Quiz 14: Providing Employee Benefits

Business

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Benefits package is part of the employee compensation but in non-cash form. Benefits package are categorized into legally required, insurance related, retirement related and others. The other benefits include paid leaves, joining bonus, transport facilities etc. Benefits package plays a key role in compensation system in order to attract motivate and retain the employees. The employee satisfaction survey data from the Society of Human Resource Management (SHRM) shows that importance rating from employees for all types of benefits is almost 80 percent. This clearly states that employees appreciate the values of the benefits. Thus, it is very important companies to communicate the benefits information with employees to meet their objective of attracting, motivating and retaining of the employee. In most companies, many employees are unaware of the benefits that they are eligible to avail. This can impact company's employee retention rate if they get opportunities from competitor firms due to lack of awareness. Poor communication system in the organization is major reason for lack of awareness. Thus, it is suggested that employers have to provide a proper channel to inform about the benefits of employee. It can be via email or any other internal communication tools. Also, HR's must conduct Q A section on benefits concerns once or twice a month.

401k is a retirement plan that allows employee to save pre-tax dollars from their paycheck for retirement benefits. Employer also contributes to match a set percentage of the employee's contributions. Employees receive its benefits along with interest accrued after the retirement. Employer contribution to the employee 401k plans helps the company to get tax benefit from the government. If the enrollment rate is low, then employer contributions to 401(k) become less and it can cause tax burden to the employer. Further, high enrollment rate in the retirement plans can help employees feel less stressed in terms of financial security. Therefore, providing such benefit can result in positive impact for employer.

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