Benefit Plan Design - Coursework Example

? Benefit Plan Design Analysis Table of Contents Table of Contents 2 Part Two: ment of the Issue 3 Part Three: Literature Review 5 Part Four: Issue Analysis 9 Part Five: Issue Solution 10 Part Six: Solution and Implementation 12 Part Seven: Justification 15 Part Eight: Reflection 17 References 18 Part Two: Statement of the Issue There are numerous benefit programs that a company tends to employ on a continuous basis for the purpose of retaining the employees in the organization for a longer period. Such kind of benefit program tends to better the quality of the work lives along with the personal lives of the employees. In the section above, it has been noted that American Airlines Incorporation provides numerous benefit plans for its employees so that the talented employees can be retained in the organization for achieving the objectives of the organization. However, it has been identified that despite several competitive employee benefit programs, American Airlines Incorporation has certain lacuna in its benefit plan. The issue associated in the benefit plan is that the company does not allow its employees to travel free of cost until and unless they have completed a period of ten years with the American Airline Association. The company also seems to be lacking in providing the other benefit plans in comparison to its competitors such as SouthWest Airways, Delta (AACareers, 2010). There are many cases filed against the company’s benefit plan such as ‘Robert T.Miller Appellant V. American Airlines, Inc,; American Airlines, Inc., Pilot Retirement Benefit Program Fixed Income Plan (A Plan); American Airlines, Inc Pension Benefits Administration Committee under case number 10-1784 on 1/25/2011’ (Third Judicial Circuit, 2011). The other case filed against the company has been ‘George W. BONIN, Plaintiff-Appellant, v. AMERICAN AIRLINES, INC. and the American Airlines, Inc. Pilot Retirement Plan, Defendants-Appellees under the number 79-1590 on June 24, 1980’ (Open Jurist, 1980). Therefore, the main aim of the report is to suggest several measures through which the company can enhance its employee benefit plans. The paper will also endeavor to identify and suggest numerous key measures that the company can take into account for managing the talents in the organization. Part Three: Literature Review Role of Benefit Plan in an Organization The reliability and the accuracy of the benefit program depend upon the two factors. The first factor relies upon the fact that the benefit program needs to be capable of identifying the needs of the employees during the upliftment of the organizational objectives. The soundness of the benefit program also stems from the fact that the program is capable of effective management of such kind of programs (Bohlander & Snell, 2009). It can be worthy of mentioning that the biggest issue for the HR managers is to attract as well as retain the excellent talents in the organization. Therefore, it becomes important for the companies to implement numerous strategies along with the techniques so that they can cope up with this kind of human resource related issues. It is identified that the high performance organizations tend to surpass in relation to their competitors by implementing numerous human resource related strategies that include openness among the members, opportunity to learn and provide training to the employees. When a company tends to realize the fact that it is the human resource’s effective management that determines the competitiveness of the firm, the companies develop the above mentioned strategies (Hiltrop, 1999). In a next few decades most of the workforces in the organizations will be women and this tends to have an impact on the corporate employers. There will be two kinds of workforce, one of them will be career-primary and the other might be career and family. If the organization wants to retain their best talents in the organization they are supposed to identify the importance of both kinds of women and thus provide them a flexible working environment. If the organization focuses upon these strategies then it will be advantageous to the employer as well as the employee. It can be observed that while applying such kind of benefit program the individual will get the opportunity to choose among the career and the family or choose both of them. Conversely, the employer will get the opportunity to retain the best talent i.e. talented women executives in the organization (Schwartz, 1985). It has been noted that most of the organizations in the US are facing the problem of ageing workforce or might face the same in the near future. Therefore, in lieu of this fact a few of the US companies’ human resource executives are trying to adopt numerous approaches. The main contributors to the workers participation rate of the older people of America are the improved health services, income and health insurance coverage, change towards a knowledge based service economy along with the advances in the technology. Therefore, a number of the employers demonstrated their concern with regard to the ageing population and thus are undertaking numerous programs so that the older workforce can be retained. Most emphasis is provided at learning and development programs for enhancing the knowledge for the employees. Furthermore, the organizations focus upon the flexible working related timings, preretirement planning, flexible and/or special benefits of certain interest to the ageing workforce, creation and promotion of the culture assisting in the promotion of the generational diversity, career counseling and retention bonuses, workplace restructuring for retaining the best employees in the organization (Arnone, 2006). Few companies during the early 1970s offered the flexible benefit plans. However, in the recent times approximately one-third of the firms that consist of more than 1000 employees tend to provide the flexible benefits to the workers. The flexible benefit plans of the 1970s were comparatively simple providing minimal options and limited flexibility. However, the present approaches tend to focus upon a variety of options such as plain offer related to ‘pre-tax salary reductions’, to pay for benefits along with complex plans that consist of many options. It can be noted that the researchers have paid very little focus upon these developments. Researchers have not tried to identify the reasons behind certain companies adopting the benefit plan and others not. Therefore, for the purpose of identifying the theoretical based description regarding the decision of the HR executives in relation to the ‘flexible benefit plans’ four theoretic lenses can be utilized such as transaction cost, agency cost, institutional cost and resource dependence (Barringer & Miklovich, 1998) It has been found that most of the companies have been offering its employees an attractive compensation package that tends to include excellent benefits, worldwide travel packages along with the competitive pays. The employees of the companies are permitted to explore beautiful destination all around the globe. The family members of the employees are also eligible for free as well as cheap rate travel that includes spouse, same-sex domestic associates, minor departments and parents (Delta, n.d.). According to the 2009 Airline Job Guide that conducted survey on 72 airlines all over the world, it has been noticed that three airlines of the USA tend to offer free travel to the employees from the first day the employees start working. In addition to that even the employee’s spouse or the immediate members of family are entitled to travel for free provided there is free space. With the help of the SWA Pass Bureau the employees of the SouthWest Airlines can also avail the facility of travel discounts with other airlines. Similarly at Air Wisconsin the employees get travel benefits with the help of the interline agreements. Both the regular as well as the part time employees along with their family members, unmarried dependent children are entitled to get free or reduced rate travel related benefits around the globe (Airlinesjob, 2010). However, it can be noted that the flight benefits depend upon the position held by the employees. If an employee is a flight crew holding the position of Pilot or First Officer along with Flight Attendant then he/ she can enjoy greatest flexibility by means of time-offs for their personal travel. It has further been found that the employees of flights while working out of the base city tend to gain a per diem allowance or hourly allowance. The rate of allowance may range from $1.00 to $2.50 or might be greater than this per hour as well that can help the employees to cover the meal expenses. Hotel accommodation is also provided to the flight attendants and the pilots. The employees of the airline might as well have to pay low for the flights, hotels, vacation packages, cruises, restaurants among others. With the assistance of the employee airline card the person may as well receive discounts of 10%-20% in the local restaurants or at bars in their hometown (Airlinesjob, 2010). Part Four: Issue Analysis The issue related to the American Airline Incorporation has been that it does not permit its employees to travel free of cost until and unless the employees have covered the period of ten years with the organization. The issue seems to be major since it can be the contributing factor towards swaying the employees towards the competitors. It has been observed from the literature review that most of the companies such as Southwest Airways, Delta Airways and Air Wisconsin Airways are providing free travel to its employees from the day they join the company. However, there are few criteria that the employees may need to meet depending upon the scenario. In addition to these it can be mentioned that the company seems to be providing minimal benefits to the employees in comparison to the competitors. It can be analyzed that for availing the free benefits the employee’s needs to wait for ten years. Therefore, in this context the employees need to work for at least 10 years with the same organization. It is important for the company to focus upon the free travel to its employees irrespective of the number of years of association. There may be few employees who may not be able to be associated with the company for that longer tenure. In that case, they will not be able to avail the facility of free travel and may switch on to other companies such as SouthWest Airways or Delta Airways who provide numerous benefits to the employees from the day they join the organization. There may be rise in the turnover rate of the employees in the organization and the operation of the airlines may face difficulties. In addition to this, it has further been noted that numerous cases are filed against the company that demonstrates the fact that the company’s employee benefit plan has not been designed properly. Part Five: Issue Solution From the sections above it can be identified that all the issues seem to be possessing risk to the company. In order to beat the competition and to retain the valuable employees in the organization, it is quite important for American Airlines to make amendments in its benefit plan program. American Airlines Inc can provide free travel to numerous destinations to employees after they have completed the tenure of one year. This strategy seems to be logical and beneficial for the employees as well as the employers. The satisfied employees will contribute to the attainment of the organizational objectives and can assist in increasing the productivity. The reduction in the number of years will assist the employers in luring and retaining the most excellent talents in the organization. However, it is the nonrevenue pass that would be made available to the employees will be only for their personal pleasure. It is to be mentioned that instead of providing free travel plan to the employees, the company can as well provide discounts to the employee for the travel made by them and their families to numerous destinations of the world. The company can either provide free or subsidized meals on the premises of the employer or at any other location being the employee of the American Airlines Inc. All the above mentioned strategies can add to the cost of the company. Therefore, the other alternative that can be followed by American Airlines is to provide free and low cost benefits to the employees. It is not always necessary for the employer to offer high cost benefit packages for demonstrating to the employees that their efforts are appreciated at the company. The company can focus upon the affordable benefit offerings such as gifts. Break from works and restaurant gift cards can also act as supplements to the benefit plan of American Airlines Inc. Dry cleaning facility, childcare for those who own a child, fitness centers are among a few of the non-monetary perks. It has been found that if the benefit program is well developed then there is less likelihood of the employee leaving the job (Mullich, 2011). By reviewing the competitors strategy of benefit plan American Airlines can gain a better insight into the ways through which the best talent can be retained in the organization for a longer period of time. As a supplement to the loopholes mentioned above, American Airlines Inc can as well use other benefit programs so that the employees’ morale can be boosted and their efficiency enhanced (Trion, n.d.). In order to avoid the legal problems related to retirement benefits of the pilots, American Airlines Inc needs to adhere to the norms and policies related to the Pilot Retirement Benefits. A separate auditor can assist the company to make it aware of the loopholes in its benefit plans (CLHP, n.d.). The company needs to identify the reason behind such issues in the organization and thus try to make necessary amendments so that in the near future such litigation can be avoided to a greater extent. Although, it may increase the cost and management burden to the company, however the company will be benefited by achieving increased employee retention and satisfaction along with enhance corporate image. Part Six: Solution and Implementation It has been found in the section above that the company can minimize its loopholes and strengthen its benefit plan program for the employees in numerous ways. However, it would not be feasible for the company to implement all the strategies at a time since it may lead to increased cost and thus will require great deal of time and effort as well. Therefore, this section of the report has been prepared to provide a single and the best solution out of many choices available to American Airlines Inc. In the sections above it has been found that free travel to employees after completion of one year has been recommended. Discounts on travel along with subsidized and free meals have been provided as alternatives. Since the benefit plan suggested may lead to high cost to the company, therefore it has been suggested to provide free and low cost benefits to the employees. Competitor’s strategies on benefits plans have also been suggested. Among all of the above mentioned strategies, it can be stated that free and low cost benefit planning seems to be the most feasible and the best solution to the issue faced by the company in its benefit plan. This can best assist the company to retain and to attract the talents in the company. Subsidized training/education can be the best perk for the employees in any organization. It has been noted by the Chief Financial Officers (CFOs) that training can be one of the best retention perks. If American Airlines Inc tries to implement subsidized training/education both the employer and the employee will be benefited. The employee can avail the benefit of learning since it will not cost the company any exorbitant sum. The employees are more likely to remain in the organization if there are tailored people practices where the employees are provided with enough flexibility to make decisions regarding their own benefits and the means to improve the work environment. American Airlines needs to provide enough power to its employees to suggest and make decisions concerning their benefit plan. The strategies mentioned will not cost much to the company and thus the employer will gain the benefit of retaining the best talents. If the employees are satisfied then there is less likelihood of switching jobs. On the contrary, for gaining more benefits the dis-satisfied employees tend to switch to the competitors. It has already been mentioned in the literature review that the competitors of American Airlines Inc are providing numerous benefits to its employees who will attract the employees towards them. In the recent times, much importance is given to the benefit plans provided by the companies. It has also been observed that at times employees are ready to work with employers who offer slight lower compensation but attractive benefit packages (Mullich, 2011). A proper plan needs to be conceived prior to the implementation of the subsidized benefit plan to the employees. A well designed benefit plan strategy entails the benefits of the proposed strategy and also tends to focus upon the risk that can be involved with the implementation of the proposed plan. It further tends to focus upon the improvement plans that need to be continuously monitored by the company. The plan prepared needs to live to the expectation of the employers as well as the employees. The successful implementation of the benefit program completely depends upon how well the plan has been prepared and with what objectives. It also depends upon the way the employees make use of the proposed benefit program. The changes made needs to be monitored and its impacts upon the employees and the employer’s need to be gauged. Therefore, it can be suggested that the changes can be made effective from August, 2011. Prior to implementation, meeting can be held with the existing employees, the old employees who already left the company and the management of the company to determine the effectiveness of the proposed benefit program. This can be quite beneficial since by discussing the plan with the employees, it will make the employees feel that the company values their decision as well. Approval from the concerned authority also needs to be taken. After receiving the approval, the plan will be implemented. Free and subsidized benefit plan will be provided to the existing staffs as well as the new joiners. A time frame of one year will be required to assess the success of the plan. After having provided the employee with the specific benefits the employee’s performance will be assessed. American Airlines should try to assess whether the employees are participating in yielding a strong commitment towards the business goals or not (Sadorra & Watson Wyatt, 2008) The objective of the plan is to motivate and boost the morale of the employees. Therefore, the evaluator will try to assess if the plan has been successful in achieving its aim. Within the period of a year, the company will try to identify the loopholes of the plan proposed as well so that they can be improved as soon as possible. After having completed one year, an audit of the proposed plan will be conducted and thus if the audit states that the plan has been ineffective at boosting the morale of the employees and the turnover rate is likely to occur if the same benefit plan is continued, then measures will be taken to opt for the alternative strategies of benefit plan. Reviewing the benefit plan on a yearly or quarterly basis, will provide American Airlines Inc with a clear picture of the issue that the employees of the organization are facing and will assist them to identify the drawbacks in its benefit plans. By implementing the plan, American Airlines will be capable of preventing the issues from occurring in the near future and thus the talents of the organization will prefer to stay with the company for a longer period of time without switching to the competitors. It is to be remembered a successful company is the one which has greater number of satisfied and talented workers. Part Seven: Justification This is the stage that tends to justify that the above mentioned solution and the implementation regarding the benefit plan would work. For the purpose of developing the individuals and the group who are competent of performing even the complex task with greater ease, it is important for the employer to pay greater attention towards the needs of employees. The strategy proposed will help the employees to satisfy their needs and can assist in boosting their morale. If the needs tend to be fulfilled then the employees will become motivated to work. Herzberg’s two factor theories tend to study the need satisfaction as well as the motivational effects of the satisfaction. There are two classes of factors affecting the motivation of the employee. They are motivational factors and maintenance factors. Maintenance factors are the factors that the employees tend to look for in a job. They are company policies and administration, status, salary, personal life, technical supervision, interpersonal relation with the supervisors, interpersonal relation with the peers, interpersonal relation with the subordinates, job security and work conditions. In addition to this the employees may also look for motivational components that directs to high level of motivation amongst the workers along with job satisfaction if the factors tend to be present. However, it can be noted that in oppose to the maintenance factors, if the motivational factors remain absent then this will lead to high de-motivation. The six motivational factors are achievement, responsibility, advancement, the work itself, the possibility of personal growth and recognition. It can be stated that the motivational factors revealed by Herzberg are related to the job itself (Ivancevich & Duening, 2002). It can be justified that the benefit plan suggested for the American Airlines Inc will be capable of satisfying the needs that the employees tend to look for in the job. If the needs of the employees are fulfilled the employees are encouraged to work and show their interest in achieving the goals of the organization. They will further demonstrate their loyalty towards the company. Benefit plan tends to fall under the maintenance factors of the Herzberg theory and thus it is justified that if this factor is absent then it may act as strong de-motivator. Part Eight: Reflection In this report, I tried to present my personal evaluations as well as experiences that are based upon the benefit plan design program focusing upon the reflective practice on specific situation of the benefit plan of American Airlines Inc. Benefit plan is a source of motivation and most of the employers are constantly focusing upon such plans. In this study, I was supposed to identify the issues regarding the benefit plan of American Airlines Inc. I observed that the company possessed numerous issues related to benefit plans. Identification of the issue was not much cumbersome as was determining the solution to the problem. I tried to provide numerous suggestions so that it becomes easier for the company to consider the alternatives if one of the solutions fail to accomplish the goals. A suggestion was chosen that seemed to be logical and feasible for the company to implement. A proper time frame was provided for evaluating the effectiveness of the proposed plan The study has been quite beneficial. It has assisted in understanding the numerous benefit plans that the companies need to consider if they want to retain the talents in the organization. Studies like this can assist a professional to enhance his competencies and skills on numerous human resource issues and identify their solutions. References Arnone, W. J. (2006). Are employers prepared for the ageing of the U.S. workforce. Retrieved July, 22, 2011, from http://homepages.uwp.edu/crooker/786-SHRM/articles/trend-age-bq-2006.pdf Airlinesjob. (2010). Travel benefits for airline employees. Retrieved July, 22, 2011, from http://www.airlinejob.net/travel-benefits.html AACareers. (2010). American airlines. Retrieved July, 22, 2011, from http://www.aacareers.com/support/Travel_Sep_Furlough.pdf Barringer, M. W., & Miklovich, G. T. (1998). A theoretical exploration of the adoption of flexible benefit plans: a case of human resource innovation. Academy of Management Review 23(2) pp. 305-324. Bohlander, G., & Snell, S. (2009). Managing human resources. UK: Cengage Learning. CLHP, (No Date). Benefit plans. Retrieved July, 22, 2011, from http://www.clhp.com/industries/benefit-plans Delta, (n.d.). Benefits & travel privileges. Retrieved July, 22, 2011, from http://deltajobs.net/travel_and_benefits.htm Hiltrop, J. (1999). The quest for the best: human resource practices to attract and retain talent. European Management Journal 17(4) pp. 422- 430. Ivancevich, J. M., & Duening, T. N. (2002). Managing Einsteins: leading high-tech workers in the digital age. US: McGraw-Hill Professional. Mullich, J. (2011). 2011 benefits trends. Retrieved July, 22, 2011, from http://ebriorg.files.wordpress.com/2011/04/wsj-bens-supp-ebri-5apr11.pdf Open Jurist. (1980). George W. Bonin, Plaintiff-Appellant, V. American Airlines, Inc. and the American Airlines, Inc. Pilot Retirement Plan, Defendants-Appellees. Retrieved July, 22, 2011, from http://openjurist.org/621/f2d/635/bonin-v-american-airlines-inc Schwartz, F. N. (1985). Management women and the new facts of life. Women In Management Review 4(5). Sadorra, E., & Watson Wyatt. (2008). Flex benefits: the employees’ choice. Retrieved July, 22, 2011, from http://www.watsonwyatt.com/asia-pacific/pubs/perspective/docs/08Fall_Org%20Trends.pdf Third Judicial Circuit. (2011). United States court of appeals for the third circuit. Retrieved July, 22, 2011, from http://www.ca3.uscourts.gov/opinarch/101784p.pdf Trion. (n.d.). Benefit plan administration. Retrieved July, 22, 2011, from http://www.trion.com/services/benefits-plan-implementation/#Plan Read More