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Compensation and Benefit Cost

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Details: After receiving a positive response from EatNGas, Inc. management about the recommendations for the incentives and performance appraisal projects, the HR generalist has been assigned a project that will prove to be very challenging: assessing the competitiveness of the company benefits package.

The owners of EatNGas, Inc. are very concerned about the escalation of health insurance costs. When they started the business in 1991, benefit costs were much less and employees were happier with what the company provided. Now, however, the owners regularly hear employee complaints about the growing health insurance premiums they pay.

In addition, the owners are tired of employees always requesting that they be allowed to take a greater number of paid personal absence days. Scheduling employee vacations and holidays is difficult due to the fact that the company's store locations are open all day, every day, except Christmas and New Year's Day. As a result, the owners want to compare EatNGas, Inc.'s benefits package with other similar companies. They intend to use these facts to make better decisions and communicate their problems more accurately to employees.

As the HR generalist, you quickly realize that the corporation had never quantified the total costs of benefits. After 1 month of exhaustive review of benefits bills and payroll records, you have summarized the corporate compensation and benefits costs as seen in the following:

Percent of Total Compensation:

total wages and salaries: 76%
total benefits costs: 24%
paid leave: 4%
supplemental leave: 2%
insurance: 6%
retirement and savings: 2%
legally required benefits: 10%
other benefits: 0%

With this information, you will now attempt an external benefits comparison. To get benefits data from other companies, review the following data from the United States Department of Labor Bureau of Labor Statistics. Some of the most pertinent survey results are in Appendix A.

Click here to view the United States Department of Labor Bureau of Labor Statistics 2005 data.

Click here to view the United States Department of Labor Bureau of Labor Statistics 1986 - 2001 data.

Prepare a comparison of the compensation and benefits costs that you will deliver to the company's owners. Create at least one chart to visually depict the most relevant data. Address the issues of greatest concern to the owners. Provide several paragraphs to summarize your findings. Use additional data provided in the United States Department of Labor Bureau of Labor Statistics documents.

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//Before writing about the Compensation and Benefit Cost for the Company EatNGas, we have to understand the concept of compensation and benefit cost. Then, we will discuss about the importance of compensation and benefit cost for the Organization. It is essential for the business organizations to focus on developing effective compensation and benefit cost system for getting success in the competitive market place. So, firstly, we will discuss about the concept of compensation and benefit cost, for example://

Compensation and Benefit Cost

The compensation is defined as the money received in the performance of work and many kinds of benefits and services that an organization provides to their employees. Insurance, bonuses, medical services, paid leaves are types of benefits, which are given to the employees (Mamoria & Gankar, 2002). The benefit cost is the cost associated with the benefits, which are gained from the employees after providing them fringe benefits and indirect compensation. In the present scenario, the benefits to the employees have become their right.

The benefit cost has been increasing day-by-day due to the increase in compensation such as insurance, medical services and some other benefits and services. Different choices to control the ...

Solution provided by:
Ashish Sharma, MBA (IP)
Education
  • MBA (IP), International Center for Internationa Business
  • BBA, University of Rajasthan
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