Starbucks Corporation Flexible Benefits Programs

Benefits refer to some of the non-wage compensations that employees stand to get at their working places due to the considerations given to them by their employers. The programs are meant to provide the employees with a number of benefits and rewards that go beyond the normal reward they get through wages.  For some, they may refer to them as the indirect benefits that employees stand to get as a result of them working for their various institutions. Moreover, it may also fall under the category of employees supplement remuneration on top of the normal wages that they get from their employers. The use of the flexible options are considered to be a good move from the organizations that offer them since it gives the employees a various options away from the normal “one-size fits all” programs. The flexible program gives the employees chances to select a number of available options from a list of so many options that are offered to them. It therefore means that the employees do not have to rely on only one fixed area of choice but they can choose from so many alternatives. For instance, an employee may choose to pick on a dental health benefit depending on the problems they are most likely to go through. Another employee may also decide to take a life insurance, if that is what they deem to be the best choice for them. Another employee might also leave the above three and instead decide to pick on long-term disability if that is what they think will give them the best option.

For this case, the best organization to pick on is the Starbucks Corporation in America. Starbucks is an American company that operates as a global coffee company with its headquarters located in Washington D.C. The organization was founded in the year 1971 when it was initially given the name Seattle coffee bean (Starbucks website). The company has managed to grow rapidly over the years, with the highest growth rates being between the years 1987 and 2007. During the mentioned years, the company managed to open sp many outlets across the globe, with estimates showing that they opened an average of two stores each single day. The organizations, just like any other organization, it has endured its own ups and downs during its growth. There wwas a time in the 1980s when it made huge amount of losses but that did not deter the owners from pushing on with their business ideas. That was however just a short period of their downward slope but they managed to pick themselves up and got back to their profitable ways of running their organization. To be specific, the organization managed to make a profit worth $812,000 during the 1989-1990 financial years. The operations of the organization became the trending move in America due to the quality products and services that it was offering to its customers. It managed to go through the tough economical times and eventually opened up its first store outside the American region. The first external store was opened in Tokyo Japan in the year 1996. Current composition of the company’s outlets is such that the Diaspora outlets form one third of the entire outlets owned by starbucks. The primary aim of the management during the nineties was that the organization was to open close to nine hundred stores within America by the end of the year 2009. However, that never came to pass since the organization was forced to close some of its stores because they were not able to generate income for the organization as was expected.

Starbucks is one of the organizations in America that allows their employees to use the flexible benefits programs that allows the employees to contribute to such a program through their payroll deductions. The deductions that are subtracted from the employees’ income are done in such a way that the deduction process takes place before the wages are subjected to taxation. The employees therefore fall into a lower taxable income bracket. Such moves allow the employees to benefit from taxation because they move from one taxable income bracket to the next. The net amount of income that they earn due to such a flexible program increases. The program can therefore be considered to be an “added benefit” to the employees. The company may also benefit in some way through the use of such a program but it is the employees who have the most benefits. The program allows the company’s to share costs with the employees such that everyone makes contributions toward the success of the program (Jay, 2000).

One type of the flexible benefit plans that the organization uses is the cafeteria plan that allows the employees of the organization to choose the nontaxable benefits that they want to get from the employer. The employees have a choice of choosing to get either all or part of the non-taxable benefits that are offered by the employers. Alternatively, the employees have a choice to pick on either getting cash money or getting other benefits such as the stock benefits (Meisenheimer and Wiatrowski, 1998).  . Such plans are not just formulated within the organization but they match the standards that were set by revenue act of the year 1978. Moreover, such plans are normally placed under the regulations of the law through the use of section 125 of revenue code. The cafeteria plan allows the employers to offer their employees a chance to pick on so many available alternatives. For instance an employee can pick on a health insurance plan or alternatively pick on a life insurance plan.  There is also the option that allows the employees to pick on the reimbursement plan for those employees who have the non-insured expenses (Meisenheimer and Wiatrowski, 1998).  . Other options that are available include that of disability, vision, day care and even elder care. The final category has options such as vacation days, the 401(k) plan and the vision coverage plan. The funding that is required for this category can come from a number of sources. The employee has the choice of choosing to cater for the entire funding process or alternatively share the cost with the employer. There is also the option of the employer taking up the entire funding of the program.  What the organization does is that it gives the employees a spending card so that the employees have the choice of picking on the “buy” benefits option. The bearer of the credit card chooses the benefits that they want to buy, for instance, they may choose to buy an option in the health insurance or life insurance category. The employer then chooses to either give the benefit to the employees in form of cash or coverage for the choice picked.

There are a number of benefits that are associated with the flexible plan or programs. One of them is that it allows the employees to build their own benefit programs that they deem to be the most useful and beneficial to them. Such a program is what the employees feel that it will meet their needs as well as their budgets. Moreover, such a plan allows the employees to make changes on their benefit elections from time to time. If for instance what he employee picked does not help them as per their initial expectations, they get the freedom of choosing another alternative that they think will give them more benefits. Such freedom of changing the benefits programs fro time to time is given due to the changing nature of life. Since life has got no pre-defined nature of progress, it is bound to take different course from a given duration to the other. It is also important that the choices given to the employees match the course that life takes. One area that Starbucks has played an excellent role is their ability to tailor-make the benefit plans in such a way that they match the needs and the requirement of their employees.

The second benefit that the employees derive from such a plan is that they are in a position to create a control mechanism for the ever rising supplementary health costs. For instance, the costs of the newly developed drugs are so expensive such that without the help of such a program, the employees may not manage to bear the cost. The plan also does give the employer a chance to create their own budgeting plans for the health care costs. In the absence of such a program, the budget allocated for the health care are normally left to be determined by the premium costs of the uninsured benefits that the employees get. For instance, the organization can decide to set a certain fixed amount of money for each employee. That limit is set with the knowledge or assumption that what the employee will benefit does not go beyond that ceiling. Another assumption made is that even if the life circumstances change, the ceiling placed by the management does not have to change.

The program also comes in handy with a number of disadvantages, one of them being that the IRS body places a number of regulations. For the case where the employees fail to use their credits or the benefits offered to them within a certain period, they are not allowed to carry forward such a benefit to the next period. Let us say that an employee had a benefit period of one year, if they fail to utilize it for that one year then they do not carry it forward to use in the second year. Another restriction is that the employees are supposed to make sure that those who are highly compensated do not receive more than twenty five percent of the tax benefits. The program leaves a certain category of employees with a huge burden as compared to other employees.

You can order a plagiarism free paper at an affordable price. 

Get Your Custom Paper From Professional Writers. 100% Plagiarism Free, No AI Generated Content and Good Grade Guarantee. We Have Experts In All Subjects.

Place Your Order Now
Scroll to Top