Question Description

I’m working on a management question and need an explanation and answer to help me learn.

Over time, benefit packages offered in the U.S. grew significantly, both in scope and cost. What were the main drivers of this growth and what could result in a reduction in the size of benefit packages being offered today? What steps can be taken to reduce benefit costs without reducing the perceived value provided to employee?

  1. Wallace Pharmaceuticals bears a larger expense for employee benefits than the industry average. CEO Marsellus Wallace asks you for an analysis of the situation – what reasons could you give that would justify spending more on benefits?
  2. Wallace Pharmaceuticals has also identified a problem with turnover, especially among employers with limited seniority (i.e., 3 years of tenure or less). How can the company’s benefits policy be modified in an effort to reduce turnover among newer employers and thus reduce the expense of recruiting, selecting, and training replacements?
  3. Initech, an IT company, is examining a suggestion from a consultant to hire full time contingent workers to until the ratio to the regular workforce decreases from 5-1 to 3-1. You work in HR and have been asked why they should or should not do this. Explain in general terms and identify any benefits and potential problems that could result from increasing the number of contingent workers.