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The Risks of Employee Benefit Plans

            If people are our most important asset, then why are we going to a predominantly contingent workforce? .
             Management is in a perennial expense-reduction battle. The battle will always start with cutbacks in the employee base so long as management believes that people are an expense. But the inescapable fact is that they will never get it right so long as they believe in their hearts that human capital, unlike other assets, cannot be managed for value. No one hires an employee primarily because they want to spend money, right? They expect that for every dollar they spend on pay and benefits they are getting back more than a dollar in profit. If this does not happen the result is called: bankruptcy. So, since most companies are not bankrupt, it must follow that people are actually returning more than a dollar for each dollar invested in them. Offering employee benefit plans was once considered a company "perk- immune from anything other than the employee's appreciation. However, as employees began to take their company group health, disability, life, and retirement plans for granted, the expectations outweighed their appreciation. When economic times were tight employers cut back on benefits, under-funded retirement plans, and occasionally used pension moneys to fund other projects. Employers and employees can no longer afford to allow workers to be passive benefits consumers. Benefits simply cost too much. According to a 1997 study of employee benefits by the U.S. Chamber of Commerce, benefits cost employers 41 percent of pay, up from 37.7 percent in 1985, and cost employees an average of 13 percent of pay, up from 8.5 percent in 1985 (www.workforce.com). Fifteen years ago, a typical benefits package consisted of life and health insurance, and an employee-paid pension plan. Today, most employers offer many more benefits and have shifted the risk of retirement plans onto the employee's back through the use of profit sharing and 401(k) plans.

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