VentaCare Nursing Homes provides private care for over 500 residents in three different locations. The company employs 250 staff members with a variety of responsibilities including RN’s, nursing assistants, kitchen staff, custodians and administrators. VentaCare has a reputation of providing superior care and has a waiting list for residents ready to move in to their homes. Further, the company enjoys a relatively low employee turnover rate. However, some recent cuts in federal funding have created some financial difficulties for the company. VentaCare has cut costs in all aspects of their operations, but the company still has not accounted entirely for their expected budget shortfall and must now examine personnel costs. Due to state requirements for minimum levels of staff to residents, cutting staff is not an option. They have decided to temporarily freeze salaries, but this will still not create enough savings for the company. Allison Wiggan, the Director of Human Resources, has been asked to examine the company benefit program for cost cutting options. The company offers a fairly generous benefits program, which is quite costly for the company. In addition to a health insurance plan, the company provides both short-term and long-term disability insurance and life insurance for which the company pays the full premium. The company provides paid time off including eight paid holidays, an average of ten vacation days and five sick days each year. As a retirement benefit, the company provides a 401(k) plan where they match the first 3% of the employee’s contributions. The company also offers tuition reimbursement for employees pursing any advanced degree. To promote employee wellness, they offer a variety of programs such a monthly lunch to discuss health concerns. And finally, they offer a full-service Employee Assistance Program. Changing or eliminating any of these benefits is going to be a challenge. Part of the reason VentaCare has had such success is that they are able to retain talented and dedicated staff members. While the company’s pay rates are in line with their competitors, their benefits program is clearly more generous. Allison is concerned that making cuts to the program could cause employee turnover or create challenges in future recruiting efforts.
Cost containment is a challenging concern for companies trying to attract and retain talented staff through offering an attractive benefits program. Employees may find benefit offerings attractive, but it is challenging for a company to determine if they are getting a positive return on their investment in a benefits program. Employers should take a strategic approach in determining their benefits program by targeting benefits that promote employee behaviors that add value to the company.
Now, you must put yourself in Allison's place and advise her on a direction to pursue. Please provide your responses to the following questions:
1. How should Allison approach evaluating VentaCare’s benefit program?
2. What are some benefits Allison should consider changing or eliminating? Why?