Amidst Covid-19, where people are struggling to balance their health as well as their jobs, employers are also struggling to manage their employees while meeting business demands. This pandemic has also forced employers to take care of the health concerns of their employees while ensuring streamlined business and productivity.
These struggles originated as benefits administration software and models that are rewarding for the employers as well as providing extensive support to their workforce in order to manage the operational cost.
Healthcare management is one of the major expenditures that has become essential for any employer to bear. When surveyed, 45% of the business entities said that healthcare cost is imperative.
Despite strict management, organizations should not miss out on underlying the non-essential expenditures that companies bear for their employees. Instead of overlooking these expenditures, employers must understand the importance of cost containment. It helps manage expenses without compromising on quality.
Defining Cost Containment and its Importance
Today’s businesses follow best practices to manage their expenses. Cost containment is one of the best ways to manage all-level outlays in order to avert unwanted payouts. Moreover, it assists in improving the profit share without causing any risk or damage to the company.
Cost containment may reduce spendings in a few areas, such as marketing & sales apart from limiting the travel expense for their employees. Companies can practice cost containment to adjust their current plans such as:
- Shifting cost
- Health plans with heavy deductions
- Health saving accounts
- Analyzing health claim
- Updating group health insurance
Today, cost containment strategies are implemented to improve the overall operational efficiencies, enhancing marginal savings, as well as deliver the best customer experience. Along with the employer, the HR department also plays a major role in managing expenses incurred by the company. There are various processes, such as recruiting, appraisals, leaves, and other management are also essential to comprehend values.
Integrating cost containment strategies in HR software solutions can assist human resource personnel to maintain expense levels at a minimum.
Implementing Cost Containment Strategies to Overcome Tough Times
Mute or Decreased Incentive Plans
Lockdown has given employees to work under flexible schedules, which is evaluated as extended working hours. Incentive compensation plans are fruitful ways to encourage employees for continuous engagement. However, these tough times are for employers as well, hence lowering these costs can provide a company with a backup budget for other necessary expenses.
Layoff Policy for Sustenance
Discontinuing employment during a pandemic is the most unwelcoming and unfortunate event for any employee as well as the employer. Not just it impacts the employee’s life but also the organization’s sustainability as they work on crucial projects. Hence, layoff plans can guide and help employees to file as well as the claim for outplacement services or severance pay to survive.
Freezing Cafeteria Benefits
Not every business can offer comprehensive facilities to their employees. One of the major reasons why employers could not provide a proper eatery benefits is budget. In order to suffice during the hard times, suspending the cafeteria contribution can prove beneficial.
Restricting Working Hours
Limiting the number of working hours, proportionate to the flexible schedules, will promote work-life balance of the employees. The reduced set of working hours can be implemented immediately and the HR department should be mandated by the company’s policies.
The employer must share their intention about the uncertain times affecting business with its employees and assuring them to resume the same hours when they have continuous business inflow.
Unpaid and Other Relevant Leaves
This pandemic is largely affecting people with their health. Moreover, monetary malfunction is discouraging as well. Employer’s small steps, such as unpaid leaves to look after themselves and family during critical illness can be encouraging. However, an employer must evaluate a substantial backup when an employee gets into a serious medical condition for continuous workflow.
Reduced Base Pay
Deciding to simply reduce the working hours aren’t enough. During the hard time, employers have to take some strict steps, such as reduction in the base pay. However, this sounds risky, but in order to control expenses, an employer can reduce the base pay as per the working hours keeping the local or state law in mind to avoid any legal hassle.
An impact that a company may face in the near future due to base pay reduction can be the loss of internal equity and competitiveness in the market.
Reducing Overtime Benefits
Companies try to control expenses in every possible way, especially during uncertain times or events. Despite employee benefits offered in the first place, companies have to ensure that they can overcome harsh situations seamlessly. Overtime wages being an encouraging step has to be suspended in order to contain their cost for difficult times.
Debar Retirement Benefits
Cost containment means excluding those employee benefits from your policies that may be difficult for you as an employer to incur. You can suspend the 401K contribution temporarily in order to save yourself from the additional cost. You must contemplate the effects of making these sudden changes in your policy as they should not impact the health plan of an employee.
Optional Separation Programs
Like any other policy alteration or modification, an employer must also offer benefits to the employee who is looking to separate from your firm. An employer can offer the employee plans, such as outplacements or similar support during these hard times. Leaving companies on a good note impacts the reputation of the company in the long run.
Eliminate Reimbursement Plans
Many organizations offer their employees reimbursement for travel fuel, meals, rent, cell phone usage, and many more. Companies that are looking to cost containment must suspend these reimbursement plans from their policy for a time being. Employees working from home may not require these reimbursements, hence it becomes easy for the companies to suspend them.
These initiatives to cost containment strategies are made keeping employee benefits in mind. Despite these benefits, the most essential aspect of these cost containment strategies is the engagement and utilization of these efforts by employees.
Companies can also take initiative for engaging their employees through wellness programs and more. Only with the help of employees and their understanding, these strategies can be fruitful while keeping the business afloat.
In a Nutshell
Cost containment strategies may look promising for the employers but may have their incoming risks that should be contemplated. Only if the changes are not impacting the business greatly, can then they prove useful for both employees and employers.
Before implementing these strategies, employers must not differentiate between their employees, be it of any level. Hard times are for all, hence limitations must be made that can allow employees to support their families.
The major aspect to keep in mind is making changes without any infringement, especially when you are already dealing with this pandemic. Communicating the reason behind these changes with your employees will make them empathetic of your perspective resulting in seamless changes.
