Benefits and Services for Employees - Report Example

Benefits and Services Benefits and Services Introduction The basic purpose of compensation is to motivate, attract and maintain the employees of an organization. The components of total compensation are indirect and direct compensation. The indirect compensation can further be divided into “benefits and service” and “Safety, security and health” which are mandatory benefits for the employees. Direct compensation can be further divided into “incentive and gain sharing” and “compensation management”. Benefits and services fall under the category of indirect compensation and are also called fringe perks and benefits. Perks are considered to be something that is more than organizations paying for employees’ car fuel, clothing, etc. In America, indirect compensation may account nearly 40 percent of an organization’s compensation cost. It may cost even more in the European countries. Indirect Compensation Indirect compensation may help in providing benefits and security in order to lower the burden present on the society when death, injury or retirement occurs. The objective of the indirect compensation in terms of organizational objective is to reduce the fatigue level of employees, minimize the cost of overtime, aid recruitment, boost the morale of employees and reduce the turnover rate of the organization. The objective of indirect compensation in terms of employees takes into concern the effort the organization puts in order to provide its employees with benefits and services at lower cost than they are being offered in the market. The objectives of the organization, society and employees have fostered the growth of benefits and services. Types of benefits The major types of benefits that are offered by the organization to its employees are insurance benefits, time off benefits, security benefits and work scheduling benefits. Insurance benefits: The financial risk that is encountered by the employees or their families can be compensated by providing insurance benefits. These kinds of financial risks are shared between the employees and organization by introducing insurance premiums. Therefore when any sort of insured financial risk occurs the organizations make sure that the employees or their families are compensated for it. Insurance benefit is basically an agreement or a contract between the two parties, which in their case is the organization and its employees. In this contract the organization agrees to indemnify its employees against any kind of loss on the happening of certain events. The contract or agreement when stated in writing is known as the insurance policy. The major kinds of insurance that are provided by the organization to its employees are health insurance, disability insurance and life insurance. Time-off benefits: These are the benefits that are provided by the organization when the employees take an off from all kind of physical and mental effort, in order to increase their productivity. Time-off benefits may take into account Holiday and vacations, well pay and sick days, leaves of absences, on job breaks and family or medical leaves. Holiday and Vacations: Time off benefits for holidays are offered to employees who want to take an off from work after meeting their productivity and other work related goals. However on the other hand the vacations given by an organization to its employees are based on the years of their service. For example an employee that has completed one year of service will be given a week of vacation. Well pay and sick days: The payments for sick leaves that are not used by the employees are known as well pay, which is later given to the employees as an incentive. Some absences from work are usually unavoidable for the employees. The organizations pay their employees when they are absent from work due to any sort of medical reason by granting them a limited number of sick days annually. Leaves of absence: It is a leave that is granted by the organization to its employees in case of extended illness, pregnancy or accident or for any other reason present in the human resource policy of the organization. The extended leaves granted to the employees are sometimes without pay. On job breaks: This is considered to be the most common kind of time off benefits that are provided by the organization to its employees during their working hours. This may take into account the employees’ meal breaks, tea breaks, rest breaks, etc. Family or medical leave: The organizations that have more than 50 employees are legally bounded to provide its employees with unpaid leave at any time of the year. For example the employees are permitted to take leave for 12 weeks in case of any medical emergency, for pregnancy which includes giving birth, adoption or looking after the formalities for placing the child in foster home. Security Benefits: The organizations provide security benefits to their employees in the following ways: Employment income security: The loss of employment definitely holds some potentially severe consequences for the employees that can be solved by the help of the benefits provided by the organization such as the severance pay and golden parachutes. Severance pay: Organizations are obliged to pay the employees with a lump-sum payment amount, when they are separated from the company. Golden parachute: The organizations make an agreement with the executives to provide them with bonuses and benefits in case they lose their job as the result of merger and acquisition. Work scheduling Benefits: Scheduling may take into account the creation of a timetable for the employees, where they can be allocated with the exact amount of work. The different types of work scheduling benefits that are offered to the employees are flexi-times, shorter work time and job sharing. Flex time: It eliminates the strict starting and finishing time of work and allows the employees to report to work at a suitable time during a range of hours that are called the “core hours”. Shorter work times: Shorter work time is a technique being used by the organization for increasing the productivity of employees. The shorter work week compresses the 40 hours week to 37 or 38 hours in order to remove work stress and increase the organization’s efficiency. Job sharing: It is when two employees of the same organization are working on single project or are performing same tasks but are working at different time of days, weeks or months. This means that two employees together are handling the duties and responsibilities associated with a single job. For example the shifting of duties of nurses and doctor in hospitals. Types of Services There are some organizations that go way beyond then providing just benefits and perks to their employees, as they provide financial, social and even educational service to them. Financial service It may take into account providing the employees with certain discount plans, where they are allowed to buy goods from the organization at a discounted rate. The discount plans are common among the consumer goods manufacturers and retailers. Educational services These kinds of services are designed for the bright employees of an organization, in order to contribute towards furthering their education. However such an education may be limited to the job related courses that would help the employees to effectively fulfill their on job responsibilities. Social Services There are a wide range of services that are provided by the organizations to their employees in order to retain productive employees and survive in the changing competitive environment. At one extreme we can see the simple interest group like the Bowling league, cricket teams, etc. However at the other extreme the organization may offer some comprehensive assistance program to its employees, which are designed to help them with their personal issues like their health problems, their struggle with drugs and alcohol or any sort of family problem that is bothering them. Some kinds of social services offered by the organization to its employees are mentioned below: Social service leave program: This program offers to provide a fully paid leaves to the employees, who wish to devote their full time to community service. Child care: This program is designed for the working mothers who are not able to take proper care of their child. The organization has options available for their women employees that may take care of their child while they are busy working. Elder Care: The elder ones may be a problem, as there are only a limited number of day care options present for their working children. The organizations usually help their employees to find or pay for the day care expenses of their elderly parents. Relocation Program: This program entitles for paying for the moving expenses of the employees from one location to the other in order to reduce the stress level of employees (Panayotopoulou, Vakola, & Galanaki, 2007). Conclusion The benefits and services that are being used by the organization for persuading and motivating the employees may not be dependent on their performance. They take into account the benefits received by the employees in addition to their direct remuneration, which contributes in increasing the wellbeing and wealth of the employees at the cost of organization. References Panayotopoulou, L., Vakola, M., & Galanaki, E. (2007). E‐HR adoption and the role of HRM: evidence from Greece. Personnel Review, Vol 36, Issues: 2, 277-294. Read More