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

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There are several major issues that arise when it comes to compensation and benefits planning for a company. Obviously, a company wants to attract the best talent possible for its positions, but there are restrictions and limitations.

First of all, there is a conflict between benefits offerings and costs. Obviously, the better the benefits offered by a company, the higher the cost. A comprehensive benefits and compensation package is essential to attracting and retaining talent—but better healthcare and pension options inherently result in higher costs. This is why many companies, having approached the limit of what they can feasibly offer, will begin to incorporate cheaper perks—like game rooms and free snacks.

Secondly, there is a need to remain competitive. When companies try to plan for compensation and benefits, they need to do a competitive analysis because people with similar skill sets will be competing for jobs with better compensation and benefits. This is a major issue and hurdle because companies are frequently innovating and improving their benefits offerings.

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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.

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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.

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