Employee Benefits & Cost Management

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Employee Benefits & Cost Management




What are Benefits? 

Benefits are forms of value, other than payment, that are provided to the employee in return for their contribution to the organization. The prime objectives of providing benefits are to attract, motivate and retain talent. 

 

Employee Benefits

•                Transport

•                Superannuation

•                Health insurance

•                Uniforms

•                Paid holidays

•                Executive perks


Guidelines for Managing Benefits

  • It is important to consider organizational effectiveness
  • Cost should be linked to productivity based on performance
  • Total cost concept and value addition
  • Fair Practices
  • Develop company policies


What is Cost?

Cost is defined as the monetary valuation of effort, material, resources, time consumed, risk and opportunity forgone in production / delivery of a good or service. It is simply put as the amount that has to be paid or given up for something to be acquired.

 

What is Cost Management ? 

Cost management is the process of planning and controlling the budget of a business. Cost management is a form of management accounting that allows a business to predict impending expenditures to help reduce the chance of going over budget.

 

Factors Affecting Cost Management

•                Growth in information technology

•                Global and overall domestic competition

•                Growth of service and manufacturing sectors


Cost Management Techniques

Managing a business has containing cost of utmost importance. Below are mentioned some of the techniques through which the overall cost of the business can be controlled and maintained within the required limits.

 

How do you manage Cost ?

  • Proper manpower planning
  • Introducing a performance base pay structure
  • Conduct salary surveys
  • Review processes, procedures and practices
  • Training and development
  • Introducing house keeping methods
  • Create cost consciousness

 

Total Cost to the Company

• Base Pay
• Variable Pay
• Benefits


Advantages of Cost Management



  • It helps in controlling the project specific cost, in turn also the overall business cost.
  • One can predict the future expenses and costs and accordingly work towards the expected revenues.
  • Predefined costs can be maintained as records for the business.
  • It helps in taking those actions that are necessary to assure that the resources and business operations aim at attaining the chalked objectives and goals.
  • It helps in analysing the long term trends of the business.
  • The actual cost incurred can be compared to the budgeted to see if any component of the business is spending more than expected.
  • It helps in analysing the business positioning in terms of making an acquisition factoring the cost component involved.

References

 

charis@peaktwo.com (2015). Employee Benefits | The Importance of Employee Benefits. [online] Virgin Pulse. Available at: https://www.virginpulse.com/employee-benefits/ 

What is cost management? - Definition from WhatIs.com (2019). What is cost management? - Definition from WhatIs.com. [online] WhatIs.com. Available at: https://whatis.techtarget.com/definition/cost-management. 

EduPristine. (2015). Cost Management Techniques and Advantages. [online] Available at: https://www.edupristine.com/blog/cost-management-in-detail.

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