Then the employer will determine the cost of providing the prioritized benefits and evaluate it against the benefits budget. This step is complex and may take many factors into consideration: Can changes be made to the current plan design to induce cost savings? Can benefits that are underused or not valued by employees be eliminated?
What are the administrative costs for the benefits? What cost-containment features can be put in place? Will employees have to contribute, and how much? Are there resources to administer in-house, or will a third-party administrator and broker be necessary for certain plans?
These are among the evaluations an employer will make in determining whether to add, change or eliminate benefits offerings.
The communication strategy is a critical component to the benefits planning and management. Some resources and samples are available to assist employers.
See Communicating and Leveraging Benefits. Employee understanding of the benefits is critical to employee buy-in.
Without buy-in, the employer's efforts, no matter how perfectly designed to meet employees' needs, may be futile. If employee input was obtained and used in the benefits design process, employers should be sure to share this with employees and let them know how their feedback influenced the benefits program's design. The positive impact on recruiting, retention and employee morale may be lost without effective communication plans.
Although the employer is obligated to provide communications to comply with laws regarding disclosure of various benefits plans, such as a summary plan description, communications should go beyond the legal requirements. Good benefits communication objectives should include:. Periodically reviewing the benefits plan program is another important step in the benefits management process.
The benefits program must be assessed on a regular basis to determine if it is meeting the organization's objectives and employees' needs. Changes in the business climate, the economy, the regulatory environment and workforce demographics all create dynamics that affect benefits offerings.
Employers should consider developing goals and measurements to assess the benefits programs and make adjustments as necessary. Employers may also consider using external trends and benchmarking data to evaluate the effectiveness of the benefits plan or conduct employee surveys or a full-fledge needs assessment on a recurring basis.
You may be trying to access this site from a secured browser on the server. Please enable scripts and reload this page. Reuse Permissions. Page Content. Step 1: Identify the Organization's Benefits Objectives and Budget An important first step in designing an employee benefits program is to identify its objectives. Step 2: Conduct a Needs Assessment A needs assessment should be conducted to determine the best benefits selection and design based on the needs and wants of the employees.
Step 3: Formulate a Benefits Plan Program Once the needs assessment and gap analysis are complete, the employer will need to formulate the new benefits plan design. Step 4: Communicate the Benefits Plan to Employees The communication strategy is a critical component to the benefits planning and management. Good benefits communication objectives should include: Creating awareness and appreciation of the new or existing benefits and improving employee financial security.
Providing a high level of understanding of the benefits offered. Encouraging wise use of benefits. Step 5: Develop a Periodic Evaluation Process to Determine Effectiveness of Benefits Periodically reviewing the benefits plan program is another important step in the benefits management process. Benefits Strategy. You have successfully saved this page as a bookmark. OK My Bookmarks. Please confirm that you want to proceed with deleting bookmark.
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OK Join. An error has occurred. This includes career and social rewards such as job security, flexible hours and opportunity for growth, praise and recognition, task enjoyment and friendships. Direct compensation is an employee's base wage. It can be an annual salary, hourly wage or any performance—based pay that an employee receives, such as profit-sharing bonuses.
Indirect Compensation is far more varied, including everything from legally required public protection programs such as Social Security to health insurance, retirement programs, paid leave, child care or housing. Employers have a wide variety of compensation elements from which to choose. By combining many of these compensation alternatives, progressive mangers can create compensation packages that are as individual as the employees who receive them.
The general consensus of recent studies is that pay should be tied to performance to be effective. However, with traditional farming operations, that is not easily done. Business performance can be affected by many factors over which employees have no influence, specifically—weather. Successful managers must search for things employees influence and base performance objectives on these areas. Your operation may benefit from the following: tenure bonuses for long-time employees, equipment repair incentives to encourage good equipment maintenance, or bonuses for arriving to work on time.
The more production information data your business has, the easier this is to accomplish. Measures such as feed conversion rates, somatic cell count or mortality can offer great sources for performance incentives.
In a tight labor market, indirect compensation becomes increasingly important. Businesses that cannot compete with high cash wages can offer very individualized alternatives that meet the needs of the people you want to employ. Such creative compensation alternatives are the small business's competitive advantage.
Ask ten different people what a fair wage is and you'll get ten different answers. While there are no hard and fast rules in determining a fair wage, the importance of the task is obvious. Research according to Gregory Billikopf indicates that employees expect wages to 1 cover basic living expenses, 2 keep up with inflation, 3 provide some funds for savings or recreation, and 4 increase over time.
Discussing wage expectations with employees can help determine what their compensation package should look like. The first thing employers should consider when developing compensation packages is fairness.
It is absolutely vital that businesses maintain internal and external equity. Internal equity refers to fairness between employees in the same business while external equity refers to relative wage fairness compared to wages with other farms or businesses.
No matter the compensation level, if either internal or external equity is violated, a business will most likely experience employee dissatisfaction and employees with begin to balance their performance through a variety of ways ranging from decreased productivity to absenteeism and eventually to leaving the business.
So, what constitutes a fair wage? One approach to determining a fair wage is a market survey. These are typically fast and easy ways to establish compensation guidelines for many businesses. A few phone calls to other employees in similar businesses can determine the "market" value for a specific job. Unfortunately, this technique is not necessarily well suited for agricultural producers. An agricultural manager can do informal surveys of other agricultural producers to determine the "going rate" for labor or modify existing studies of non-agricultural businesses to compare employees not by job title but by skill sets.
For example, operating a forklift in a factory and driving a tractor may require similar skills and, therefore, can be compensated similarly. Broadbanding was used in a Cornell University study. Five competency levels were developed to classify employees according to three criteria: authority to make decisions, skill level and supervisory capacity. By using a competency scale, each employee can be cross-referenced by job title and competency level or studied solely within either category.
Employees of similar skill levels or competency are taken together in compensation "bands" regardless of job title. These bands then compensate like employees at like rates across the entire organization and serve to maintain both internal and external equity.
Agricultural managers face many decisions every day. Finding the time to build and implement an equitable wage structure can be difficult. To make the process easier, consider the following checklist:.
Successful agricultural producers rely on common sense when it comes to management decisions.
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