Employee Benefits Strategies

Designing a Strategic Benefits Program

When designing your organization's benefits plan, it's best to adopt a strategic approach.

Use the following four steps:

• Step 1: Write a mission statement for the benefits program based on the nature and philosophy of the organization. State the goals of the program and how the program fits in with other plans.
• Step 2: Establish specific tasks for each program with projected deadlines for completion.
• Step 3: Select specific plans for each benefit and determine how to fit the various programs together.
• Step 4: Review the plan to see if it is achieving the desired goal and if changes need to be made in any of the above three steps due to changes in circumstances.

There are two different approaches that can be used to develop a strategic benefits plan:

• holistic
• incremental

Holistic planning

Holistic planning is also called top-down planning. This planning method takes the above steps and sequentially moves from one to the other. Holistic planning uses the mission statement to select courses of action that align benefits with the direction and culture of the business. This type of planning looks at all the benefits as a whole to see that they are mission-driven and consistent with each other. Each major part of benefits (such as health insurance) has long-term goals set for it. These in turn lead to short-term tactical goals and actions.

Holistic planning is most useful when a full review of benefits is required. This occurs when benefits programs are being totally revamped or a major change has occurred in the organization (such as a merger or acquisition).

Incremental planning

Incremental planning lets you address specific changes that occur. Rather than review the benefits plan in its entirety, you only review specific parts of the plan and make changes as appropriate.

When making changes in this manner, it's important to keep in mind the overall mission statement and the fact that the part being examined and changed is intertwined with other benefits.

One important catch to look out for when using incremental planning is that particular alternatives look very attractive when examined in isolation, but they can be inconsistent within the larger picture. This is particularly true when cost considerations are taken into account.

No matter which approach you use, always keep the total cost of compensation in mind. Benefits planning should never take place outside the context of the cost of total compensation.