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Applying Strategic Planning Principles to the Design and Management of Employee Benefits

By Rappaport, Anna M.; Barocas, Victor S. | Human Resource Planning, February 1993 | Go to article overview

Applying Strategic Planning Principles to the Design and Management of Employee Benefits


Rappaport, Anna M., Barocas, Victor S., Human Resource Planning


Introduction

The human resource and benefit environment of the 1990's has, in contrast to the previous decades, become increasingly complex and volatile. Today it is not uncommon to hear benefit executives describe themselves as corporate firefighters. They discuss the difficulties associated with developing a meaningful benefit package that is concurrently affordable to both companies and employees, and meet sometimes onerous government regulations. Within this environment, many of these executives view themselves as less proactive, more reactive, and trying to get more from fewer dollars. In part their inability to plan strategically is shaped by crises that may be unmanageable blazes or readily containable brushfire.

In this increasingly volatile environment, executives are seeking strategies and tools to enhance the design, cost-control and management of employee benefits. This article will discuss the application of strategic planning to the corporate human resource/benefit function. Strategic planning can be viewed both as a way of thinking and a way of planning for systematic change. It integrates information from the external and internal environment to take a comprehensive look at issues when planning for change. This article will combine theory and practice; it integrates theory with data from a national study on corporate strategic benefit planning practices, and actual experience in supporting planning.

This article provides a discussion of benefit planning issues facing employers generally, discusses a large research study of employee benefit planning and identifies questions and issues for benefit planning. This article has four sections:

1. Presents research on benefit planning and how it is applied today

2. Outlines an "ideal" benefit planning process

3. Defines the issues to be dealt with in benefit planning

4. Ties benefit planning to broader human resources issues

Section I

Strategic Benefit Planning--State of the Art

While benefit executives view the three most important priorities as being evaluating plan adequacy, defining benefit objectives and projecting benefit expenditures, they find themselves engaged in a broad cross-section of activities--the three most frequent being evaluating the adequacy of existing plans, evaluating the administration of existing benefits and defining plan objectives for specific benefits. Because of these multiple and sometimes conflicting requirements, some 80 percent of all responding companies are turning to strategic benefit planning as a way to balance existing benefit plan management and long range business and human resource goals.

Strategic Benefit Planning Defined

Strategic or long-range benefit planning expands the traditional functional approach to benefit management (i.e., planning, designing and implementing health, welfare and pension plans) into an approach and thinking about benefits with a long term perspective. Specifically, through strategic benefit planning, information--that is gathered about the company and its business environment--is used to develop different scenarios that may reasonably affect the company. Outcomes might include the development of new benefits; revisions in existing benefit programs; changes in benefit administration, including financing; and/or the management/organization of the benefit function.

Strategic Benefit Planning: A Process

Many corporate executives suggest strategic benefit planning is a dialectic. This process has several defining characteristics. Specifically, strategic benefit planning:

* Supports the corporate philosophy or mission. While a small number of companies use the long-range benefit planning process to articulate a corporate benefit mission, most companies view the mission both as a goal and a framework shaping shorter term decisions.

* Expands the definition of benefits. For many companies strategic benefit planning allows executives to define benefits within a broader context.

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