Month: February 2021

Companies are constantly faced with decisions on what they should offer for its discretionary benefits for its employees. These decisions are tough because funds necessary to keep up the benefits become more and more costly each year. Discretionary benefits are put into three categories that include protection programs, paid time off, and services. Protection programs involve disability insurance, life insurance, and retirement. These protection programs don’t do much at the time you are working but when needed at some point later on they are very valuable. Paid time off allows for employees to have a good work and life balance by being compensated while not being at work. The last category includes services like employee and family assistance, tuition reimbursement, and even transportation services. These service discretionary benefits seem like extra luxury benefits.

So after some background information about the three categories of discretionary benefits I truly believe it is pretty clear and obvious on which benefits need to be first eliminated and lastly eliminated. The category of service benefits needs to be the eliminated first because it is all really nice to have but none of it is needed. It’s a really nice gesture to provide family assistance for employees for families that are struggling but a company that is in a tough financial situation doesn’t need to be spending money on this. There is many more important areas the money can be and should be going The 2nd category of discretionary benefits that should be eliminated is the paid time off. Yes having a work and life balance is important but not a must have for a company that is struggling with funds. Paying employees for time they are not working is nice for the employee but as for a company it is costly. The last category to be eliminated would be the protection programs. In my opinion these are really what matters. If something happens to you and lets say you become disabled those few days of PTO will not even be of interest anymore. You will want to have that disability so you can still support your family. Yes you may go years and years and never need the disability insurance and PTO and other benefits may sound much more attractive. At the end of the the protective programs are much more important. For a company they should look to preserve its discretionary benefits in this order when funds are limited and benefit areas need to be dropped.

When I think about a person focused pay structure I think of a skill based pay (SBP) compensation system. I have a very large background in the sports world and could not look at the National Football League as a prime example of a SBP. In this type of structure it has been taught that the pay is determined by that persons characteristics or skillset from our classes learning materials. Rather than just the job itself. I use the NFL as example because its players are paid based on their skillset and athletic capabilities. The higher skilled the athlete the more they are generally paid. A good way to measure this is based on production and statistic the individual athlete produces. For example before this NFL season the Kansas City Chiefs Quarterback Patrick Mahomes signed a $500 million dollar contract. Becoming the highest paid football player in history because of many factors. He has been able to put of some amazing production, winning lots of games and even the super bowl. Doing all of this and at an early age has made this contract possible for himself. The contract is paying him for what he has already done and for what he can do in the future. In essence saying hey you are doing great and please keep it up and we want to reward you for your work and kind of bribe you to keep it up. He was able to set his own salary and if the Chiefs refused to offer him this deal another NFL team could and the Chiefs could lose their most important player. If another pay structure was used it just wouldn’t work. The athletes who are the employees would more than likely not support the idea. For the most part to get top level football played and win you need to pay based on skillsets. This is not like paying a cashier who you can easily be replaced and receive the same production. A cashier has no leverage to demand more pay. Where a NFL quarterback can because its like saying good luck finding someone to do what Patrick can because you probably wont. Now the players benefit from this greatly but the NFL would make even more money then it already does if they could just set a pay structure and the players had no option. Though if this was the case it would not make football what it is today.