Deck 13: Employee Benefits

Question 1

We have seen that many organizations have become less paternalistic in their employee benefits strategies. Employees now have more responsibility, and sometimes more risk, regarding their benefits choices. One change has been in the area of retirement income plans, where employers have moved toward greater reliance on defined contribution plans. Such plans require employees to understand investing; otherwise, their retirement years may not be so happy. The risk to employees is especially great when defined contribution plans invest a substantial portion of their assets in company stock. One reason companies do this is because they wish to move away from an entitlement mentality and instead link benefits to company performance. However, if the company has financial problems, employees risk losing not only their jobs, but also their retirement money. Another change has been in the area of health care benefits. Employees are being asked to increase the proportion of costs that they pay and also to use data on health care quality to make better choices about health care. Of course, different companies have different benefits strategies. We saw at the beginning of the chapter (and later in the cases of Google and Patagonia) that tech companies, for example, are not in the mode of reducing benefits and/or passing on more costs to employees. Rather, they are looking for ways to make their benefits packages more attractive to help them compete in the labor market for valuable human capital.
QUESTIONS
Why do employers offer benefits Is it because the law requires it, because it makes good business sense, or because it is the right thing to do How much responsibility should employers have for the health and well-being of their employees Take the perspective of both a shareholder and an employee in answering this question.

Answer 1

Employee benefits are offered to motivate the employees. They make the employees more loyal towards the company. Employee benefits also increase the morale of the workers which results in higher levels of productivity.
Employers offer benefits because of the following reasons:
1. Motivated Work Force: People work for incentives. Provision of benefits keeps people happy and satisfied. People are induced with a sense of belongingness and ownership which makes them very motivated.
2. Higher Productivity: When people get benefits, their morale goes up. When people are satisfied and motivated, they work more effectively and efficiently. This results in optimum utilization of resources. Optimum utilization of resources results in an increase in production and decrease in costs.
3. Competitive Edge: Benefits help in attracting a competent workforce. Benefits make the organization attractive and give a competitive edge.
The following are the arguments from a shareholder's perspective:
1. Higher Profitability: When employees receive benefits, their morale goes up. Their productivity increase by many folds and therefore, there is an increase in the productivity of the company. Shareholders are investors in the firm. Thus, they enjoy this higher productivity as it is directly proportional to the profits made.
2. Unnecessary Expenditure: Some shareholders may also argue that expenditure on benefits is an extra burden on the profits of the firm and reduces the profits of the shareholders.
The following are the arguments from a employees point of view:
1. Basic Necessity: Provision of benefits is a basic necessity for the employees as it helps them to fulfill their basic healthcare and security needs.
2. Expectations: For employees, providing benefits is a way by which the employer shows how much they care about the employees. The employees feel a sense of belonging and become loyal towards the organization.
The employees feel that when they are working hard for the organization, it is the duty of the organization to reciprocate and provide the workers with such benefits.
Thus, it is concluded that the employer should have an essential role in providing employees with benefits.

Question 2

The chapter-opening story described how employers are shifting more employee health care costs to employees. What are the likely consequences of this change Where does the social responsibility of employers end, and where does the need to operate more efficiently begin

Answer 2

Employees are the workers who work for the organization, company or at work place to achieve the common goals and objectives. Employees are the important stakeholder of the company. They get wages and salary for their work.
Employers are the persons or company management who hire the employees to work in the organization, company, factory,work-place. Employers are an important stakeholder of the company. They get profits from the business.
Company is a place where group of people work together to achieve the common goals and objectives of organization The goals and objectives of company are profit maximization, wealth maximization and optimum utilization of resources.
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The responsibilities of employers or company management towards employees as follows:-
• To promote employee Fitness by employee wellness programmmes. Proper gym facility, racing grounds, exercise facility etc. should be provided for the betterment of employees.
• To promotes efficiency and work capacity of employees in the organization.- The goals and objectives to be designed in such a way that it will promote the efficiency and work capacity in the organization.
• To work for the improvement of communication among the levels of communication. That is among top level, middle level and low level. There is upward and downward communication takes place.
• To improve the levels of Creativity - Creativity is something which has never existed before. It promotes creativity and thinks out of box feeling.
• Trustworthy - To promote trust among the employees and management among the organization. It promotes trust and loyalty among the employers and employees.
• Control Absenteeism - To control absenteeism of employees in the company.
• To provide fair wages and salary.- Reasonable wages and salary to be provided to the employees and workers.
• To provide facilities like transportation and housing etc.- There should be proper facility of transportation and housing to be provided to the workers.
• To provide good working conditions to employees at workplace.- There should be proper working conditions to employees at the organization.
• To provide the safety at work place.- There should be safety at work place in the organization. Example equipments, cafeteria, workplace etc. all should be safe.
• To provide health and welfare practices at work of his or her employees.- There should be proper medical check-ups in the organization. They should properly manage and conduct work activities for maintaining safety, at workplace. There should be regular activities related to health and welfare at work of all employees.
The responsibilities of employees towards employers or company management as follows:-
• To be in good health work in best spirit for company.- Proper gym facility, racing grounds, exercise facility etc. should be provided for the betterment of employees.
• To work with efficiency in the organization.-.- The goals and objectives to be designed in such a way that it will promote the efficiency and work capacity in the organization.
• Have a proper communication with management. - To work for the improvement of communication among the levels of communication. That is among top level, middle level and low level. There is upward and downward communication takes place.
• To work with creativity in company.- There should be innovation and creativity in the work. They should work with a feeling of something new.
• The employees should be loyal to the organization. -The employees should be faithful towards the organization
• Absenteeism should not be there. - The company should be able to control the absent rate of the organization.
• Practice the culture of hard work.- They should practice the culture of hard work in the organization. All workers should work diligently in the organization. There should not be any laziness in the organization.
• They should do the optimum utilization of resources.- The resources are to be utilized in best possible way.

Question 3

Why don't more companies emphasize employee wellness Does it work better for some companies than for others

Answer 3

Employees are the workers who work for the organization, company or at work place to achieve the common goals and objectives. They are very important part of organization.
Wellness is related to state of well being both physically and mentally. It means the organization should be disease and infection free. The main motto is to keep employees physically and mentally fit.
Employee wellness is related to the wellness of employees in the organizations. In this various kind of programs or activities are started by the employer and the management of company. The activities are run under the care and guidance of company management for the physical and mental gain of employees. The wellness is very important for employees because health is wealth. If the employees are healthy they can work more effectively in the organization.
There are various kinds of Employee wellness programs which include various activities and health and fitness programmes are run by employer or management of company in order to take care or improve the physical and mental health of workers or employees. It also help individual employees workers to overcome and control the various problems related to health and fitness. The employer or management of company can give mandatory or compulsory trainings to employees through seminars. Various Induction and orientation programs are to be introduced by employer and company management which is to be given to staff and workers. The employers or company management can enter to a contract and agreement with a third party to deal in health and fitness to employees and workers. Third parties or the company who deal in training are those which provide health and fitness training programs. Some companies provide the facilities of sports ground, health and fitness equipment, gyms, sports items etc. Some companies have the facility of sports ground where the activities like running, jogging, brisk walk etc. can take place.
Company is a place where group of people work together to achieve the common goals and objectives of organization. Many goals and objectives of company are profit maximization, wealth maximization etc.
Reasons for that company don't emphasize for employee wellness as follows:-
• It appears to be doubtful - The nature of employees is to be doubtful. They are doubtful both employers and employees. That the employees can work part time or full time. Sometimes there is an essence of skepticism
• Company management is not prepared -   Employees are not interested or ready or prepared for health care, health changes and fitness.
• It is not important or significant - Employees and employers do not find important for themselves like health care, changes and fitness. For example exercises, jogging, cycling, running etc.
• It leads to fatigue or tiring - It leads to tiredness and fatigue in the body of employees. It can hamper the working capacity of company. 
• It has barriers of communication - It requires various channels to communicate on this employee wellness programs. Communication systems are not well developed.
• It has lack of creativity - It is not enough compelling. It is not able to create positive impact or importance among employers and employees. It is not having importance in organization. Sometime there are repetitive activities in wellness activities. So there is an iterative nature.
• Sometimes lack of awareness among employees for employee wellness programmes.
• It is boring or tedious - Employers and employees find it boring. They do not find it challenging. They find it tedious and it does not create interest among them
• It is suspicious or distrust - There is distrust between employees and employers.employees and management does not trust each other. There are cultural problems among the employees. It does not create confidence among employees. There is a sense of suspicious among them.
• It is expensive or costly - Wellness program are costly to the organization. It requires instructors, infrastructure, equipments etc. It is found to be very expensive technique.
Employee Wellness work better for other companies than for others:-
Employee wellness programs work for the wellness of employees in the organizations or company. In this various kind programs are prepared are operated or worked under the care of management of company. These kinds of Employee wellness programs are run by employer or company management in order to take care or improve employee health, metal issues and wellness. It enables to overcome and control the various problems related to health among employees and company management. The management can implement mandatory or compulsory training to employees, and the seminars given to staff, employees and workers. The employers can enter to a contract with a third party to provide physical training and fitness programs. These programmes provide mind balance as well as with physical well being. In this the companies provide the facility of exercises, aerobics, gym, yoga etc.
Other companies which own the other companies in there own brand. Examples of other companies are Coca- cola, Unilever, Kellog's, Procter and gamble etc.
Yes it is suitable for those Employees participate in Employee Wellness work better for other companies than for others.
The reasons as follows:-
• It promotes health and fitness - Both Employers and employees can be fit in the organization. It is important for both employees and management
• It promotes efficiency - It improves the efficiency and work capacity of employers and employees in the organization. It promotes speed in the organization.
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It has quality of communication - It lead to improvement communication among the levels of communication. That is among top level, middle level and low level. There is upward and downward communication takes place. The communication can be upward and downward. The upward communication can take place from employees to management of company. In Downward communication takes place from company management to employees.
• Creative mind is required - Creativity is something which has never existed before. It promotes creativity and thinks out of box feeling. So if there is creativity or some new tricks in employee wellness programmes they will enjoy more.
• Trust - Employee wellness promotes trust among the employees and management among the organization. It promotes trust and loyalty among the employers and employees. There should be trustworthiness is required.
• Control Absenteeism - Employee wellness programs should be able to control absenteeism of employees that is rate of number of employees absent in the company.

Question 4

For employers that need to cut employment-related costs, what other cuts could be made What are the pros and cons of cutting 401(k) matches versus making these other types of cuts

Question 5

We have seen that many organizations have become less paternalistic in their employee benefits strategies. Employees now have more responsibility, and sometimes more risk, regarding their benefits choices. One change has been in the area of retirement income plans, where employers have moved toward greater reliance on defined contribution plans. Such plans require employees to understand investing; otherwise, their retirement years may not be so happy. The risk to employees is especially great when defined contribution plans invest a substantial portion of their assets in company stock. One reason companies do this is because they wish to move away from an entitlement mentality and instead link benefits to company performance. However, if the company has financial problems, employees risk losing not only their jobs, but also their retirement money. Another change has been in the area of health care benefits. Employees are being asked to increase the proportion of costs that they pay and also to use data on health care quality to make better choices about health care. Of course, different companies have different benefits strategies. We saw at the beginning of the chapter (and later in the cases of Google and Patagonia) that tech companies, for example, are not in the mode of reducing benefits and/or passing on more costs to employees. Rather, they are looking for ways to make their benefits packages more attractive to help them compete in the labor market for valuable human capital.
QUESTIONS
If you were advising a new company on how to design its health care plan, what would you recommend

Question 6

Your company, like many others, is experiencing double-digit percentage increases in health care costs. What suggestions can you offer that may reduce the rate of cost increases

Question 7

The companies here have on-site facilities. Is that the right model for all companies

Question 8

Are 401(k) plans more or less important today than they were in the past Why Does this increase or reduce your concern with 401(k) match cuts

Question 9

Why is communication so important in the employee benefits area What sorts of programs can a company use to communicate more effectively What are the potential positive consequences of more effective benefits communication

Question 10

How does the recent performance of the stock market affect the role of 401(k) plans

Question 11

What are the potential advantages of flexible benefits and flexible spending accounts Are there any potential drawbacks

Question 12

Although benefits account for a large share of employee compensation, many feel there is little evidence on whether an employer receives an adequate return on the benefits investment. One suggestion has been to link benefits to individual, group, or organization performance. Explain why you would or would not recommend this strategy to an organization.