Employee Benefits Strategies

WHO RECEIVES BENEFITS?

If benefits are truly group rewards and not job related or performance related, then they should be equally available to all employees. However, if the organization needs continuity of employment from only some groups and is not so concerned about turnover in other groups, it may make sense to have different benefits packages for different employee groups.

Example: in many cases, benefits provided to union employees will differ from those provided to non-union employees.

The costs of having different benefits packages for different employee groups are many:

1. This creates a status ladder in the organization in which there are haves and have-nots. This can create morale problems within the have-not group and tensions between the groups when they must work together to accomplish organizational goals.
2. There are administrative problems such as setting up a number of different plans and deciding exactly which job titles fall into which categories.
3. There may be legal problems with qualifying programs for tax purposes if only some employees are involved. In the United States, discrimination rules pertain to some benefits, including self-funded medical plans, cafeteria plans, and group life insurance.

Temporary Employees

The trend toward using part-time employees rather than full-time employees is based partly on the cost of benefits. By using part-time employees, the employer can reduce the cost of legally required benefits and eliminate discretionary benefits entirely.

Another option is to use a staffing service to hire temporary workers who are not typically eligible for employee benefits. A third option is to use independent contractors. There again, no benefits are required.

Many organizations feel that the cost savings are worth the price of using a temporary workforce.