Benefits that Increase Employee Effectiveness and Productivity

Many researchers as well as managers believe that use of fringe benefits on employees increases their loyalty and doubles their productivity and effectiveness at work (Banerjee & Perrucci, 2012). In addition, they also increase retention of employees, thereby reducing attrition, as well as having a positive effect on the bottom line. This is an important facet of employee motivation, which is has been proven to be an indispensible requirement in human resource management. There are various non-mandated benefits that companies around the world award to their employees, including health insurance, group retirement savings, voluntary benefits, paid vacations, life, and disability insurance among others (Barden & Rogers, 2012). Effective implementation of any of the benefits could lead to remarkable improvement in employee performance in a company.

Though there are numerous benefits that are company-specific, not all of them are effective in impacting positively on employee performance. Managers could make use of the following strategies or benefits to impress their employees: comprehensive health insurance, group retirement savings, and providing employees with discounted products or services (Rappaport, 2013). First, offering a comprehensive health cover is perhaps the most important fringe benefit each employee would appreciate. This has become so commonplace that most employees assume it is a mandatory requirement. The quality of life can be directly tied to the productivity of an employee, since a sick workforce is simple non-productive (Dominick, 1966). In order to reduce cost and meet the demands of cost effectiveness, a company may not have to fully cover the employees, but take care of the most basic health requirements. Due to ever increasing costs of health care, it is generally worrisome to most managers to implement this cover. In this regard, employers should consider affordability in terms of copayments and deductibles, which must not infringe on the lower paid employees (Yamamoto, 2011). Medical cover should be extended to the family, as an employee’s wellness is also largely affected by the status of the family members. When there is effective health care cover for employees, their wellness is guaranteed, which in turn assures their productivity and establishes their loyalty to the company. Over 90% of the companies in the private sector use this strategy of employee motivation, including Love’s Travel Stops and Country Stores, US Foods, PricewaterhouseCoopers, and Koch industries among others (Kwon & Hein, 2013).

Increase in health care costs and implementation of other benefits can prompt managers to look for cheaper and more stable benefits. One of the benefits with a controlled rate of inflation is group retirement savings. In this plan, Defined Contribution plan and Group RRSP may be included (Uchak, Pohler & Gellatly, 2008). In terms of increasing costs, these two plans are not affected by the future rising rates of inflation, or even health care. There are, instead, driven by wage inflation which are more stable, consistent and generally lower. Some leading companies in the US according to Forbes including Gargill, Betchel, and Publix Super Markets use this strategy to motivate their employees (Kwon & Hein, 2013). Surely, even with increasing production costs, the management can still reward employees in this cost-effective manner to win their loyalty and trust.

The Fair Labor Standards Act does not have a mandatory requirement for laborers to be paid when on holidays, vacation or during their sick leave (UTZ, 2013). However, this is an important initiative that can be championed by the management of a company to increase the productivity and effectiveness of their employees (Brenner, 2010). Usually, paid vacations and holidays can be calculated as a percentage of the basic salary, which goes a long way in motivating employees and preventing them from shifting their focus on other businesses. The implementation of this may be a bit challenging; especially due to the fact there are no immediate returns on the amount paid as benefits. However, the management should look at the broader picture of such an initiative, and evaluate the long-term gains from it. Research shows that companies which pay their employees while on vacation register improved productivity upon resumption of duty, for instance, the Coca-Cola Company (Gilbert, 2012).

It should be noted that implementation of the above benefits is not as easy as they may appear. For instance, a myriad of problems arise in constituting a comprehensive but cost effective health cover. Though the use of strategies such as copayments and deductibles is a common procedure for sharing and reducing company costs, their implementation must be judicious so as not to weigh heavily on lower paid workers (Brenner, 2010). Furthermore, fiscal balances and reconciliations of such offers has numerous logistical challenges, which must be adequately addressed in advance by the management if a sustainable scheme is to be put in place. Similarly, though retirement group benefits have a relatively stable inflation rate, some employees do not stay long enough to feel the impact of such strategies on them. Therefore, a company may be offering such benefits, but realizable returns in terms of productivity and employee effectives are not felt (Gilbert, 2012). The increasing costs of medical cover is also an impeding factor, that employers must be aware of when putting in place such benefit schemes.

All said and done, it is agreeable that effective employee benefits package is a sure way of winning their loyalty, thereby increasing effectiveness and productivity, as well as reducing staff attrition.

References

Banerjee, D., & Perrucci, C. (2012). Employee Benefits and Policies: Do They Make a Difference for Work/Family Conflict?. Journal Of Sociology & Social Welfare, 39(3), 131-147.

Barden, P., & Rogers, P. (2012). Getting the most benefit from a voluntary benefits program. Benefits Magazine, 49(8), 38-41.

Brenner, B. K. (2010). Instituting Employee Volunteer Programs as Part of Employee Benefit Plans Yields Tangible Business Benefits. Journal Of Financial Service Professionals, 64(1), 32-35.

Brenner, B. K. (2010). Using Employee Benefits Can Help Recruit, Attract, and Retain the Workforce of the Future: The Mature Employee. Journal Of Financial Service Professionals, 64(3), 24-28.

Dominick, V. D. (1966). Committee on Post Office and Civil Service. Additional health benefits plans under Federal employees health benefits Act. 6p.

Gilbert, N. (2012). Accounting for Employee Benefits. Oxford University Press.

Kwon, J., & Hein, P. (2013). Employee Benefits in a Total Rewards Framework. Benefits Quarterly, 29(1), 32-38.

Rappaport, A. M. (2013). Business Case for Employee Benefits. Benefits Quarterly, 29(1), 8-14.

Uchak, A. A., Pohler, D. M., & Gellatly, I. R. (2008). When do committed employees retire? The effects of organizational commitment on retirement plans under a defined-benefit pension plan. Human Resource Management, 47(3), 581-599.

UTZ, J. L. (2013). Leaves of Absence: Employee Benefits Considerations. Journal Of Pension Planning & Compliance, 38(4), 1-64.

Yamamoto, H. (2011). The relationship between employee benefit management and employee retention. International Journal Of Human Resource Management, 22(17), 3550-3564.