by Indrani Basu

Created on: August 28, 2009

Employee Benefit plan is one of the direct cost centre to a company. However if evaluated and rendered properly these could lead to an indirect revenue generating centre. The reason is simple. A company is nothing but a group of people and machines working together for a common goal and that is making money and working for the greater good of society. And hence it becomes a core activity to evaluate and improve their employees benefit plans on a regular basis. Typically that happens annually or during board meetings sometimes. Of course while evaluating we cannot ignore the external forces that might be having an impact on the company or the industry as a whole but even in tough situations a good company always backs on its resources and strategizes on a long term plan.

Implementing good benefit plans thus becomes a necessary pain that any company needs to take. It could be quite cost bearing and complex on the face value. Therefore a lot of factors are to be considered while evaluating an employee benefit plan. The plan has to be balanced between supporting the employee against the competitive nature of cost to the company.

Money is a prime factor in any business but as most agree it is a means and not the end to do well in a business. Apart from tangible factors, a lot of employee benefit plans are focusing more and more on the intangible aspects. It has been observed empirically that a company that fosters a caring, transparent and supportive environment for its employees has a very high productivity and retention rate. Therefore these aspects should be taken into account when a plan is being evaluated.

One way of evaluating could be to gauge the value that is being generated from each dollar invested in the employee benefit plan. If we compare several plans based on certain parameters like quality of work, employee medical claims, new business deals etc, and rate each plan, we have a picture of how efficient and cost effective a plan is.

An employee benefit plan may include many services like healthcare, household, banking and vacations to name a few. It is very important to check and understand the terms and conditions of these service providers before any agreement with them. A good negotiation and screening process should be in place for comparing these services existing in the market and then choosing the one that would best suit the cost structure, business model and will work towards the benefits of the employees as well.

A company can have one or more segments or compositions of workforce. For example, the call centre industry is having a more young and unmarried population. On the other hand a research institution would have middle aged and highly intellectual workforce. Some FMCG companies have a very family oriented workforce. It all depends on how old and how big is the company in terms of revenue and volumes. So what is needed is a dynamic set of plans that could cater to each segment in a company.

A plan for young population should be oriented towards housing, vacations etc where as for families medical and housing benefits matter the most. Another factor is whether it should be for the employee or will include his immediate family members.

Any benefit plan will have little gaps between the benefit and cost point of view from the employees and employers respectively. Thus while evaluation, the aim should be to minimize the gaps as much as possible and strive towards perfection. And keep on setting better targets each year.

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