7.6 Goals of Employee Benefits
Pay is not the only incentive offered to employees. Compensation comes in the form of employee benefits. It is the combination of pay and benefits that makes up Total Rewards. Benefits include insurances, security through income, time off, educational supports, financial rewards, and employee assistance. Employee benefits are a valuable asset to employers to attract and retain top talent.
Employee benefits have goals that meet the organization, society, and employee goals.
- Society: Modern society provides security for employees through many different tax supports, and many employee benefits are tax free to employees. As well, the employer has the right to deduct the cost of benefits as business expenses. Employee benefits offer employees financial security that may be due to illness, death, or disability.
- Organization: Employers can attract and retain employees by offering benefit packages such as vacations, sick time, and retirement plans. Often employees, who may not even be satisfied with their jobs, stay because of the benefits. Productivity may increase because of breaks in the day, lunch hours, vacations, and holidays granted by the employer. Stress and burnout are reduced by employees who have reduced work days.
- Employees: Employees who do not have to pay out-of-pocket for health and other expenses lower their personal costs. Employers can purchase group insurance plans much cheaper than an individual, and pay for a portion of the health care plan. Some employees will only work for companies that provide benefits. For those companies who do not pay for benefits, they are losing out on highly talented employees.
