Helps to paraphrase with the similar word count Employer Disadvantages 1. Setup

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Helps to paraphrase with the similar word count

Employer Disadvantages

1. Setup Costs: If your business already has a traditional benefits plan in place, there are some considerations to be made before adopting a flex plan. Speak with your employees to see if your plan already meets their needs because changing plans will cost money and if it does not add extra value to your business, the return on investment may not exist. The process of designing and implementing is time-consuming, which is costly for a business. Also, a flex plan may also require some new technology to implement and keep track of your plan.

2. Sharing Information: Making changes to a benefits plan is difficult enough for a business, in terms of time and money, but it also needs to be accepted by the employees. Employees need to have an understanding of why the plan is changing and how it will affect them. Businesses that take the time to explain the benefits to their employees will see a great acceptance rate for their plan, but those who simply implement the change without communicating why, may face some backlash from their employees. If the employees do not embrace the changes to their plan, the advantages mentioned above will not be seen by businesses.

Employee Disadvantages

1. Potential to Lose Money: Some flex plans do not allow for employees to save the money that they do not spend over the year. This would mean that employees would be putting in a certain amount of money each month for their plan and not being able to recoup that money if they do not use their benefits. While this could be seen as a major disadvantage for employees, having an ability to prepare for a worst-case scenario is still advantageous, especially considering that some flex plans will include life and dental and/or vision insurance.

2. Lack of Portability: While some benefit plans are portable, flex plans are not. A portable health plan means that employees may be able to move their account over to a new employer if they decide to change jobs. Having no portability may lead to employees staying in a job simply because of their benefits, even if they do not enjoy their job. In an extreme situation, this could lead to disgruntled employees and more absenteeism. Businesses should ensure that their employees are satisfied with both their benefits and their job to avoid such a situation.

Conclusion: As the workplace becomes more diverse, so too do the needs of employees. Businesses that can accommodate to these needs will thrive in areas like employee satisfaction and recruitment/retention. Flex plans are a powerful tool to be used by businesses and have benefits for both employers and employers. With all major decisions, businesses should be sure to consider both the advantages and disadvantages of change prior to considering a change.

Explanation / Answer

1. Setup Cost: There are certain setup costs associated with beginning a new flex plan. First of all, it is important that the plan is useful for the employees. If the traditional plan is already helpful then adding a new plan may not be much of ROI for the organization or the employees. Next, there may be requirement from technology, effort, resource when it comes to setup the flex plan. Hence it is important to identify the need of the employees before setting up a flex plan.

2. Communication: Changing benefits plan is similar to changing a company policy. The plan will impact employees and their way of saving and looking at compensation. However, it is important to communicate the benefits and differences of the new plan to the employees clearly. A clear and concise communication with explanation will see greater acceptance rate from the organization. Without this, the employees may not welcome the changes. This may cause overall failure of the new benefit plan.

1. Risk of monetary loss: Flex plans are often designed to make the pay package more attractive. This means it provides options for employees to save money or contribute a part of their savings for insurance related purposes. Such insurance, such as dental, medial, etc. is a one way payment and cannot be redeemed if the incumbent does not need them. This may be considered as a loss of money for many employees (specially the younger ones). Some plans may have these components as mandatory but if an employer can provide flexibility in this matter, it is helpful.

2. Portability issue: Every employer can choose different flex plan for their employees. This means that in likely scenario, the benefit plan will not be portable. In case an employee changes organization (or even geographic location for that matter) the benefit plan may change. This lack of portability provides complication for employees. While it may not be an extremely strong issue to hold on to a dissatisfied employee, it does provide room for certain consideration while changing a job.

With increase in diversity, complexity and variation in organizations, the employees and employers both are evolving. It is critical that the employers consider parameters such as employee satisfaction, retention, attrition ratio, etc. in order to manage their human resources efficiently. Flexible benefit plans provides and interesting opportunity for employers to offer their employees with powerful customization for their compensation. However, organizations need to consider the pros and cons before proceeding.

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