Benefits may be defined as all the financial rewards that are not paid directly in cash but rather in kind to the employee, for example, life insurance, medical benefits, etc. In today's world, it is essential for companies to provide their employees with benefit policies. By providing an attractive benefits scheme, the company will be able to retain all its employees especially the efficient ones. Developing an attractive benefit program should be done very carefully so that it may go hand in hand with the company's values. It is also important that the program benefit the employee as well as the employer. "The right combination of benefits can assist an organization in reaching its strategic business objectives and provide HR managers with an improved focus and sense of perspective on their organizations benefit programs. Sometimes, many conventional benefit programs bear little relationship to the strategic business objectives of the organization."
Developing a poor benefits program could result in neither improving employee motivation nor being cost effective. Many organizations promote equal pay for equal work and pay for performance philosophies. But sometimes conflicts arise between the benefit policies and these philosophies, for example, employees families are provided with extra coverage under health and medical benefits, employees are provided with company cars based on status rather than performance.
Guidelines for an effective benefit program
A company should recognize the need for developing an effective benefits policy as well as its advantages and disadvantages. By doing so it will be able to attract the most efficient staff. Nowadays companies have extremely competitive benefit schemes and so companies should keep the competition factor in mind while setting up its scheme. But this does not mean that the company should go overboard and develop a benefit scheme that will cost it a fortune. The...