Should a Company Drop Benefits Essay

Earlier this century, few workers received compensation from their employers, with the exclusion of direct rewards for hours really worked. Employees and their households were instructed to react to the demands of old age, illness and decease. Vacations, if this are by and large allowed without intervention.

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The 1940 old ages and 1950 saw the increased usage and credence of benefits as a signifier of compensation than direct wage. In the last two decennaries this accelerated growing of new types of benefits are added and bing services have increased. In add-on, while employee benefits were reasonably standardized. ( Burton T. Beam, John J. McFadden – 2004: p.04 ).

A company beginning stuff benefit duties, pension, wellness programs, and executive wages. All these plans are promises that the company paid to employees, and that the purchaser is the dollar value of these promises to command. Furthermore, because frequently provided in a signifier of tax-favored, they embody considerable debts. If programs are developed or non good served, for lost revenue enhancement benefits, and the company may hold big amounts to the province revenue enhancement. ( Ilene H. Ferenczy – 2008: p.04 ).

Employees as independent contractors who provide personal services to relieve organisations may be compensated in a assortment of ways. The most common method of wage is the current wage or pay. Many employees besides receive deferred compensation – the promise or outlook of having money in the hereafter for services rendered in the present. Deferred compensation may be in the signifier of a qualified employee program, a pension sharing or net income, income or a deferred compensation program does non measure up. Besides taking non-monetary signifiers of wage, such as occupational wellness, decease or other benefits. “ Benefits ” is besides a personal vehicle, repasts or adjustment, personal and household benefits, instruction, low-interest loans, payment of personal travel, leisure and other disbursals, the rank of a athleticss nine or state, and in personal usage employer ‘s premises. ( IRS GOV )

So we will discourse about: –

“ If employees undervalue the cost of benefits, why should a company non drop benefits and merely add more direct compensation ”.


Before proceeding, it is better to specify exactly what is meant by employee benefits. The narrowest definition of the term merely applies to employers with benefits for decease, hurt, unwellness, unemployment or retirement. ( Ilene H. Ferenczy – 2008: p4 ).

Employee benefits are an highly of import portion of about all fiscal security. The benefits represent over 40 per centum of the entire wage of an person. In many companies this per centum is even higher. In add-on, many new signifiers of employee benefits emerged in recent old ages as employers compete for endowment.

Broad overview of the benefits: –

Employee benefits are a portion of entire wage of the employee. Entire compensation refers to “ all signifiers of communicating and fiscal services employees receive the benefit, as portion of an employment relationship. “ ( Jerry S. Rosenbloom – 2005: p3 )

The benefits are indirect ways to counterbalance employees ; these employees receive benefits beyond salary. Unlike disablement benefits merely favours stableness and economic security, guaranting the donees of unsure events such as unemployment, unwellness and hurt. In add-on, some benefit plans to function the income and public assistance of American households to be protected. A common differentiation between direct signifiers of employee compensation, including wages and indirect wage or benefit is that the former employee believes the criterion of life, while the latter protects the criterion of life.

The scope of benefits including instruction, salary graduated tables, household, authorities, wellness, life style, leisure, retirement, nest eggs and benefits of conveyance. Despite some benefits, such as those sanctioned by the authorities are necessary, others are more or optional at the discretion of employers. The handiness of these extra benefits, wellness insurance and a pension program, in peculiar, depends on several factors, but chiefly on the size of the company, harmonizing to quarterly consequences. ( Reference for Business )

Compensation: –

Employee and other independent contractors, who provide personal services to relieve organisations, can be compensated in a assortment of ways. Many employees besides receive deferred compensation – the promise or outlook of having money in the hereafter for services rendered in the present. Deferred compensation can be in the signifier of a pension program as a qualified employee program or net income sharing, rente or a deferred compensation program ineligible. Compensation is besides non-monetary signifiers such as workers ‘ wellness, decease or other benefits. “ Fringe Benefits ” is besides a personal vehicle, nutrient, lodging, personal and household educational benefits, low involvement loans, payment of personal travel, amusement and other disbursals, fall in a athleticss nine or state and belongings personal employer.

What is a compensation bundle?

It ‘s easy to believe “ dollars per hr ” when believing about compensation.

But the success of the net incomes travel much further and can be considered as planetary systems of non-monetary benefits, direct and indirect elements.

Non-monetary compensation: No benefit to the employee receives from their employer or a occupation that does non affect touchable value. This includes calling and societal wagess such as occupation security, flexible work agendas and chances for worship, growing and acknowledgment, enjoyment of work and friendly relationships.

Direct Compensation: An employee on the footing of wage, an one-year wage or hourly pay, which may in any performance-based compensation that workers receive incentive awards.

Indirect compensation: costs more varied, runing from the legal duty to protect public plans like Social Security to wellness insurance, retirement plans, paid leave for kid attention, or traveling. All types of compensation are of import. Employers have a assortment of points to take and pay are limited both by their ain biass about the compensation bundles, every bit good as by budget cuts. By uniting several of these options for compensation, progressive directors can make bundles that are every bit single as the workers receive. ( Texas Agricultural Extension )

Direct Compensation: –

Base Pay: Cash compensation for the worker, which pays a wage is a common pattern, competitory advantage can merely come by paying a higher sum.

Performance Wage: A fillip paid if certain public presentation marks are achieved inducements can promote employees to put and accomplish higher degrees of public presentation and actuate them to his farm.

Stock options: The right to a piece of the company, which may be granted to an employee to honor first-class service to an employee who has a portion of the company is now much more likely to travel beyond to the farm.

Bonuss: A gift for the chance to honor exceeding public presentation or for particular occasions

The bonds may demo a form values aˆ‹aˆ‹its employees, guarantee that good public presentation is rewarded. ( Texas Agricultural Extension )

Indirect Compensation: –

Flexible working hours

Reform plans


Insurance ( wellness, oculus, alveolar consonant )

Social lodging

Paid leave ( holiday, ill leave without wage )

Tickets to events ( ball games, concerts )

Magazine subscriptions


Wellness Programs

I disagree with the above statement which is “ If employees undervalue the cost of benefits, why should a company non drop benefits and merely add more direct compensation ” because benefits are more of import than compensation.

Advantage OF BENEFITS: –

The companies offer their employees and a assortment of benefits. These benefits are basically the signifiers of security or services provided by an employer to its employees for their part to organisational public presentation. These benefits are an of import portion of the compensation bundle for a company to pull and retain employees. The benefits of inducements to function the workers and promote them to work harder for the organisation. They besides help increase employee satisfaction at work.

Social benefits are an of import portion of each company to offer its current and future employees. There can be many advantages of set uping a system of employee benefits, non merely for the employee, which would be utile for non-cash benefits received, in add-on to or alternatively of a part of their salary, but besides the largest employer ‘s portion of their rewards to supply extra benefits to their employees. ( All Experts )

Employer Advantages: –

An of import advantage for employers is to ease its ain hard currency flow. This is particularly true if you enter a intervention system of forfeit, where employees donate a part of their wage in exchange for other benefits. You may be able to obtain the benefit of providers to negociate if your squad is great, and the proviso of non-monetary benefits can be cheaper than a part of the wage the employee must give. In add-on, there are possible revenue enhancement benefits, but are limited and potentially complex. More information about the revenue enhancement effects of employee benefits which are available elsewhere on this site. ( All Experts )

Employee Advantages: –

Some of the benefits of a program of employee benefits are obvious. At first, if the benefits are attractive, so you will hold entree to utile belongingss, such as a pension or a auto without those same understandings. It is chiefly used for public services such as nomadic phones, which can be supplied as non-payment by the employer. In add-on, if certain activities or services you should pay for it are available as benefits, receive a clearer image of its hard currency place and no money aside for these things.

Finally, the revenue enhancement benefits granted to employees and employers. Working with your employer, you should be able to box an advantage of a revenue enhancement benefit to be negotiated, such as your employer wages for the nomadic phone is considered a non-taxable benefit. Several articles like this can be a important revenue enhancement nest eggs for a twelvemonth. ( All Experts )

Some Organizational Examples: –

Example No 1: – ( TESCO )

Tesco is committed to the benefits that appeal to its 275,000 employees, many of them low rewards.

All employees are entitled to the same footing of public presentation, including a defined benefit program, nest eggs program, price reduction card, personal, and a scope of voluntary benefits. Louise Pocock, Tesco in the UK is the director, said: “ Our manner of life of the best options can be adapted to all conditions of the workers on behalf of Tesco offers a defined benefit program for all employees, benefits more deadlines for each squad member, irrespective of income. and adapted to each support staff member, one time it stopped working. “ The retail merchant uses a broad scope of communications to all parts of the concern information benefits. For illustration, in November issued an one-year study on their personal benefits and single parts to pensions. ( Employee Benefits 2009 )

Example No 2: – ( INTEL )

Intel employees who work full clip or parttime 20 hours per hebdomad may inscribe in the company and single household physicians, medicines, vision, dental attention, long term disablement and long term. Intel helps employees to cover wellness reimbursement through the pocket of Health ( HRA ), wellness nest eggs histories ( HAS ), histories and wellness flexible disbursement ( FSA ). Intel removed from above and below the age of 65 have entree to some of the same benefits as current employees, including adult females and medical history, prescriptions, vision attention coverage and long term. Intel besides announced a retirement history for retired employees eligible for lodging where you can purchase specific medical services. ( Best Employers 2009 )

Example No 3: – ( MICROSOFT )

Microsoft is widely recognized as a taking company that offers to pay the benefits of the largest and most comprehensive in the state. We start with a competitory wage, fillips and stock awards to eligible employees based on single public presentation. ( Microsoft )

Example No 4: – ( GOOGLE )

We strive to be advanced and alone in all the services we offer to clients and employees, including our services and benefits offered. We recognize and celebrate that our employees have different demands and that this diverseness requires flexible and focussed support. Our precedence is to offer a varied plan that can be tailored to the specific demands of each person offer, if you like ice mounting in Alaska, wants to retire at age 40. Google offers, you can happen a yarn that shows how Google sees its staff as a household. Thinking about the attention and support they provide to their workers and the demands for the object, is the gum that their employees happy, healthy and financially responsible. ( Touch of Business )

Example N0 5: – ( HEWLETT PACKARD )

HP employees with the chance to take the benefits they want. So if there ‘s an advantage that, in most instances, purchase it and give you hard currency alternatively. ( Hewlett Packard )

Some of these benefits include:

Auxiliary pension strategy

25 paid vacations

Sports and societal nines

Health Care Plan

Dental coverage

Life Insurance

Retail Bulletin

HP Employees Stock Purchase Plan

Example No 6: – ( CANON )

Canon employees are entitled to certain cardinal consequences are included in the contract, but working for Canon besides has a figure of extra benefits such as price reductions on our merchandises and services. ( Canon )

Example No 7: – ( INTEL )

Intel ‘s end is to pay hard currency compensation above the planetary norm. Components of hard currency compensation are as follows: ( Intel )

Base wage


Furthermore, based on the work and map, employees can besides profit:


Wagess and displacements or overtime

Example No 8: – ( BMW )

BMW has a new attack to increase gross revenues, seeking to promote more of its ain employees to purchase autos. The car manufacturer than 7,000 cards distributed to workers in Germany driving a BMW or Mini, so that the windshields of vehicles used by viing trade names in the staff parking batch. ( Employee Benefits 2009 )

Example No 9: – ( SCHLUMBERGER )

Schlumberger, the oil and gas company has paid an official gym of a upper limit of 250 lbs a twelvemonth for many old ages. On July 1, 2010 was filmed Gymflex, and through it, so that the 2500 wellness nines in the UK and Ireland available to the 3,000 employees eligible for the eight old ages of flexible benefits. ( Employee Benefits 2010 )

Example No 10: – ( ASDA )

Asda offers its employees a price reduction card for 10 % after three months of service. The card can be used in all Asda shops in Britain and around the universe in all Wal-Mart, Asda ‘s parent company. Using the card Asda 175,000 employees to salvage more than ? 60 million per twelvemonth. ( Employee Benefits 2011 )

Example No 11: – ( XAFINITY )

A taking supplier in the UK services and retirement benefits for employees, Xafinity, announced an investing of several million lbs in Northern Ireland. ( BBC News 2010 )

Example No 12: – ( NHS )

Bradford and Airedale NHS Primary Care District has a figure of appropriate systems to back up 17,000 employees in accomplishing a healthy balance between work and household. ( Employee Benefits 2011 )

Example No 13: – ( KPMG )

KPMG has renewed parental leave and wage commissariats of 11,000 British workers. Delivery of pregnancy leave, antecedently organized into four grades based on senior status was modified so that each worker has more than 26 hebdomads service at the relevant day of the month will have full wage during the first 18 hebdomads of pregnancy leave Followed by 21 hebdomads of salary. ( Employee Benefits 2011 )

Decision: –

Satisfaction of employee benefits can ensue in net net income by increasing worker productiveness and committedness. Work besides advisers should besides understand that the value provided by the benefits originative and can assist place the most profitable. Employee benefits are an of import portion of each company to offer its bing and future staff. There may be many advantages to set uping a system of employee benefits, non merely for the employee, which would be utile non-cash benefits received in add-on to or alternatively of a part of their salary, but besides to employers who most of their rewards to supply extra benefits to their employees.

As an employee, it is of import to retrieve that you may experience pressured to accept a salary forfeit strategy. You must accept that the benefits are good, and you ‘re happy with the monetary value offered ( for illustration, the part of your wage that you specify, in exchange for benefits ). As my point of position benefits are more of import as direct compensation because most of the organisation provide benefits to their employees it ‘s up to the organisation whether he supply add more direct compensation but as I say in this assignment benefits are so of import for the employers for illustration portion clip off, insurance, instruction reimbursement, retirement financess, societal maps and incentive plans.


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