As per the recent trends, employees consider compensation and benefits among the top rated aspects most important to their job. This is the reason why companies use rewards and compensation benefits to motivate its employee and achieve its strategic outcomes. HR professional of the company is responsible for programs that are conventional as well as unconventional. Profitability, employee satisfaction and management’s goals can be realised through the smooth implementation of reward programmes. This case describes the reward programmes of two companies, Alfac Insurance and L L. Bean. Both the companies have a robust ‘reward system’ programmes. Let us consider the case of Alfac Insurance, a fortune 500 insurance company that was founded in 1955 and which primarily into supplemental health and life insurance business. The company employs more than 4,500 people and 71,000 licensed independent agents in U.S and Japan, where the company operates. Some of the key aspects of Alfac’s HR- benefit programme are:
Use of its own products and services to enhance total compensation for its employees: The corporate philosophy of Alfac focuses on providing value to its employees and treating them with care, dignity and fairness. In order to target and retain top talent in the industry which has an unemployment rate of 3.3 percent as on March 2008, the company tries to provide several attractive incentives to its employees. It has several value-added programs that would improve employee job satisfaction. It provides Alfac products to its employees at little to no cost. The products and services include life insurance policies, company-paid cancer policy and subsidized accident protection insurance. If an employee volunteers for a charity cause, he is awarded “Volunteer of the month”. Also, profit sharing bonus is a big way in which employee’s compensation is related to product sales.
Strengths and Weakness of Alfac and rewards perspective: Some of the internal strengths of the company would include:
- Good company reputation. Around 90 percent of its employees were attracted to the company because of this aspect.
- Eighty-one percent of employees believed the company’s profit sharing bonus was better than the competitors.
- Eighty nine percent of the employees were happy with company’s reward systems. This resulted in high employee engagement and satisfaction.
Some of the external strengths of the company were good market reputation and employee turnover of less than 10 percent in the first quarter of 2008, which was pretty good and robust for an insurance firm. Speaking of weaknesses, the internal weakness was that the employee benefits became a conspicuous line item on profit and loss statements. This could prove to be a risky proportion because if the firm underperformed in the near future due to any internal or external factors, it would affect the employee reward programme and would reduce employee-morale. The external weakness was a high rate of inflation in the market. The cost of offering health insurance continued to outpace inflation. This added the cost to the growth of the business and adding staff. Alfac developed a total rewards programme which evolved from one page programme to an extensive review of values of rewards and benefits. It focused on satisfying employee’s needs from benefit’s perspective while balancing cost. This was achieved by promoting several value-added programmes, which would promote employee benefits along with company goals. These rewards were given in the form of monetary compensations and offering company’s own products at low prices or free of charge, and it included employee’s participation and involvement at workplace and outside.
Some of the traditional rewards given by Alfac to its employees under its total rewards programs were:
- Providing company products at little or no cost: It included life insurance, company paid cancer policy and subsidized accident protection plan.
- It provided a profit sharing bonus to its employees.
- Providing extensive employee training and leadership programs. Some of the courses that were included in such programmes were “Managing Your Career” and “Preventing Diabetes”.
Some of the non-traditional rewards included:
- Rewards in line with philanthropy: Any employee, who was involved in philanthropic activity, in any of the four areas; health, education, youth and arts, was recognised by a “Volunteer of the month” award. This award was very useful in boosting the morale of its employees.
- Providing largest on-site child care facility in the U.S.
- Sponsoring outdoor adventure days, fitness centres and service discount.
The traditional and non traditional rewards were used by Alfac under its total rewards system to provide various incentives and benefits to its employees. This would result in increased employee satisfaction and lesser employee turnover. A higher employee satisfaction will lead to higher productivity at workplace, which would eventually enable the company to provide best insurance values and services to its customers.
How do Alfac place its benefits with its corporate values?
Since its inception, Alfac has believed that the best way to succeed in its business is to value its people. Using this, company provides several benefits and rewards to its employee as mentioned. It provided an enriching and rewarding workplace to its employees and quality service to its agents. This gave rise to high employee satisfaction, low employee turnover rates and best insurance value to its customer.
Recommendation pertaining to the current ‘Employee Benefit Programme’ of Alfac
Some steps that Alfac’s HR department can take to strengthen the company’s goals and values are:
- Create ‘Employee Referral Scheme’: The Company would encourage its current employees to refer their friends or relatives to join the company. This would be helpful and productive as it is difficult to find trained personnel in the insurance industry. If the referred person is selected, the employee who referred his or her name will be given ‘reference bonuses’.
- Introduce innovative options such as ‘Work from home’ and ‘Work on weekends’ to improve productivity and employee benefits in form of ‘weekend bonuses’ and other perks.
References
Dessler, G. & Varkkey, B. (2010) Human Resource Management. Pearson, 11, 61-67.
Sandra,M.(2009) Benefits of Business at Alfac and LL Bean . SPHR, 3-11.
