Human Resource Management and Its Benefits for Employees

Human Resource Management Individual Assignment - Employee Benefits Table of contents What is a benefit? 3 How do (employee) benefits affect us? 3 The Employee Benefits concept 3 What are Employee Benefits? 4 Employer's challenge. 5 Why the use of employee benefits? 6 Three important factors influencing employee benefits: 7 Conclusion: 7 Bibliography: 7 What is a benefit? A few examples from Webster 1913 dictionary's definition of the word "Benefit": 1. An act of kindness; a favor conferred 2. Whatever promotes prosperity and personal happiness, or adds value to property; advantage; profit.

To be beneficial to; to do good to; to advantage; to advance in health or prosperity; to be useful to; to profit.

To gain advantage; to make improvement; to profit; as, he will benefit by the change.

financial assistance in time of need 6. something that aids or promotes well-being: "for the common good" How do (employee) benefits affect us? In most industrial countries Government provided benefits (e.g., Social Security and Medicare) are by far the largest expenditure of the federal budget.

Government tax subsidies for privately provided benefits (companies) amount to hundreds of billions each year (in most industrial countries). The news talks about benefits and employee benefits nearly every day. It's a subject of public interest.

The Employee Benefits concept The Employee Benefits concept first originated in the United States, where in the 19th century there were brotherhoods that offered the private members provisions with regard to burial, pension and sickness. These organizations were succeeded by charitable institutions, the precursors of the unions, who offered benefits in order to attract members. Today, the concept of Employee Benefits is a part of businesses strategy to most companies worldwide. This concept plays an important part in maintaining and achieving competitive advantage by retaining core employees.

What are Employee Benefits? An employee benefit is a benefit provided or paid by the employer for the benefit of the employee or the employee's family. Benefits are generally included in the employee's wage for tax purposes. Benefits may also be excluded from wages in full, partially, or only to the extent that certain conditions are met. Employee benefits are usually exchanged for employee's service, although the obligation to pay benefits may also arise from the termination of employment. The obligation to pay employee benefits arises from contractual arrangements between the company and employee, legislative requirements, industry practice and business practice. A company usually settles employee benefits with cash payment or non-monetary benefits such as goods and services. Employee benefits may be paid in the period, or in the future.

Employee benefits typically include: bereavement leave, disability, life, and other types of insurance; family medical leave; health benefits; membership or membership discounts; moving expense; pension and retirement benefits; vacation; and travel benefits. An employer's benefits plan may include all, or just a few, of the above benefits. Different selections of employee benefits are called benefits packaging.

There are lots of different employee benefits. They differ from country to country, and from company to company. The selection of benefits will constantly change.

Below are some examples of employee benefits divided in major groups.

Legally Required Retirement Related Insurance Related Payment for Time Not Worked Other Social security Unemployment compensation Workers compensation State disability insurance Pension fund Annuity plan Early retirement Disability retirement Retirement gratuity Medical insurance Accident insurance Life insurance Dental insurance Survivor benefits Disability insurance Vacation Holidays Sick leave Military leave Election day Birthdays Funerals Paid rest periods Lunch periods Wash-up time Travel time Company discounts Moving expenses Severance pay Tuition refunds Credit union Company car Legal services Financial counseling Recreation facilities Meals furnished by company Employer's challenge.

A company that successfully provides Employee Benefits will get what they want in return; high retention, happy employees, loyalty, low percentage of sick leaves etc.

It is important that a company communicates its Employee Benefits, and that the selection of these benefits reflects employees wants and needs.

"Most of all, employees want medical insurance," said Harriet Hankin, president of CGI Consulting Group Inc. of Malvern. But along with that they want more control of their health-care options, with a choice of plans and deep discounts. Harriet continues: "Generations have different desires at different ages of their lives.

For example: To the younger employee, long-term care might not be as important as auto insurance or benefits that offer child care and paid time off. Today's trends in benefits are toward employee self-sufficiency, flexibility and choice. Flexibility in time off, tailored to the employee interest.

"Companies that design plans where one size fits all will miss the boat." says Hankin.

While unwrapping a typical benefit package still reveals the expected health-care and retirement options, "gender, age and marital status are big determinants in the kinds of benefits that employees seek," Hankin said.1 Voluntary benefits are thriving. A typical benefits package may include voluntary benefits that range from boutique items -- pet insurance or discounts on computer purchases -- to the more practical, such as home or auto insurance, financial consulting or long-term care. Voluntary benefits give the employee flexibility and control. Voluntary benefits allow employees to purchase additional benefits to what an employer offers. In Australia, Salary Packaging is an increasingly popular way to structure voluntary employee benefits. With Salary Packaging an employee can choose to get specific benefits instead of cash, only having to pay taxes of the cash. This allows the employee to achieve significant taxation savings. Salary Packaging enables the employee to structure the personal finances in such a way as to pay certain expenses from pre-tax income.

Why the use of employee benefits? Human Resource Management is a matter of recognizing people as perhaps the most important asset of a company and to manage these people the best way possible. A company's competitiveness in its industry refers to their ability to maintain and gain market share. Competitiveness is related to company effectiveness, which is determined by whether the company satisfies the needs of its stakeholders. The important stakeholders include stockholders, customers and employees. Therefore, retention of employees becomes an important factor of a company's competitiveness.

A company's core employees are those that are essential to the service(s) the company provides. These employees work year round, typically full time, and drive the business. Retention of core employees is vital to the business.

To retain employees it is no longer enough to be competitive concerning pay. Employees of today relate their jobs to their private lives far more than they did in the earlier days. In earlier days employees would go to work, do their job, get their pay, and go home to a life often totally separated from work. Today the types of work have changed, and people's conceptions of work have changed in a way that makes retention of employees something much more complex than adding more pay.

A dangerous myth existing from earlier days is that people only work for money. And yes, people do work for money, but they work even more for meaning in their lives, for fun, for jobs that will contribute something to their lives, and their family's life. Pay cannot substitute for a working environment high on trust, fun, and meaningful work. Companies that ignore this fact are essentially bribing their employees and will pay the price in lack of loyalty and commitment, and difficulty in retaining core employees.

Today, employee benefits are a major force in determining employee retention, or employee happiness. One could argue that happy employees make happy customers, and that happy customers make happy stockholders. In this view, employee benefits become crucial to a company's success.

Three important factors influencing employee benefits: 1. Self-Interest of Decision Makers a. Shareholders b. Company Executives c. Employees d. Unions e. Congress and other Policy Makers 2. Taxation a. Tax laws determine which benefits receive favorable tax treatment, and which do not.

Which benefits Congress has decided to provide favorable tax treatment to c. Taxes can influence: I. Whether to offer a particular benefit ii. The form that benefit will take 3. Demographics a. Gender and the workplace b. Longevity c. Age Distribution d. Parenting Roles e. Household Composition Conclusion: There is no "one-size-fits-all" solution to this issue. Employee Benefits is a useful and good tool to retain core employees if used in strategic way. A company can provide social, physical, material and moral benefits. The selection and range of benefits must reflect the employee's needs and wants in relation to company goals.