site child-care facility and for hiring a trained professional attendant. They considered instituting a flexible work schedule program, but this was impractical for most of the jobs because each front-line employee had to be there at his or her appointed hour. However, they did institute a new job-sharing program. Now two people could share one job, as long as the job was covered.

One of the metrics Alima and her team specifically wanted to address was the relatively high absence rate at the ABC Corporation. Because so many of these jobs are front-line jobs-housekeeper, drivers, and office clerks, for instance-absence had a severe effect on metrics like overtime pay and temporary help costs. Here, at the urging of her compensation consultant, Alima decided to opt for a system similar to Beximco. With this benefit program, employees can trade the value of some sick days for other benefits As Alima put it,"I'd rather see our employees using their sick day pay for things like additional health care benefits, if it means they'll think twice before taking a sick day to run a personal errand."

After just less than a year, Alima and the CFO believe the new program is successful. Their studies suggest that the improved benefits are directly contributing to improved employee morale and commitment, sick days have diminished by 40%, and employee turnover is down 60%. And when they advertise for open positions, over 60% of the applicants cite "family-friendly benefits" as a top reason for applying to work at the ABC Corporation.

Questions

1. What is your opinion of the new ABC Corporation benefits plan? Justify and elaborate.

2. Because employers typically make benefits available to all employees, they may not have the motivational effects of incentive plans. Given this list five employee behaviors you believe ABC Corporation could try to improve through an enhanced benefits plan and explain why you chose them.

3. Given your answer to question 2, explain specifically what other benefits you would recommend the ABC Corporation implement to achieve these behavioral improvements.