The Herman Trend Alert|
March 27, 2002
Move to Individual Benefits
For years, employers have offered benefit packages to their employees. Gradually, these benefits have shifted from being something extra that a company did for its employees to an expected part of the compensation program. Today's benefits include the traditional health and major medical, life insurance, and perhaps vision and/or dental coverage. Sometimes disability is part of the package and there's almost always some sort of retirement savings plan.
These benefit programs were established as providing similar benefits for all employees in a class-executives, managers, salaried, hourly. Each company had its own design. Then "cafeteria benefit plans" were introduced, providing wider choices of benefits and giving employees an allocations of funds. Each employee then chose how he or she wanted to spend the benefit dollars available to purchase benefits in the company's selection. The process continued to be employer-driven.
As employers seek to hire and keep people with particular competencies, experience, and/or standing in their fields, we will move more strongly into highly individualized compensation packages. There will less concern for internal equity on the pay scale or the benefits scale and more focus on the needs of the employee.
The next step down this path is fully-individualized benefit plans-designed by the employee. Some employees will create their own packages; others will seek outside professional advice in constructing the program that is right for them and their family.
The major difference here is that the selection of benefits may or may not be consistent with what the employer is offering.
Employees will present their personalized benefit package to the employer for funding. Employers will decide how much they want to fund-100 percent of what the employee has designed, or perhaps some lesser percentage. Employee support will be part of the negotiation at time of hiring, and probably during employment as well.
Employers face some management challenges during the transition period, as they administer fixed benefit plans, cafeteria benefit plans, and the payment of individual plans. A new industry will emerge to manage individualized plans for employees and for self-employed workers who will contract with a number of employers.
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