Compensation
Discussion of the effects of employee benefits on cost and workforce quality
I. Introduction
Most benefits are a form of non-taxable income to employees, providing them with such advantages as retirement provisions, paid personal time, insurance and health protection and various other employee services. Benefits are to increase an employee’s feeling of security, happiness and wellbeing. The aim of benefits is to attract better, more skilled employees and be competitive in local market for most positions.
The benefits provided can range from bonuses for performance to different insurances to discounts or even material gifts. It depends on the company, market and employee structure and needs which benefits will provide the best effects on performance and company culture. Benefits can also be used to increase employee loyalty, by providing more than do others, thus relieving their company of costs associated with finding a replacement.
Some benefits may seem inadequately expensive while others might be more effective in achieving the objective with less cost. However, it is important not to look at just the obvious price, but also at the other costs associated with providing or not providing a benefit. The hidden cost of not providing a benefit is the cost of high turnover, the cost of lost productivity or the costs of providing other substitute benefits.
The workforce quality goes up with the quality of benefits provided. The more and the better benefits an organization provides, the more skilled workforce it can attract and retain. If education is provided as a form of benefit, it can be the means of having higher skilled workforce without the need for recruitment (4).
I. What are benefits
Benefits are extra services provided by an employer to his employees, they are an indirect form of the total compensation to an employee (5). Benefits include mostly health insurance, paid time from work and retirement income, but they can vary into a wide range of other services. Most companies offer at least some form of benefits as it is more cost-effective than giving the employees cash instead.
Benefits were first introduced during the World War II, when a shortage of workers forced companies to look for new ways of attracting workers. Since they could not increase their wages, which were controlled by the government, together with labor unions the companies decided to offer inducements not controlled by the government. They offered to pay employees’ medical bills, provide insurance and subsidize cafeterias. Later on, tax policies were set to aid the development of benefits. Benefits became deductible expenses for the employer and are not subject to tax for the employee. Most organizations today in the US offer some kind of benefits.
The objective of benefits is to accomplish external competitiveness along with cost effectiveness. Benefits must also comply with legal regulations and should be designed to meet individual employees’ needs and preferences (5). When choosing a benefit package for an organization, the organization’s objectives and strategies must be reflected in those chosen benefits. Apart from giving the employee something extra for working, the employee should feel that his employer cares for his well-being, and with that in mind he chooses the benefits to propose.
Benefits offered differ by the size of the company, its location, strategies and objectives. Large businesses can usually afford to provide more expensive benefits, especially full medical coverage or the like. Smaller businesses have to consider more closely what to offer, as each additional cost affects the business. They may therefore choose to pay only a percentage of the medical costs as a benefit. Location of the workforce of an organization affects its needs; therefore different benefits would have to be provided in New York, USA, than in S±o Paulo, Brazil.
The most widely offered benefits include pension plans (401(k) in the USA) and retirement benefits, insurance (disability, life, accident), medical and dental coverage, monetary bonuses, paid time off, flexible scheduling arrangements, training, and child care assistance. These various benefits and their impact on the organization will be discussed in the following chapters.
Benefits should aim to increase the employee’s sense of well-being, help achieve balance in his life. As Brian G. Dyson said, today’s employees look more for balance than for money in their lives, even though money still plays an important role.
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Štvrtok, 21. novembra 2024
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Discussion of the effects of employee benefits on cost and workforce quality
| Dátum pridania: | 22.11.2004 | Oznámkuj: | 12345 |
| Autor referátu: | Daggie | ||
| Jazyk: |  |
Počet slov: | 2 718 |
| Referát vhodný pre: | Vysoká škola | Počet A4: | 8.9 |
| Priemerná známka: | 2.99 | Rýchle čítanie: | 14m 50s |
| Pomalé čítanie: | 22m 15s | ||
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