Question

You are a financial Planner making over $500 an hour. The CEO and COO of Facebook ask you to write up an employee benefits/retirement plan for their employees. Facebook’s goal is to attract and retain qualified, creative and driven employees. Facebook is also interested in making money for the company and increasing their profit margin for the benefit of the shareholders.

Answer 1

Employees are the assets of an organization, recruiting them is an easy task but retaining them is tough. Whenever employees get better opportunities, they just switch.

To retain the employees and giving them benefits, Facebook can take up following points:

1. Employees should be provided good health coverage plans and life insurance. nowadays there are several plans available like indemnity (fee for service coverage), managed care plans and point of service plan. These plans differ as per their cost, cost is vital part while providing benefits to employees.
2. Employees can be given "Employee stock option plan", where they can buy the stocks of Facebook lower than market price and retain them for some period of time. They will keep on getting dividend.
3. Employees should be given performance and occasion bonus time to time to motivate and encourage them.
4. Employees must be provided retirement benefits, in a survey, most of the employees said, they are ready to do job at lower salary if it provides excellent retirement benefits.
5. Some other non monetary benefits include, tea outing, potluck, free coffee/tea, evening snack, flexible schedules etc.

Facebook should concentrate more on Wealth maximization rather than profit maximization, Facebook can increase the wealth to shareholders by giving the dividends and providing capital appreciation, if share price is not doing well then by repurchasing the shares from the secondary market so that per share value can increase.