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Employee Benefits Plan and Design for BAE Systems
Introduction
The company I chose to do my project on is BAE Systems. I chose this company, because my sister works for them. She has worked in the Colorado Springs, CO office for ten years now. She feels that this company is a good company to work for; and they take care of their people. The ten years that she has worked there, she has received three bonuses. Although, she likes the company, she told me that in the last year benefits, pay increases, have gone down, while the price of benefits have gone up a considerable amount. The company has a cafeteria plan, a flexible spending account and many other programs.
This company is located in the Colorado Springs area and headquartered in Rockville, Maryland. They specialize in space operations by providing prototypes, tools, and hardware that supports the war fighter. They have businesses all over the world; BAE and provide technological support to the Army, Navy, Marines and the Air Force.
According to BAE (2006) they currently offer eligible employees and their eligible family members comprehensive benefits through the Value Plan . BAEs (2006) Value Plan offers a flexible health and welfare benefits programs such as medical, dental, vision, life insurance, accidental death and dismemberment health care and dependent care flexible spending accounts, adoption assistance short and long term disability, and employee assistance program (BAE Benefits, 2006).
They also offer other types of insurance plans for their employees at no cost to the employee. Some of these benefits are accessible to the employee as well as their family members. (BAE Benefits, 2006). Also offered to employees is an Employee Assistance Program (EAP), this program allows employees to seek professional counseling to deal with social issues in and outside of the work environment. Other services of their EAP are financial and legal consultation.
Literature Review
The core of theoretical literature describes different problems and issues related to benefits system and support policies followed by modern organizations. Following Belcher and Atchison (2003) benefits system is an important part of organizational management and effective resource allocation. Managing benefits is based on plans and involves three distinct goals: attracting and retaining qualified staff, motivating employees, and controlling costs.
Although the HR manager would like to achieve each goal, it is also true that it is very difficult to achieve the best in each strategic aim at the same time. On the one hand, attracting and retaining staff will likely involve establishing fixed base salaries at very high rates. It implies that the company has to set wage rates and salaries at or above the market average. Thus, high salaries violate the basic impulses of cost control and motivating people. Employer sponsored Insurance involves analysis of employees needs, productivity and contribution to the organization. The Employer sponsored Insurance programs reflect skills and professionalism of workers and their position in the company.
Baron and Kreps (2001) one of the popular benefits methods is Social Security. Under such schemes, workers receive a Social Security support from the state. For instance, one issue revolves around the question of how much of a reward is essential to stimulate extra effort. According to this perspective, flexible spending accounts is so little difference between what a manager and non0manager earn that there is very little reason for a n individual to seek becoming a manager, especially given all the headaches the management position must face in trying to supervise under an intractable federal employment system.
Wallace and Charles (2003) effective pay-for-performance plan should draws together the various goals and issues involved into an integrated scheme for paying for employee performance. Each company has distinctive goals and conditions that require a pay-for-performance plan best suited for that organization. Burgess (2002) and Cascio (2003) suggest that the most popular method is benefits. This method represents a significant cost to the organization and provides important yet often intangible values to the workers. As part of the overall flexible spending accounts scheme, benefits can enter into the competitive position to attract, retain, and motivate staff.
At the same time, the organization wants to minimize costs of the benefits provided. Again, the ability to design and implement effective benefits schemes is a critical skill for the HR manager. In the development of a Benefits Plan, a manager works with other consulting teams and recommends the most competitive and cost-effective benefits plan possible for employees. In this exercise, HR manager develops a benefits plan design, costs, and impact on workers to suggest a plan with the best outcomes for employees and the organization. With the possible exception of layoffs and terminations, benefits schemes are the most high-profile HR< activity performed (Reed 2001).
Snell (2006) pays a special attention to such method as rewards. These plans and schemes are important in their own way. Incentives rewards can consume a sizable portion of total benefits costs. For that expense, organizations would like to receivebut often have trouble obtainingreturns in goodwill and performance. For these issues, effective incentives rewards design is often a silent but important part in HR planning and administration.
Workers who are judged to perform the job acceptably should receive rewards that match the rate of inflation. Workers who are judged to be exceptional professionals should receive adjustments that are about double the rate of inflation. Adjustments will be permanently added to the workers base rate of pay on an approximately annual basis. Workers will be regularly assessed by their managers, and those who are not meeting minimal acceptable standards will not be rewarded (Colt, 2001).
Reed (2001) states that employers should pay a special attention to safety and health needs of employees. These involve maternity leaves and medical insurance for employees and their family members. Employee job performance is used in making decisions about medical coverage. The amount of bonus adjustment for which any worker is eligible will be at the discretion of the supervisor. Medical coverage is not permanently added to base pay. In addition, in order to intensify appropriate behavior, the percentage amount of increases awarded to each employee is noted in the organization-wide communication each year.
Lenesis (2001) benefits system is a complex process based on work assessment and personal skills of the worker. In many companies, all workers who meet the minimum accepted standards of performance become entitled for a year-end cost of benefits increase, if it is granted. Though, whether a cost of living increase is rewarded and the amount of the increase is only at the discretion of management. In some organizations, rewards may become ongoing additions to the workers base rate of pay once awarded. Though, flexible spending accounts management reserves the right to reset wage rates whenever it supposes essential.
Henderson (2005) states that effective benefits management is always sensitive to competitive labor market conditions. In this case, using salary survey information effectively becomes very important for the organization. Beyond grounding pay rates in competitive labor market conditions, benefits schemes are properly structured and designed to support organizational goals.
Issues Analysis
It is assumed that the plan should focus on the programs that will create value for the business itself. All benefits decisions are not strategic, only those decisions that are critical to the success of the business are strategic. In BAE Systems, such factors as how much money it takes to serve as a lure to more effective and productive performance, ethical concerns in using incentive schemes, and fully developed incentive plans with organizational requirements are all core factors to effective benefits design.
In competitive labor market conditions, employers must pay attention to the prevailing wage and salary levels paid for various jobs and skills (Armstrong 2001). Were employers to ignore what the market is paying, they would soon discover either that they cannot keep employees because their rates are too low, or they cannot make a profit because their rates are too high. For many employers, it is relatively easy to find salary surveys that identify the prevailing wage rates found in a labor market.
For example, many private consulting firms compile, publish, and sell annual surveys of geographic areas or of industries (such as banking and financial institutions). Professional associations often publish their own salary surveys of the jobs in the occupational field they represent (Bemis et al 2995),
A value plan as with BAE is a most cost efficient plan for both the employer and employee. According to the Internal Revenue Service (2009) a cafeteria plan or a value plan is defined as a separate written plan maintained by an employer for employees that meets the specific requirements of and regulations of section 125 of the Internal Revenue Code; it provides participants an opportunity to receive certain benefits on a pretax basis .
This type of plan enables the employee to have various choices to their plan instead of being tied down to one option and not being allowed to choose what is beneficial to them. I believe this type of plan will make employees happy and make them want to stay at the job. Also, by having the employees satisfied with their benefits situation they are more likely to perform better knowing that their families and their selves are being taken care of if or when they may need to use the benefits provided to them.
Issue Solutions
The Benefits Plan Design presents the company with three different business situations. For this reason, BAR is challenged to create a benefits plan design for each business that most effectively supports the achievement of the business goals and requirements. This plan will involve all important areas of support: employer sponsored Insurance; Social Security, unemployment benefits, flexible spending accounts and health plans.
Employee employer sponsored Insurance can represent a significant cost to the employer and provide important yet often intangible values to the employee. As part of the overall employer sponsored Insurance provided employees, benefits can enter into the competitive struggle to attract, retain, and motivate employees. The ability to design and implement employee benefits programs is a critical skill for the human resources manager.
In the Designing a Benefits Plan assignment, BAR competes with other consulting teams to recommend the most competitive and cost-effective benefits plan possible for All State Services. In this exercise, BAR juggles benefits plan design, costs, and impact on employees to suggest a plan with the best outcomes for employees and the business (Armstrong 2001; Henderson 2006).
With the possible exception of layoffs and terminations, unemployment benefits are the most high-profile human resources management activity performed. There are several reasons for the central role played by benefits administration. First, unemployment benefits can be significant expenses associated with running the organization. Second, without proper management, poor unemployment benefits practices will hurt the organization through turnover, poor performance, or high costor all three.
Third, benefits plans can exert tremendous pull and push on employee performance and can play an instrumental role in shaping and redefining the culture of an organization. Effective unemployment benefits administration must be sensitive to competitive labor market conditions.
For this reason, using salary survey information skillfully becomes very important. Beyond grounding pay rates in competitive market conditions, benefits plans should be properly structured and designed to support organizational goals. Such issues as flexible spending accounts serves as a lure to more performance, ethical concerns in using incentive plans, and fully aligning incentive plans with organizational requirements are all vital ingredients to effective plan design (Henderson 2006).
It is possible to say that health plans orientation of an organization by the extent to which employees voluntarily pursue vocationally oriented self-directed learning projects In this type of learning projects, BAE Systems controls the learning process in identifying topics of interest, plan and organize the learning activities, engage in the learning, and evaluate what BAE Systems needs to do next (Henderson 2006). Formalized Social Security programs can represent significant costs as well as returns to the organization.
In order to create the most cost-effective training, several steps are critical in the development and design of any program. Such steps assist in pinpointing what should be covered by the training, how the training should be conducted, and how to increase the chances that the skills learned in training will carry back to and be used on the job (Colt, 2001).
Conclusion
In sum, the case analysis of BAE Systems shows that some portion of all the self-directed learning that occurs in an organization is a response to changing organizational and job conditions, whereas another proportion is due to staff who eagerly and voluntarily undertake learning projects in which they are interested. Benefits plans and designs are important in their own way. In BAR, such plans can consume a sizable portion of total benefits dollars.
For that expense, employers would like to receivebut often have trouble obtainingreturns in employee goodwill and performance. For these reasons, effective benefits design is a silent but important partner in human resources planning and management. Without a properly managed training process in place, there are several undesirable outcomes that may occur. First, the instruction that is done may be uneven in quality and effectiveness.
This means that the wrong skills may be taught and/or that employees are inadequately prepared for all their job duties. Second, without adequate training, employees are more easily flustered and stressed in trying to do their work. This can lead to increased errors and customer ill communication. Consider the case of a bank teller who is uncertain what to do while the customer being served is watching her every move. Uncertainty leads to delays and mistakes, irking the customer and generating frustration all around. Such demanding working conditions can demotivate the BAE Systems staff and even create pressures on the employee to quit.
Works Cited
Armstrong, M. Human Resource Management. 8th edn. Kogan Page, 2001.
Baron, J., Kreps, K. Strategic Human Resources; Frameworks for General Managers. Wiley; 1 edition, 1999.
Belcher, David W., and Thomas J.Atchison. Compensation Administration. 4th ed. Homewood, Ill.: Richard D. Irwin, 1987.
Bemis, Stephen E., Ann Holt Belenky, and Dee Ann Soder. Job Analysis: An Effective Management Tool. Washington, D.C.: Bureau of National Affairs, 1983.
Bereman, Nancy A., and Mark L.Lengnick-Hall. Compensation Decision Making: A Computer-Based Approach. Fort Worth: Dryden Press, 1994.
Burgess, Leonard R. Compensation Administration. 2d ed. Columbus, Ohio: Merrill, 1984.
Cascio, Wayne. Costing Human Resources: The Financial Impact of Behavior in Organizations. 3d ed. Boston: PWS-Kent, 1991.
Colt, Stockton B., Jr. (ed.). The Sales Compensation Handbook. 2d ed. New York: AMACOM, 1998.
Gross, Steven E. Compensation for Teams. New York: AMACOM, 1995.
Henderson, Richard. Compensation Management: Rewarding Performance. 5th ed. Englewood Cliffs, N.J.: Prentice Hall, 1989.
Lenesis, Peter M. Workers Compensation. Westport, Conn.: Quorum Books, 1998.
Reed A. Innovation in Human Resource Management. Chartered Institute of Personnel and Development, 2001.
Snell, B Managing Human Resources. South-Western, Div of Thomson Learning; 14th edition, 2006.
Wallace, Marc J., Jr., and Charles H.Fay. Compensation Theory and Practice. Boston: Kent, 1983.
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