Loading...
Employee benefits can be rated in terms of Frequency and Instance Cost. The frequency of a benefit is the average number of times a single employee would be expected to receive the benefit over the span of a 20-year career with the company. Instance cost is the average cost incurred by the employer to provide the benefit to a single employee at the moment it is delivered. The frequency/oost ratio (\(\mathrm{F/C}\) ratio) is computed by dividing the frequency by the instance cost. A business is considering various benefits to attract and retain employees.
From the following list of benefits, select the benefit with the highest \(\mathrm{F/C}\) ratio and select the benefit with the lowest \(\mathrm{F/C}\) ratio. Make only two selections, one in each column.
Every day, each employee receives a voucher for a free cup of coffee.
Every month, employees are each served breakfast by volunteers from upper management.
Every year, \(\mathrm{10\%}\) employees are randomly chosen to receive a \(\mathrm{10\%}\) raise for one year, paid all at once at the end of the end of the fiscal year.
Upon the birth of an employee's first child, the employee receives a lump-sum bonus equal to \(\mathrm{25\%}\) of the company`s average annual salary.
Every year, each employee is reimbursed for a month's supply of food for one person.
Since we're comparing multiple benefits with different properties (frequency and instance cost), a comparison table is the perfect visualization:
| Benefit | Frequency over 20 years | Instance Cost | F/C Ratio |
| Daily coffee voucher | Daily × 20 years | Cost of 1 coffee | Very High |
| Monthly breakfast | Monthly × 20 years | Cost of 1 breakfast | High |
| Annual 10% raise (10% of employees) | ? | 10% of annual salary | ? |
| First child bonus | ? | 25% of annual salary | Low |
| Annual food reimbursement | Yearly × 20 years | 1 month of food | Moderate |
Let's calculate the exact frequency for each benefit:
While we don't have exact costs, we can rank them relatively:
We need to find:
The F/C ratio increases when:
Let's update our table with relative F/C ratios:
| Benefit | Frequency | Instance Cost | F/C Ratio |
| Daily coffee | 7,300 | Lowest | Highest |
| Monthly breakfast | 240 | Low | High |
| Annual raise (10%) | 2 | High | Low |
| First child bonus | 1 | Highest | Lowest |
| Annual food | 20 | Moderate | Moderate |
The daily coffee voucher has:
The first child bonus has:
Final Answer:
These selections make perfect sense: the coffee benefit combines maximum frequency with minimum cost, while the first child bonus combines minimum frequency with maximum cost.