Importance of Employee Benefits: Essay

Importance of Employee Benefits: Essay

Business professionals are often faced with human resource challenges that, in the long run, can impact company performance. Valuable personnel is especially important to properly manage during an economic downturn. Employee benefits can play a crucial role here. Kathryn Mayer, an hrexecutives.com editor and chair of the Health & Benefits Leadership Conference says, “[In the midst of COVID-19] even employers that find themselves in cost-cutting mode know that they are in a unique position to help employees.... Many are turning to employee benefits as one of their coronavirus strategies” ('Effects of Employee Benefits'). Although competition in business may seem intimidating, carefully implemented employee benefits offer a competitive edge and create value for a company because they promote higher job satisfaction, have a positive correlation with company commitment, and increase organizational performance.

Employee benefits are a multifaceted resource utilized across the globe to influence businesses. The growth of benefit popularity has people split on whether implementation should increase or not. Employee benefit hype began in the 1960s and caused a variety of arguments for and against benefits. Many who supported wished for more benefits, while the challengers opposed the idea and would rather that money be changed into wages. In the last century, benefit costs have grown exponentially as employers offer more employee benefits that drive competition. The Gale Encyclopedia of Management includes numbers from the U.S. Department of Labor's Bureau of Labor Statistics that say, in 1929, benefits just were 3 percent of company expenses, and as of March 2018, they grew to nearly 32 percent. The nearly 32 percent of current expenses shows how supporters are winning the battle for more benefits. This radical change in costs poses a problem for many employers and creates a need for a sustainable solution.

Until around the 1970s, benefits implementation was uncomplicated as benefits up to this point were referred to as traditional benefits since, traditionally, only healthcare and retirement were offered. The new complications came about in the form of flexible benefits. or a 'cafeteria plan', where employees can choose from a pool of benefits to best fit individual needs. Cafeteria plans integrated more employee control over individual compensation needs, influencing an increase in job satisfaction. Augustine O. Agho Ph.D. in his article 'Flexible Benefits Plans: Perceptions of Their Effectiveness' discusses four key reasons why flex plans are attractive and are more commonly implemented in recent years: they can help control health care costs, they improve employee attitudes, they help fulfill the needs of the diverse workforce, and they can give employees an active role in the selection of their individual benefit needs to further improve the relationship with the company.

The impact of benefits, flexible or traditional, is difficult to be displayed empirically, but evidence of higher job satisfaction due to employee benefits has been found by Alison Barber, associate dean at the Eli Broad College of Business at Michigan State University. Barber states that, traditionally, companies offered just healthcare and retirement plans, but in recent years, traditional benefits have evolved into flexible benefits that are adapting to the ever-changing demographics, for example, more women entering the workplace and having a different set of needs. The growing trend of flexible benefits has played a major part in job satisfaction levels. In Barber’s research, data gathered from a pre-test and post-test survey, completed by 110 persons, presents an increase in overall satisfaction from flexible benefits.

Benefits come in the form of different mediums, monetary and non-monetary benefits; both types of benefits are crucial components for business. Flexible benefits and their correlation to job satisfaction can be broken down into a couple of socio-emotional components. The social exchange theory (SET) in Jaekwon Ko and SeungUk Hur’s research on worker attitude is one component that describes the idea that everyday exchanges have an impact on employees' perception of their work environment and can lead to positive reciprocation of duties. A part of this theory, and most important to the workplace, is the leader-member exchange (LMX) theory, which associates employee satisfaction and turnover intentions with high-exchange relationships built on high levels of trust and confidence with superiors. Effective relationships are a non-monetary element that is positively associated with satisfactory employee attitudes (Ko & Hur, 176). The increase in job satisfaction is affected by both willingness to work with an employee on his/her specific benefit needs and social exchanges with peers, as well as leadership. Job satisfactio