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Benefits Cost-justification Checklist

October 1, 1995
Related Topics: Benefit Design and Communication, Featured Article
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Because we all have our employees' best interests at heart, it's easy to get sidetracked from the primary issue: We help out employees as a means of boosting the bottom line. Here are some considerations as you look over your programs:

Ask yourself:
Do our employee-service programs aid retention?

How to be sure:
Listen to employees' reasons for leaving the company. Track them by category: more money, relocation, fewer hours. Comments like "more time" or "flexibility" should sound the alarm for you. These are areas where low-cost employee-service programs may help. Ask the person whether he or she would stay for more flexible hours or two-thirds hours. If the person says yes, and restructuring is possible, you can save the company some money. Track every employee who chooses to remain because of such an arrangement. Calculate the combined money saved for future reference.

Ask yourself:
Do we maintain a competitive advantage with our benefits?

How to be sure:
Benchmark, benchmark, benchmark. Look at what benefits companies in your industry offer. Are yours equitable? Although you probably don't want employees coming to your company specifically because of the benefits—you want them there because they want to do the job—you also don't want to lose out on good ones just because you're lagging behind. But note the word "equitable." It could be a competitor offers many more benefits than you, but your company offers higher compensation and excellent referral services. Study your recruiting market and ask recent hires what attracted them to your company.

Ask yourself:
Do our benefits boost productivity?

How to be sure:
Identify the areas that seem to lag behind. If you have a high absentee rate, find out why through an employee questionnaire. It could be many people are staying home to care for sick children. Calculate the amount of days missed on average due to child-care fall-throughs to determine if a care center would pay off. Similarly, tracking absenteeism before and after an employee is referred to an EAP program can help cost-justify that service.

Personnel Journal, October 1995, Vol. 74, No. 10, p. 84.

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