Reference no: EM133853607

Assignment:

We have seen that some organizations, especially those in competition for employees with high human capital, have expanded their benefits offerings and/or are covering more of the costs. Other organizations, however, have become less paternalistic in their employee benefits strategies as they seek to control costs and sift risk to employees. Employees now have more responsibility, and as noted, sometimes more risk, regarding their benefits choices. ("Gig" workers, who are typically independent contractors, have even more responsibility, because they have no employer and thus no employer-provided benefits.) One change has been in the area of retirement income plans, where employers have moved toward greater reliance on defined contribution plans. Such plans require employees to understand investing; otherwise, their retirement years may not be so happy.

The risk to employees is especially great when defined contribution plans invest a substantial portion of their assets in company stock. One reason companies do this is because they wish to move away from an entitlement mentality and instead link benefits to company performance. However, if the company has financial problems, employees risk losing not only their jobs but also their retirement money. Another change has been in the area of health care benefits. Employees are being asked to pay an increased proportion of the costs and also to use data on health care quality to make better choices about health care.

Of course, different companies have different benefits strategies. We saw at the beginning and throughout the chapter that companies differ in how they control benefits costs and in the degree to which the take responsibility for employees 'health, well-being, and financial wellness (including retirement). These, at least on the face of it, appear to sometimes conflict. We also saw that some companies look for ways to make their benefits packages more attractive to help them compete in the labor market for valuable human capital.

• Why do employers offer benefits? Is it because the law requires it, because it makes good business sense, or because it is the right thing to do?
• How much responsibility should employers have for the health and well-being of their employees? Take the perspective of both a shareholder and an employee in answering this question.
• If you were advising a new company on how to design its health care plan, what would you recommend?