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Flexible Benefits (Process to administer flexible benefits (Step 1: Define…
Flexible Benefits
Definition
This scheme, also known as cafeteria benefits, allows your staff to choose their own benefits from a set range of benefits offered. With a flexible benefits budget they can “buy” the benefits they want. These types of schemes are very popular because staff do not have to take benefits they don’t really want and can opt for benefits they do want. You can offer a wider range of benefits under flexible benefits schemes than your employees would get from a core package in order to accommodate the diverse needs of your staff.
Purpose
- Improvement in QWL(Quality of Work Life)
- Enhancement of productivity through increase in loyalty and motivation
- Appreciation of the value and cost of each benefit
- Better understanding of the cost and value of the total benefit programme
Advantages
- Meet the needs of a demographically diverse workforce
- Helps recruitment and retention of employees
- Control over the future benefit cost increases
- Increasing employee understanding
- Ensure that companies will not need to change their benefits offering every time their business objectives shift
Limitation
- Higher administrative cost factor
- Adverse Selection may discourage employees from implementing flexible benefits plans
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