CAFETERIA BENEFITS PLAN

Hi folks,

Cafeteria benefits plan! Sounds interesting? Yes, indeed not only the sounds attract us but the formula behind the plan is impressive and effective.

Cafeteria benefits plan is a concept of written plan that offers employees a variety of choice between receiving their compensation either in a form cash or as part of benefits. It’s replicate the concept of cafeteria that offers variety of menu. Obviously, there are pro and cons while practicing this plan in an organization, especially companies with huge numbers of employees will feel complicated.

However, addressing the individual differences of needs and wants, besides because of business competition demands across the globe, a flexible approach is needed to fulfill both needs. Moreover, a comprehensive pay package with right combination of benefits helps to retain best talent in the organization. Thus, this cafeteria benefits plans will fit to be applied by offering the employees a list of choice of benefits that under the cost structure. Employees can pick and choose from listed benefits and put together the benefit package that works best for them within the established cost structure.

There are few things, the organization need to bare in mind before designing benefits package such as;

1. Does the benefits offered meet employees needs?
2. What are consequences of offering the benefits?
3. Does it within company’s cost structure budget?

Most important thing in designing the benefits package is the needs to respond to employees’ wants. Then, be creative. For example, a XYZ company tells its employees that it will pay up to RM5000/- in benefits per year and values its benefits offerings this way:

Benefit Amount; Health insurance RM4600/ Child care RM1500/ Life insurance RM2500 /Retirement plan RM 2300

Aziz, an employee then picks from the listed benefits until he reaches RM5000. If Aziz wants more than RM5000 in benefits, he needs to pay for the additional cost benefits with a reduction in his pay slip. The list of benefits could be considerably longer than items listed above.

The responsible authority in the organization needs to take into account many issues prior of implementing or practicing this cafeteria benefits plan in their organization. It’s undeniable that this plan works better in small business/ organization, as it’s more manageable compared to larger companies. Yet, nothing is impossible to imposed or taking action on.

Thank you!