How to Create an Employee Benefits Programs Successfully

HR Tech Outlook | Saturday, March 19, 2022

Employers must manage employee benefits, which is a time-consuming and costly task. While most employers are required to provide mandatory benefits such as Social Security contributions, workers' compensation insurance, and unemployment insurance, most other benefits are optional and determined by the employer.

Fremont, CA: The selection and design of benefits are crucial components of total compensation costs. Benefits can account for 40 percent or more of total compensation costs in some cases. Therefore, employers should have a well-thought-out benefits plan design that meets both employee needs and employer objectives due to the employer cost investment and the importance of employee benefits in recruiting and retaining employees.

Determine the Benefits Objectives and Budget of the Organization

Identifying objectives is an important first step in designing an employee benefits program. This will provide overall guidance in establishing the benefits program's selection and design. In general, this process does not result in a list of specific benefits provided but rather provides an overview of the organization's goals of providing benefits that meet both the needs of the employer and the needs of the employees. In addition, the benefits objectives will be guided by the organization's business and HR strategy, as these objectives should help achieve the overall strategic goals.

Conduct a Requirements Assessment

A needs assessment should be conducted to determine the best benefits selection and design based on the needs of the employees. The needs assessment may include an employer’s perception of employee benefits needs, competitor’s benefits practices, and tax laws and regulations. But a more recent trend is to take a market research approach to employee benefits planning. Common market research techniques include employee inquiries in personal interviews, simplified questionnaires, or sophisticated research methods.

Create a Benefits Program

Once the needs assessment and gap analysis are completed, the employer must design the new benefits plan. Then, using the information gathered from all resources in Step 2, the employer can begin to prioritize benefit offerings. The employer will then calculate the cost of providing the prioritized benefits and compare it to the benefits budget.

Inform Employees About the Benefits Plan

The communication strategy is an important part of benefits planning and management. Some resources and samples are available to help employers (see, How to Develop an Effective Benefits Communication Strategy). Employee comprehension of the benefits is critical for employee buy-in. Without buy-in, the employer's efforts, no matter how well-designed to meet the needs of employees, maybe futile.

Create a Process for Evaluating the Effectiveness of Benefits Regularly

Another critical step in the benefits management process is regularly reviewing the benefits plan program. The benefits program must be evaluated periodically to determine whether it meets the organization's objectives and the needs of its employees. 

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