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In: Operations Management

Many compensation professionals are faced with making choices about which discretionary benefits to drop because funds...

Many compensation professionals are faced with making choices about which discretionary benefits to drop because funds are limited and the costs of these benefits continually increase. Assume you make such choices. Rank order discretionary benefits, starting with the ones you would most likely drop to the ones you would least likely drop.

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Expert Solution

In the event of fund limitation requiring to drop discretionary benefits, my ranking order of discretionary benefits, starting with the ones I would most likely drop to the ones I would least likely drop is as follows:

1) Festival gifts: In times of financial austerity, the first and the foremost discretionary benefit that I would drop is festival gifts. Festival gifts are gifts given to employees during important festivals during the year. While these gifts often create a feel-good factor among the employees. at times of financial distress, they are the least important discretionary benefit.

2) Paid Vacations: Likewise, many companies offer their employees at least one paid vacation once a year. But when are tough and companies are required to tighten their financial belts, paid vacations can also be dropped to accommodate other important benefits.

3) Earned Leave: Earned leaves are mandatory paid leaves that employees earn for their personal work. These leaves can even be encashed in case the employee does not wish to utilize them. However, when the company has limited funds to offer discretionary benefits, such benefits can be done away with.

4) Health and security benefits: Health and security benefits are the discretionary benefits that I am least likely to drop. This is because health care plans are often very expensive for the employees and therefore, it is very important that they retain the health coverage given to them by their employers.


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