Evaluation of Flexible Benefit Plans

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  • Topic: Employee benefit, Cafeteria plan, Workplace wellness
  • Pages : 10 (3112 words )
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  • Published : July 3, 2012
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Evaluation of Flexible Benefit Plans

Table of Contents

INTRODUCTION …………………………………………………………………………….1
Purpose of the Report …………………………………………………………………….1
Scope of the Report ………………………………………………………………………2
Sources and Methods …………………………………………………………………….2 TRADITIONAL vs. FLEXIBLE BENEFIT PLANS …………………………………….…..2 ADVANTAGES OF FLEXIBLE BENEFIT PLANS ………………………………………..4
Increase Employees’ Benefit Satisfaction………………………………………………...4
Increase Benefit Plans’ Efficiency………………………………………………………..5
Gain Controllability of Employer Contribution to Benefit Plans………………………...6
Provide Better Communication of Benefits………………………………………………6
Help in Recruitment and Retention……………………………………………………….7
Reduce Income Tax……………………………………………………………………….8 DRAWBACKS OF FLEXIBLE BENEFIT PLANS………………………………………….9
Complexity of Implementation…………………………………………………………...9 Difficulty of Administration……………………………………………………………..11
Education and communication…………………………………………………………..12 CONCLUSION ……………………………………………………………………………...13

Executive Summary

As a result of diverse workforce, different employees valued different benefits. Offering identical benefits package to all employees, such as traditional benefit plans, would not likely satisfy all employees. On the other hand, the flexibility of flexible benefit plans can better fulfill various needs of employees. By comparing these two benefit plans in the diverse workforce environment, flexible benefit plans can better meet the unique needs of different employees, and increase their benefit satisfactions. This will give the organization advantages in recruitment and retention. Moreover, flexible benefit plans tend to be more efficient than traditional benefit plans, and it proved higher controllability in employer contribution to benefit plans. The employee self-selected feature of flexible benefit plans result a better understanding of benefit and its costs, thus prove a better communication of benefit. The complexities of implementing flexible benefit plan and the administration difficulties of such a plan may prevent employers from adopting it. However, implementation cost is a lump-sum cost, which would not affect the future expenditure. The implementation cost can be outweighed by the paybacks that flexible benefit plans will provided. Also, organizations should take the advantages of outsourcing the administration of flexible benefit plan if it is more efficient than administrating it by themselves. By doing so, the administration cost and difficulties can be minimized. By analysing and comparing these two types of benefit plans, flexible benefit plans will be a more appropriate for an organization which is facing a diverse workforce. Introduction

The workforce becomes more diverse daily due to factors such as rising numbers of immigrants, multigenerational work force (White, 2009). People at different age would have different needs, as well as benefit the valued. Employee benefit plan is an important component of organization’s employment (Hubbard et al., 2009). Employers are adopting flexible components in their benefit plans to accommodate the variety of needs from different employees (Byron, 2008). There is a noticeable increase of numbers of firms adopted flexible benefit plans, which increased from 41% in 2005, to 60% is 2009 (Hewitt associates, 2009). Flexible benefit plans are gaining its popularity in a diverse workforce environment.

Purpose of the report
The purpose of this report is to determine whether or not the flexible benefit plans would be more appropriate for a firm in a diverse workforce environment. This report will do the following: 1. Introduce traditional benefit plans and flexible benefit plans briefly 2. Outline the key advantages of flexible benefit plans over traditional benefit plans 3. Identify the disadvantage of flexible benefit plans

4. Provide the conclusion of which one would be more appropriate Scope of the report
To achieve the...
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