What are some factors that Alan should consider when determining whether to offe

Question

What are some factors that Alan should consider when determining whether to offer benefits to part-time workers? **based on the reading below**

With just under 100 employees, Jackson, Smith, and Henderson CPA (JSH) is considered one of the fastest-growing certified public accounting (CPA) firms in the area. Alan Jones was recently hired as the director of human resources and has many challenges ahead of him as he works to formalize the human resource practices of the firm.

As the benefit open enrollment period is approaching quickly, his first job is to review the benefit offerings of the firm to ensure that JSH is competitive with other area firms. Beyond the legally required benefits, the firm currently offers a fairly basic benefit package including health care insurance, a 401(k) plan, vacation days, and sick days.

Currently, all employees are full-time, and all employees are eligible for benefits. However, two employees have recently requested part-time schedules. Further, in order to meet future unique staffing needs, the firm is considering hiring part-time workers in several departments, including CPAs. Therefore, Alan must make a recommendation to the company’s board of directors on whether they should extend the benefits to part-time workers.

A recent compensation survey of businesses in the local geographic area includes information about benefits. The survey reports that about 90 percent of companies in the area offer time-off benefits to part-time employees, only 40 percent offer health care insurance, and 15 percent offer a retirement savings plan. A national survey of CPA firms showed a different picture for part-time workers: 95 percent of firms reported time-off offerings, 75 percent offered health care insurance, and 67 percent offered retirement benefits to part-time workers.

The job market for talented CPAs is competitive, and Alan knows that the firm will need to hire both full-time and part-time CPAs in the future. Alan’s initial reaction is that the firm needs to offer all benefits to both full-time and part-time workers in order to be competitive with other CPA firms. However, the costs to do so are significant. The current benefits package is approximately 30 percent of the total compensation package for full-time workers.

While time off benefits and 401(k) contributions for part-time workers would be prorated based on the number of hours each employee works, offering health care insurance is a fixed cost. That is, the firm must pay the same to cover a part-time worker as a full-time worker. As a result, benefit costs could potentially approach nearly 50 percent of the total compensation for part-time employees. Part of this cost could be offset by asking part-time workers to pay a higher percentage of the premium, but the cost would still be significant. Alan must balance recruiting needs against a tight budget, and he is concerned about the right path to take.

Explanation / Answer

Few factors that Alan Jones need to consider are:-

1. Company plan aligned with future plan - It is being predicted that part time working will increase and the compensation benefits will thus have to be structured to make JSH competitive and attractive to the right talent

2. Competition scenario - area wise & national sector wise - It needs to be seen how the other companies in this sector nationally and all companies from all sectors in this area stack up with JSH in terms of compensation benefits. This will be important as the employees under the part-time bracket will have their expectations set based on the offerings being given in the market by the companies

3. Cost vs Benefit analysis - Costs incurred will be high if the same benefits that are being provided to the full time employees get extended to the part time workers too. But whats the benefit the company will get from the employee, not just in short term but long term vision too!

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