A Decision on Employees’ Benefits
Benefits on employees have been a tool used by many companies to attract employees and to retain the talented employees for longer periods. This is also seen in MBS where the company has been able to attract more employees than other companies in the same industry as a result of their high benefit grants to the employees. Ending the benefits will cause more harm than help to the business. In the first place, the business will lose the attraction which it has on the employees. There will be fewer employees willing to work in the company as compared to the time when the company was granting benefits to the employees. The competitors of MBS may take advantage of the situation and improve their benefits plan to attract better employees in the industry. This will affect the performance of MBS because their competitors will be a step ahead in terms of quality and efficient production of goods and services.
Ending the full coverage health benefit and the defined benefits pension plan will make employees want to go to other companies which offer the benefits. This will reduce the employees in MBS since most of them will quit in preference of greener pastures. This will result into inefficiency in production in MBS due to an inadequate supply of labor. The company’s output will reduce the hence reduction in profits. In the long run the company may end up collapsing due to poor performance.
Benefits are used to retain good and talented employees in the company. Ending the benefits will reduce the power of MBS to have highly qualified employees in their company for long periods. This will affect the efficiency of the company’s production because of lack of enough qualified skills in the production process. The quality of production will also go down and this may affect the market for the company. Loss of market due to the production of low qualified goods and services will automatically cause poor performance of the business in the industry and may eventually lead to fall of the company. There will also be minimal innovations in the company due lack of qualified and highly skilled employees who contribute a lot to innovative skills in a business. This will make MBS not to compete well in the industry since it will be unable to upgrade its production at the same or higher rate as compared to its competitors. Lack of innovation will also make the company to continue with the high cost of production and this will lead to an inability to cut the prices. There are times when the supply of goods and services in the market are high or the competitors set low prices on their products and any company in the industry is forced to lower its prices. In this case the innovative measures to reduce costs become very important.
Benefits are also a good motivational tool to the employees by the employer. Currently, employees in MBS are always motivated by the full covered health benefit and the pension plan granted to them. This has contributed a lot to the continued good performance of the business for many years. The employees are able to provide the best of their services because they are assured of good returns from their work. Ending the benefits will really reduce the motivation of the employees and this will be reflected in their services to the company. The employees’ productivity will go down hence decrease in production. The company’s output will be reduced which in turn will cause low sales hence low profits. The working spirit of the employees is very important and it really affects the performance of the business.
There are things that the company must consider before ending the benefits. The fact that most of the employees are already used to the benefits and everyone expects a pension on retirement is a very crucial matter. This is because MBS has been giving out these benefits for the past fifty years. Ending the benefits will affect the current employees of the company because they may not understand why the company should not give benefits which it has been able to give for many years. This may even result to instability in the company because some employees may strike or demonstrate trying to express their disappointment. This will automatically attract public attention that may affect the company’s reputation.
The idea of ending the benefits may be beneficial to the company because it will reduce its expenses and therefore increase returns. The gains that the returns obtained will bring to the company cannot cover for all the damages that will be caused by ending the benefits. Mr. Lee should, therefore, consider the future life of the company before ending the benefits. The company can come up with strategies to reduce the cost of production by using more machines in production. This will reduce the labor force hence reducing the funds required for benefits. The company can also reduce the number of benefits granted to the employees without having to end it all. Before implementing the reduction policy the company should give good reasons to the employees to create their understanding on the matter. The other option is to make more investments besides the annuities that will generate more funds to finance the benefits. A good example of an investment that the company can undertake is to invest its funds set aside for benefits on profitable shares instead of putting them in savings accounts. With this, the company will be paying the benefits from the earnings of the shares instead of withdrawing the funds from the savings accounts.