Benefits encompass an assortment of programs that offer certain forms of rewards to employees that go beyond their salaries. Benefits ought to be well coordinated, efficiently planned, and well balanced to satisfy the needs and requirements of employees while at the same time meeting the compensation objectives of the employer. The benefits plan should have a design that motivates the employees at the lowest level of pay and ensures that personnel is retained in the organization. Moreover, the benefits plan should be perceived as being fair by the employees and hence attract potential professional employees ( Bryant & Allen, 2013) . Nevertheless, the plan should allow for the provision of incentives to employees demonstrating performance that is beyond average. Notably, organizations differ significantly in their benefit plans. In some organizations, the benefits included are only the legally mandated ones while other organizations include voluntary benefits for their employees.
Currently, organizations lack universal standards to serve as the guidelines regarding the benefits that an employer should accord to a given employee. Nevertheless, there are various external and internal aspects that need due consideration in the process of developing an employees’ benefits plan. Internal factors include; job responsibilities, employee’s educational background, and cost management, the number of employees required as well as experience and level of skill ( Bryant & Allen, 2013) . On the other hand, the external factors deal with the extent to which the organization meets the expectations made by the external entities such as the government regulations and policies, competition in the organization’s environment, and the labor market among other factors.
Delegate your assignment to our experts and they will do the rest.
External factors
Notably, external factors have an important bearing on the organization and hence should be considered in developing the employees’ benefits plan. Although external factors are outside the organization and hence independent of it, they have a huge influence on the package of benefits accrued to employees (Rosenbloom & Hallman, 1991). Particular external factors that directly affect the structure of the benefits plan are the government regulations and policies, competition in the organization’s environment, and the labor market.
The labor market should be considered with regard to the other employers or organizations that are in the same location. The reason for this consideration is that organizations in the same geographic area compete for the same labor force with the bottom-line being the level of benefits provided to employees. Employees necessitate the importance of a competitive organization to a certain degree, particularly in the labor market. This factor implicates that one’s organization must offer benefits in the same measure if not more, in line with the other organizations ( Rosenbloom & Hallman, 1991) . Although it is not easy to offer competitive benefits, prompt decision making on the benefits and costs of the compensation provide the basis for maintaining a competitive edge in the labor market. Organizations also need to be aware that types and extent of the benefits offered have a direct implication on the organization’s image. In fact, the types and measures of the benefits provided by an organization make it attract or dispel individuals who could be potential employees ( Rosenbloom & Hallman, 1991) . Moreover, benefits serve as a form of leverage that the organization could use to keep the employees from considering other jobs and thus reduce the employee turnover rate.
On the other hand, the government comes in as an important player due to the laws and regulations put in place for all organizations. They include both requirements and prohibitions against which legal action is taken against the organization. A major proportion of these laws and regulations had their origin in the deplorable economic conditions witnessed during the great depression ( Rosenbloom & Hallman, 1991) . Laws and regulations act as the vehicle for setting the guidelines for mandatory or illegal practices. The laws serve numerous purposes that work to the benefit of both the employers and the employees. One of the purposes of laws is to ensure the expansion of employment by ensuring that work hours are kept in check to avoid overworking the employees. As a result, organizations have to employ enough employees who can work efficiently in the stipulated work hours without exploitation.
Another purpose of the regulations is to ensure that workers are compensated at levels that enable them to have an acceptable living standard. At other times, the laws ensure the provision of income for certain periods especially after an employee loses their job, after retirement or due to disability. Moreover, the laws and regulations promote the rights of employees, especially regarding collective bargain. Other numerous laws and regulations serve as the standards for determining a fair compensation of employees and ensuring that the working conditions are kept in check. Thus, the laws and regulations are important areas of consideration for the management as they develop the employees’ benefits plan.
Internal factors
On the other hand, organizations need to consider the internal factors in developing the employees’ benefits plan. The internal factors encompass every aspect that depends on the objectives of the organization, the conditions, and standards of the organization and their needs in production and maintenance of profitability ( Rosenbloom & Hallman, 1991) . Internal factors cover a wide scope ranging from the business needs such as operations costs, administrative costs, and equipment costs to the factors implicating the employee such as their work experience, educational background, and their level of skill as well as their physical ability depending on the nature of the job ( Shields et al., 2015 ).
A major internal factor is the administrative costs. For any organization to design and manage a benefits program, the management needs to be well informed on the costs of administering various benefits on their employees. Moreover, the organization requires to progressively and constantly monitor their insurance cover that forms a huge part of the benefits program ( Rosenbloom & Hallman, 1991) . . Thus, organizations have to consider the administrative costs and use appropriate methods of cutting down on such costs to ensure the most effective benefit plan.
Another important internal factor is the operations costs. In looking at the operations costs, utilization reviews function effectively to ensure the optimum utilization of the organization’s equipment and resources. Moreover, the operation costs enable the organization to look at the effectiveness of benefits to employees before instituting them ( Bryant & Allen, 2013) . Through reviews, an assessment of the constancy of usage of certain benefit packages as well as the quality of services in such packages is important to ensure relevance of the benefit plan to the employees.
Notably, organizations require a system of classification through which they can ensure an equitable structure in their benefits plan. This classification is done based on the evaluation of the job for both the employee and the organization. Through job evaluation, an analysis, description, and valuation of the duties involved in a job are clearly laid out. Moreover, the authority held by the job, the relationship with other jobs, the essential skills required, and the working conditions of the job in comparison to other categories of work in the given organization ( Shields et al., 2015 ). . The importance of a Job or its contribution should mirror the goals of the organization and should be reasonable to the employees from their personal estimations of the job worth. From a meticulous job evaluation process, a ranking system comes into being to ensure the systematic outline of the benefits plan.
An important internal factor in an organization is the demographics of the employees therein. In most of the times, the demographic characteristics of the employees serve as the hint to the benefits that they may require. Nevertheless, they may not be fully accurate in assessing the preferences since employees demonstrate diversity in their preferences and needs. In fact, studies targeting the preferences of employees have established that certain demographic characteristics especially marital status and age serve as important predictors of the preferences of benefits by the employees ( Bryant & Allen, 2013) . On the other hand, other demographic characteristics such as sex and occupation are not important predictors of the desired benefits of the employees in an organization. For accuracy in determining the most suitable benefits for their employees, organizations could conduct a survey looking at the employee preferences regarding work benefits.
From the discussion, various internal and external factors have a bearing on the process of developing the employees’ benefit plan. The most important information for the organization to have is on the laws and regulations put in place for all organizations as they include both requirements and prohibitions against which legal action is taken against the organization. Similarly, the organization needs to be aware of its competitive position particularly in the labor market since the organization must offer benefits in the same measure or exceed the other organizations. On the other hand, the least important consideration is on the operations costs as organizations have to incur operations costs regardless of their employees’ benefit plan.
References
Bryant, P. C., & Allen, D. G. (2013). Compensation, benefits and employee turnover: HR strategies for retaining top talent. Compensation & Benefits Review , 45 (3), 171-175.
Rosenbloom, J. S., & Hallman, G. V. (1991). Employee benefit planning . Prentice Hall.
Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P., & Plimmer, G. (2015). Managing Employee Performance & Reward: Concepts, Practices, and Strategies . Cambridge University Press.
