Many employers that I have worked for offered discretionary benefits; these types of benefits are ones that they don’t necessarily need to offer but rather offer them to motivate and engage their employees. These benefits fall into three categories: Protection programs, paid-time off, and services like employee assistance programs. Protection programs typically include insurances, such as life and disability, as well as retirement assistance and contribution plans such as a 401k. Paid time off allows employees to take time away from work to manage other aspects of their lives without worrying about their income, and services covers a wide range of benefits from childcare assistance, tuition reimbursement, and even transportation.
When a company is short on funds, and budgets become tight, cutting or removing some of these discretionary benefits is a way in which they can save money. If I were working for a company and was tasked with ranking these benefit categories in terms of which should be eliminated, I would aim to remove the ones that have the smallest impact on the employee. The service category would be the first thing I would eliminate, with things like company cars, wellness programs, and childcare services being a high cost to the company. Typically, services in this category can be achieved and maintained by the employee themselves with their salary, and while it would be an inconvenience, it could help the company recover financially and prevent the employee from being laid off. The next benefit I would start to cut back on would be paid time off. In a time where the company is not performing well, employees should be focused on their work and getting the company back in shape. While this does not mean cutting paid time off completely, a manager could reduce the number of paid time off days in order to save money throughout the year. The last category I would cut would be the protection services, mainly because it deals heavily with the employee’s futures. Insurance can be a costly expense to an individual, and if the company were to cut the benefits in this category, they would likely have a large portion of their workforce resign and find employment elsewhere. Taking a reduction in paid time off or giving up employee wellness programs might be difficult in the short run, but the employee needs to know that the company is taking care of them in the long term. That is why I would be hesitant to remove insurance programs and retirement assistance, because the employees would not be motivated to continue working with a company that won’t help them out with their future.