Case Study 4-2 apa

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Case Study 4-2 1 Case Study 4-2: Cost Cutting at VentaCare Laura Bates Southern New Hampshire University 1/30/2021

4-2 Case Study: Cost Cutting 2 4-2 Case Study: Cost Cutting at VentaCare Discretionary benefits offer employees extra incentives to sign on and stay with a company. Smaller companies that offer generous benefit packages to compete with larger companies that can afford to pay higher pay rates. “According to Glassdoor’s 2015 Employment Confidence survey, about 60% of people reports that benefits and perks are a major factor in considering whether to accept a job offer” (Jones, K., 2017). Overall, a generous discretionary benefits package can set one company apart from another and can help retain talented staff and lowering turnover rates, which can be costly for a company. VentaCare has had a positive response from their generous benefits program. Employee turnover has been low; this results in the company having a superior reputation and a waiting list for incoming residents. These benefits are expensive for VentaCare, which has 3 locations, 250 staff members, and 500 residents. While the company pays rates are comparable to competitors, their benefits program sets them apart from the competition. With cuts from Federal Funds, VentaCare has to reexamine its discretionary benefits package, since a freeze in pay is not going to cover the gap in the budget. Reexamining the benefits package may mean that benefits may be added, modified, or eliminated. The current protection plan benefits that VentaCare offers is that the company is taking the full cost of health insurance and both short and long term disability. “According to a 2016 SHRM Survey, employers spent an average of $8,669 per an employee annually on healthcare coverage” (SHRM, 2017). This means the VentaCare in 2016 spent over two million dollars on healthcare coverage for employees. To reduce the cost on the company, VentaCare should limit eligibility for healthcare to only full-time employees and introduce split healthcare costs with employees by establishing tiered health insurance plans. Suggested tiers would be “Employee

4-2 Case Study: Cost Cutting 3 only, generally called individual coverage, employee plus one – a spouse or child, and employee plus family” (SHRM, 2017). Each tier would have a different rate since as tiers get higher so does the amount of coverage. “For an employee selecting single coverage, the employer covers 71% of the monthly premium, but only 54% of a family premium” (SHRM, 2017). For short term disability, VentaCare should change to each full-time employee have a personal “Sick Timebank”. This means that unused company offered sick time would be put into their bank, the bank can grow up to 30 days. In case of short term disability, employees that have days in their bank can use those days. Also, once the bank is full, unused sick days can be paid out to employees at the end of the fiscal year. Employees would be required to obtain their long term disability and life insurance and additional short term if desired. The retirement benefit of the 401(k) plan can stay the same, and match the employee’s first three percent of contributions. Paid time off (PTO) is important to both employers and employees. Employers want employees to take time off as needed to be able to work at their best capacity. For the benefit, there should be a differentiator between full time and part time employees. Full-time vacation days should accrue depending on the length of service and should be earned in the first year. A suggested break down would be “One year of service one week of vacation, two to four years of service 2 weeks of vacation, five to nine years of service three weeks of vacation and ten years plus four weeks of vacation” (HRsimple, 2020). For part-time employees, they would accrue vacation as an average of the time working in the first twelve months. For example, if the part- time employee consistently worked 18 hours a week, they would earn 18 hours of vacation time to use. Vacation time would have to be used and not paid out, and employees cannot carry over more than 3 vacation days into the next year. The company should change from eight paid holidays to six paid holidays and two paid floating holiday days. “A floating holiday benefit can

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4-2 Case Study: Cost Cutting 4 give employees flexibility, improve team morale, and support diversity and inclusion at your company” (Indeed, n/d). An employee can have 5 sick days for the year; any unused sick time can go into the employee’s personal sick bank up to 30 days. Other benefits that would need modifications would be the tuition reimbursement benefit. This benefit would have to be a full-time employee only benefit. An employee would have to be approved by the administration for a work related program before enrolling in courses. The employee would be reimbursed depending on the grades that they earned for the class. A’s in classes would be full reimbursement, B’s 85 percent reimbursement, C’s 75 percent reimbursement, and no reimbursement for grades falling under the C grade. Employees would be responsible for the purchases of any books and required materials for the class. Employees can be surveyed on which types of wellness they would like to maintain. The monthly lunch would either need to be changed to a “potluck” where all employees contribute. Another option would be to do a dollar donation for dress-down Fridays and those proceeds can fund the monthly lunch. The full-service Employee Assistance Program would have to be evaluated for the amount of usage combined between the three worksites. If this benefit is being used substantially VentaCare may consider “fixed fee- contracts where employer’s contract for various services such as counseling, referrals, and supervisory training with fees based on the number of employees regardless of their actual EAP usage” (SHRM, 2020). If the evaluation reveals that the program is not utilized often, VentaCare can consider “fee for service contracts which employers contract directly with the EAP provider, paying only when the services is used” (SHRM, 2020). In addition to temporarily freezing salaries, these modifications to the benefits package should allow the company to maintain the new budget. Though employees will have to endure

4-2 Case Study: Cost Cutting 5 some of the costs of healthcare coverage, employees are still receiving most of the benefits they were before. The company might consider a report for employees so that they can see how much the company has spent per employee for each benefit. This may help them rationalize the cost that they are now being asked to cover. In the future, management can take surveys of which benefits they would like to see come back or new benefits they would like to see added, or benefits that are not needed that may want to be switched for different benefits.

4-2 Case Study: Cost Cutting 6 References HRSimple. (2020, June 16). Employment Law Reference Guides, HR Manuals and Books in print and online . Welcome to hrsimple. https://www.hrsimple.com/blog/vacation-policy . Indeed. What Is a Floating Holiday? Job Search. https://www.indeed.com/hire/c/info/what-is-a- floating-holiday. Jones, K. (2017, February 15). The Most Desirable Employee Benefits . Harvard Business Review. https://hbr.org/2017/02/the-most-desirable-employee-benefits . Shrm. (2020, May 14). Managing Employee Assistance Programs . SHRM. https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/ managingemployeeassistanceprograms.aspx. Shrm. (2017, May 23). Managing Health Care Costs . SHRM. https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/ managinghealthcarecosts.aspx.

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