2 Benefits Benefit Strategic Perspectives on Benefits An indirect compensation given to an employee or group of employees as a part of organizational membership.Strategic Perspectives on BenefitsBenefits absorb social costs for health care and retirement.Benefits influence employee decisions about employers (e.g., recruitment and retirement).Benefits are increasingly seen as entitlements.
3 What are fringe benefits? Fringe benefits are benefits which employees receive from their employment but which are not included in their salary cheque or wages.They include such things as company cars, private medical insurance paid for by the employer and cheap loans.
4 FEATURES OF FRINGE BENEFITS An employee enjoys them in addition to the salary he/she receives.They are not given for specific jobs performed but to make jobs more attractive.They are not linked to productivity so do not reward performance in any way, criteria used is other than performance.They have an indirect impact on workers’ efficiency. If impact is direct, it is not a fringe benefit.
5 NEED FOR FRINGE BENEFITS Employee demandsTrade Union demandsEmployer’s preferenceAs a social securityTo improve human relations
6 Types of Fringe Benefits Pay for time not workedHours of workPaid holidaysShift premiumHoliday payPaid vacationEmployee securityRetrenchment compensationLay off compensation
7 Types of Fringe Benefits Safety and healthWorkmen’s compensation ActHealth benefits(Sickness benefit, Maternity benefit, Disablement benefit, Dependant’s benefit, Medical benefit)Voluntary arrangementsWelfare and recreationCanteensConsumer storesCredit societiesHousingLegal aidHoliday homesEducational facilitiesParties and picnics
8 Types of Fringe Benefits Old age and retirementProvident fundPensionDeposit link insuranceGratuityMedical benefits
10 Benefit Design Decisions Affecting Benefit Design: How much total compensation?What part of total compensation should benefits comprise?What expense levels are acceptable for each benefit?Which employees should get which benefits?What are we getting in return for the benefit?How will offering benefits affect turnover, recruiting, and retention of employees?How flexible should the benefits package be?
11 Benefits Administration Benefits CommunicationBenefits StatementsAnnual “personal statement of benefits” that translates the benefits into monetary terms to show their worth.The Internet and Benefits CommunicationWeb-based HR information systems allows employees to change their benefit choices, track their benefit balances, and seek benefit information on-line.
12 Typical Division of HR Responsibilities: Benefits Administration
13 Most common benefits provided in India HRAGratuityHousing loanMedical reimbursement/allowancesInsuranceLeave travel allowancesConveyance allowancesEducation allowancesSuperannuationCar loanSocial/sports club membershipHome furnishing
14 Flexible Benefits Plans (Cafeteria Plans) Benefit plans that enable individual employees to choose the benefits that are best suited to their particular needsAdvantagesMore appreciation of benefits offeredBetter match between benefits and employee preferenceDisadvantagesIncreased design and administrative costs