I need an introduction for this case study.

CANADIAN ATLANTIC AND INTERNATIONAL BANK

Mary Keddy, Senior Vice-President HR, was facing Michael Bennett, the banks CEO, in his office. He had called her to an urgent meeting regarding the banks benefit expenses. He showed her some figures he had received from the Internal Auditor. The data indicated that the banks benefit expenses had reached almost 40 percent of the banks payroll. He also produced benchmark data from a survey, which showed that the industry average was close to 30 percent. Why is it our benefit expenses are so much higher than those of our competitors? he asked.

Mary pointed out that the data had assessed the financial services industry, not just banks, and that the industry included some trust companies with much lower benefit levels than bankswhich, by and large, had benefit expenses similar to those of the CAIBalthough the CAIB certainly occupied the high end of the scale.

Mr. Bennett wondered whether these expenses were really justified. Where is the payoff? he asked. Mary had no problems defending the banks benefit outlays. She pointed out that the CAIB had the lowest turnover rate among banks, 2 percent lower than any other, and that every employee attitude survey showed that the CAIB staff felt the bank to be a very good place to work and that job satisfaction was high. She also mentioned that the bank had no difficulties attracting top-flight applicants. She was convinced that the banks generous benefit package contributed significantly to this level of satisfaction. She concluded her explanation by saying: Mike, look at the level of customer satisfaction. We beat out every other bank on this measure. I am sure the reason is that happy employees mean happy customers. And there is the main payoff.

Bennett appreciated Marys explanation. He always had been proud when he saw the results of internal surveys. There was no doubt that people liked to work for the CAIB. Still, he wondered, are there ways to cut the expenses without doing too much damage to employee satisfaction? Mary agreed to look into that matter and to make suggestions regarding more efficient methods of delivering benefit services. She had heard and read about the use of the intranet and the Internet as more effective ways to administer benefit plans, but felt that she did not know enough about it to come up with convincing recommendations. It was obvious that she needed some expert advice.

ADDITIONAL INFORMATION

The last time a benefit audit had been done was seven years agoa year before Mary joined the bank. Ever since her arrival, Mary had been too busy introducing strategic changes in areas such as selection, diversity management, and training. In the past five years, the bank had also acquired several other financial institutions and expanded into other countries. But the need for a benefit audit had been on her mind for some time.

The banks flexible benefit package included, besides the usual supplementary health and life insurances, child care, elder care, a drug payment plan, wellness programs (the bank had its own exercise centre), personal counselling service (drugs, alcohol, smoking cessation), educational support, and financial advising. It was also possible to purchase more vacation time. There were three full-time employees responsible for administering the flexible benefit package. The administration expenses, including communication, were close to $300,000 annually. The bank used a quite-effective intranet mainly for training and public announcements.