Subject: Compensation & Benefits Identify and discuss key issues in benefit planning, design, and administration.

Expert Answers
brandyhwilliams eNotes educator| Certified Educator

The benefits package is often far more important than what an employee's wage or take home pay is. In fact, it is quite common for the benefits package to be higher than the actual salary or wage for any given employee. Because of this, setting up a benefits package poses some major hurdles for benefit administrators. See below for a basic list of major concerns.

1. Determining the goals and objectives of the benefit's package

Primarily, the benefit package has to involve considerations of the wage, and what the remainder of the offerings amount to as far as costs to the employer. Benefits, unlike wages, are not unitary. Thus, it is critically important to determine valuation, goals for competitiveness, and cost- benefit ratios for the trade off in employment services. Additionally, the labor market demands of an organization and job profile determines what benefits package to offer.

2. Social and competitive assessments

Government legislation, such as healthcare and social justice needs, dictate major concerns for employee benefit and compensation. What the minimum wage is, what level of healthcare is necessary, and what things to cover in a package, are all social concerns. Likewise, administrators must review competitor rates and packages to ensure that they can fight for the top talent. What company X provides, who is relatively close in distance and job categories to an administrator's company, is a serious consideration for the management of human capital. 

3. Legal restraints

Under ERISA employers must provide employees with a summary plan description and changes. This description must be given to employees when hired and every five years. More so, collective bargaining must be accounted for in the legalities of benefit and compensation administration. Have unions mandated something? How much monitoring is necessary to remain in good legal standing? These are all major considerations.

thanatassa eNotes educator| Certified Educator

Perhaps the most difficult aspect of benefit planning is how to balance your desire to create as attractive as possible a benefit package for employees while at the same time controlling costs.

The first key issue in benefit planning and administration is compliance with all relevant local laws. One major area of compliance is making sure you are following any relevant equal opportunity guidelines.

The next issue is health benefits. In the United States this means verifying that you are in compliance with the provisions of the Affordable Care Act. Controlling health costs is a major issue for many companies, and involves incentivizing employees to reduce health costs. You need to consider whether things like smoking cessation and fitness programs will, over the long term, result in savings in health benefit costs. 

Finally, you will need to balance the goal of letting employees customize their benefit packages with your need to control costs and simplify administrative procedures and reduce costs.

Access hundreds of thousands of answers with a free trial.

Start Free Trial
Ask a Question