Employee Benefits and Services

INTRODUCTION Management is concerned with attracting and keeping employees, whose performance meets at least minimum levels of acceptability and at keeping absenteeism and turnover to tolerable levels The provision of benefits and services can be and are important in maintain the employees and reducing the turnover and absenteeism low. The purpose of such benefits is to retain people in the organization and stimulate them to greater effort and higher performance. They foster loyalty and act as a security base for the employee.

Concept Employee benefits and services – Any benefits that the employee receives in addition to direct remuneration ‘Fringes embrace a broad range of benefits and services that employees receive as part of their total package. It is based on critical job factors and performance. Benefits and services however are indirect compensation because they are usually extended as a condition of employment and are not directly related to performance’ *fringe benefits are also called welfare expenses, wage supplements sub wages or social charges, etc

Concept Benefits and compensation provided to the employees usually depend on the conditions of employment and other factors like security, safety, health, welfare and recreation of employees These benefit programs must be managed carefully to enhance recruitment and to boost the morale of the employees

Why Organizations Provide Benefits  Employee demand: To meet rising prices and increased cost of living employees demand various types of benefits Example: Variable dearness allowance, Enhanced HRA o Trade union demands: The growth and strength of trade unions has substantial influence on the benefits and services a company offers  Employer’s preferences: Employers prefer to give benefits to employees as it enhances employee’s morale and works as an effective motivational tool provided it is within the accepted norms and limits

Factors influencing the decision to set up a particular employee benefit and service program Cost Ability to pay Needs of the employees Bargaining strength of the trade union Tax consideration Social responsibility The reaction of employees

Coverage of Benefits 1. Payment for time not worked (a) Vacation (b) Holidays (c) Sick leave (d) Miscellaneous types of non-working plans (e) Shifts premium

2. Employee Security 1. Severance pay 2. Lay-off 3. Guaranteed annual wage 4. Supplementary unemployment benefits 5. Retrenchment compensation

3. Safety benefits 4. Health Benefits (a) Medical benefit or insurance (b) Managed care  Health maintenance organization  Preferred-provider organization

5. Maternity benefit 6. Dependent benefit 7. Insurance benefits (a) Life insurance (b) Vision insurance (c) Dental insurance

8. Welfare and recreational facilities (a) Educational assistance (b) Legal assistance (c)Housing facilities (d) Financial services (e) Employee assistance programs

9. Old age and retirement benefits (a) Provident fund (b) Pension (c)Deposit linked insurance (d) Medical benefit (e) Gratuity (f) Retirement counseling

Employee services In addition to fringe benefits, organizations also provide services that employees find desirable. These services are provided at low or no cost to the employee. These are provided at the discretion of the management with consultation with the trade unions.

These services include Services related to type of work performed- includes subsidies for the purchase and upkeep of work clothing and uniform. Eating facilities Transportation facilities Child care facilities Housing services Financial and legal services Recreational, cultural and social programs Educational services Medical services Outplacement services Flexible time Cafeteria service

Fringe benefits in India  When a study was conducted, it was revealed that 19,60,981 companies pay little over million in wages and fringe benefits per year in India.  The fringe benefits were high in mining and plantation industries low and very low in manufacturing sector. The quantum of the bonus varied sector to sector A. Payments for time not worked B. Statutory fringe benefits C. Voluntary benefits

Problems raised by benefit programs Charge of Paternalism = When too many benefits & services are offered to employees, a feeling develops that employers are playing the role of parents and workers are looked upon as children. Excessive Expenditure = It’s a very costly affair and involves a great deal of paper work Maintenance of least productive worker = With increase in benefits and services employees,particularly when they are not very productive,tend to stick to their jobs and are not interested in changing them. Neglect of other personnel functions = Due to excessive concern from management they stop emphasizing on other aspects of personnel programs which can develop a concern among the employees.

Administration of benefits and services Organizations have seldom established objectives, systematic plans and standards to determine the variability of the program Lack of employee participation Managers take little interest in benefits program and trade unions are almost hostile to schemes Employees have little awareness about such programs These problems can be avoided if following steps are taken: - To establish benefit objectives - To assess environmental factors - To assess competitiveness - To communicate benefit information - To control benefit costs and evaluation