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EMPLOYEE BENEFITS PROGRAMS

Meaning:-

Employee benefits and (especially in British English)benefits in kind (also called fringe

benefits, perquisites, perqs orperks) are various non-wage compensations provided toemployees in addition to their normal wages orsalaries. In instances where an employee

exchanges (cash) wages for some other form of benefit is generally referred to as a 'salary

packaging' or 'salary exchange' arrangement. In most countries, most kinds of employee benefits

are taxable to at least some degree.

Examples of these benefits include: housing (employer-provided or employer-paid), group

insurance (health, dental, life etc.), disability incomeprotection, retirement benefits, daycare,

tuition reimbursement, sick leave, vacation (paid and non-paid), social security, profit sharing,

funding of education, and other specialized benefits.

The purpose of employee benefits is to increase the economic security of staff members, and in

doing so, improve worker retention across the organization.

The term perqs (also perks) is often used colloquially to refer to those benefits of a more

discretionary nature. Often, perqs are given to employees who are doing notably well and/or

have seniority. Common perqs are take-home vehicles, hotel stays, free refreshments, leisure

activities on work time (golf, etc.), stationery, allowances forlunch, andwhen multiple choices

existfirst choice of such things as job assignments and vacation scheduling. They may also be

given first chance at job promotions when vacancies exist.

Objectives:-

It has become increasingly common for firms, particularly large firms, to maintain a lengthy and

often detailed list of objectives for their employee benefit programs. The following are the

objectives of one such firm:

- To establish and maintain an employee benefit program that is based primarily on the

employees' needs for leisure time and on protection against the risks of old age, loss of health,

and loss of life

- To establish and maintain an employee benefit program that complements the efforts of

employees on their own behalf

- To evaluate the employee benefit plan annually for its effect on employee morale and

productivity, giving consideration to turnover, unfilled positions, attendance, employees'

complaints, and employees' opinions

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- To compare the employee benefit plan annually with that of other leading companies in the

same field and to maintain a benefit plan with an overall level of benefits based on cost per

employee that falls within the second quintile of these companies

- To maintain a level of benefits for nonunion employees that represents the same level of

expenditures per employee as for union employees

- To determine annually the cost of new, changed, and existing programs as a percentage of

salaries and wages and to maintain this percentage as much as possible

- To self-fund benefits to the extent that a long-run cost savings can be expected for the firm and

catastrophic losses can be avoided

- To coordinate all benefits with social insurance programs to which the company makes

payments

- To provide benefits on a noncontributory basis, except benefits for dependent coverage for

which employees should pay a portion of the cost

- To maintain continual communications with all employees concerning benefit programs

-to ensure that an attractive and competitive total remuneration package is provided which both

attracts and retains high-quality staff;

-to demonstrate that the company cars for the needs of its employees.

Note that these objectives do not include to motivate employees. This is because benefits

seldom have a direct and immediate effect on performance unless they are awarded as an

incentive; for example, presenting a sales representative with a superior car (e.g. a BMW) for a

year if he or she meets a particularly demanding target. Benefits can, however, create more

favourable attitudes toward the company leading to increased long term commitment and better

performance.