DO FRINGE BENEFITS HELP EMPLOYEES WORK MORE EFFICIENTLY

Alexa McHenry

Elmwood Murdock High School

April 7, 2016

Why do your employees keep leaving you for a rival company?

Youve done some research and found that they actually pay less than
you do!! The only difference is that they provide their employees with
something called fringe benefits. The employees of their company
seem happier and work harder. You notice that their production
numbers almost match yours even though the company is half the size
of yours. This makes you think, do these fringe benefits help
employees work faster? You decide to research the pros and cons of
fringe benefits: what they are? What do they cost the company? What
are the affects on small companies? Next you look at employee work
habits and efficiency with and without fringe benefits, and can giving
fringe benefits make employees more willing to work. Lastly you
research what makes people stay at their jobs, what makes employees
want to stay, and why they leave? The results of your research are this.
Fringe benefits are property and services whose benefits to
employees often outweigh the cost to the employer. Generally fringe
benefits are part of an employees taxable wages, but there are certain
fringe benefits that are excepted from this rule and an employer can
still take a business deduction from their cost
(smallbusiness.findlaw.com, pro and cons: offering employee benefits,
2016). Nontaxable fringe benefits include no additional cost services,
qualified employee discounts, working condition benefits, and qualified
transportation benefits. These benefits can include an employer-

provided vehicle, a free or discounted commercial airline flight through

your frequent flyer miles, a discount on services or property, a ticket to
a sporting event or to other entertainment, or a membership to a
country club or other social club.

Employees are not required by law to offer benefits. These

include health insurance, pension plans, and paid
vacations. Offering fringe benefits gives employers a larger
pool of people to choose from when hiring. Employers who
offer benefits are bound by certain laws and regulations.
They often need to pay advisors and attorneys to help
them create plans that follow them (bizfilings.com,
providing employee fringe benefits can increase job
satisfaction and performance, 2016).
There are pros and cons to having fringe benefits. Offering a
benefits package that includes health insurance such as dental and
vision will help attract quality employees. Businesses can deduct plan
contributions such as health and life insurance and pension plans.
Employees will often take a lower salary if there are better
benefit plans. This in turn can save the business money. An employer
can save money on benefits for themselves by providing them to all
employees instead of purchasing them privately. Health insurance
benefits are shown to decrease the number of absences there are in a
business. They are also shown to improve employee health and
morale. Those with these benefits are more likely to seek preventative
care and, therefore, live healthier lives.
There are some cons to providing fringe benefits as well, these
are a few. Providing health benefits is more costly for small businesses
than it is for large ones. In the terms of higher prices because of lesser
buying power, and due to relatively higher costs for administrative.
Small businesses have choices for designing a retirement plan because
of the higher administration costs. The more benefits a business offers,

the more it must pay for administrative overhead. The cost of health
insurance has steadily risen over the years. This makes it less
affordable for the

employer, and makes financial planning more difficult each year.

Offering benefits creates concerns regarding legal compliance, which in
turn causes a company to incur legal fines.
Fringe benefits tend to attract better talent and cultivate more
loyalty and productivity among staff members even though it also
comes with more exposure and scrutiny to state and federal
employment laws. Companies should contact an employment law
attorney who specializes in employers issues if they are planning to
provide benefits for their employees. This will help to make sure there
is nothing that will cause problems with laws and regulations.

Offering high wages in your ads instead of benefits might

attract applicants, but what is going to keep them from
leaving your company for another that offers a higher
wage? Offering a competitive salary or even a slightly
lower salary combined with benefits and perks can prove
to be a win-win combination. It promotes improved work
habits and reduces employee turnover. Offering benefits
tends to drive employee engagement while providing a
sense of security, encouraging workers to stay on the job,
even during tough times (paychex.com, the importance of
employee benefits, August 28, 2014).
When considering adding fringe benefits to their company,
employers must consider several things. Number one is the age group.
There are generally several of them. First is the Millennial or generation
Y. These are the people who were born from 1981 until the present.
Second is generation X. this group was born between 1965 and 1980.
The third group is the baby boomer generation. They were born

between 1946 and 1964. Lastly are the traditionalists. This group was
born between 1925 and 1945. Having this diverse group of people in
the workplace means that employers may have to consider the various
needs of those age groups. Allowing the

employees to do a customized package according to their needs may

be more appealing than a one-size fits all approach. Packages that
allow for choices and flexibility can drive participation and can give
employers a better return on investment.
What should employers include in their benefits package? What
are job seekers looking for? In a recent survey by Monster, survey
participants were asked to rank benefits by value and importance
when considering a prospective job. The results of the survey ranked
average importance of benefits. Number one was Healthcare plans
with 32 percent. Second was vacation time with 25 percent. Third was
pay raises with 15 percent. Fourth was employee benefits with 10
percent. Fifth was performance bonus with 9 percent. And last was
retirement plans with 8 percent.

Benefit Importance

Percents

35%
30%
25%
20%
15%
10%
5%
0%

Benefits

It came as no surprise that vacation time and pay raise ranked highest.
Employees are looking for time to spend with their family as many are
raising children or

caring for aging parents. This combined with the cost of doing so
makes sense that they would need a pay raise (business.time.com,
top reasons why americans stay at their jobs, Belsky, August 31,
2012). What about offering perks or rewards? Employers can offer low
cost options such as floating holidays, an employee of the month
parking space, company paid lunch breaks, casual Fridays, etc.
creating a culture within your company that makes employees feel
valued can also be a great tool when considering or creating a benefits
package. Once an employer has arrived at a plan that suits them and
their employees, they should let employees know about it. They can
hold enrollment meetings, encourage participation, outline the benefits
in the employee handbook, and communicate to the employees what
the total compensation package is. This way both the employer and
the employee are aware of the potential added value that having
benefits can bring to the working relationship.
What is the number one reason people continue working for
their employer? Is it the pay? The benefits? A lack of better options?
Todays sluggish economy and unemployment rates, are the obvious
answers. Although they are not the correct ones. According to a new
survey commissioned by the American Psychological Association,
which contains a number of revealing insight into employee
motivation, that should be of interest to corporate managers and
governmental policy makers. This is what employees said: I enjoy the

work I do (67%), my job fits well with the other areas of my life (67%),
the benefits (60%), he pay (59%), I feel connected to the organization
(56%), my coworkers (51%), my job gives me the opportunity to make
a difference (51%), my manager (40%), there

arent any other job opportunities for me (39%) (forbes.com, why do

employees leave their jobs, Lipman, Oct 10, 2015)
Turnover is one of the management problems with a lot of subtle
costs- from lost productivity, training time, and uncertainty that the
new hire will work out. Total costs are often estimated from a third of
annual salary to numerous multiples of salary for executive positions.
The process is seldom as simple as you expect it to be. A new
employee retention report was conducted by TINYpulse, an employee
engagement firm. They surveyed 400 full-time U.S. employees. Overall
the results were less surprising and more validating. It once again
confirms the importance of an employee-manager relationship. Results
were listed from highest to lowest. The high cost of micromanagement
was first on the list. A strong connection between employee job
satisfaction and the freedom to make decisions about how to do their
jobs is needed. Employees whose hands are regularly tied are 28
percent more likely to think about finding a new job. Culture was
second on the list. The overall fabric of the environment one spends
large amounts of time in naturally influences ones perception of the
work experience. Employees who give their work culture low marks are
early 15 percent more likely to think about a new job than their
counterparts.
The question regarding fringe benefits and employee work
efficiency is now more easily answered. By providing fringe benefits to
i.

Micromanagement: (V) to manage or control with excessive

attention to minor details

employees the employer can benefit greatly. They can save money,
have better production, and keep their employees happy easier.
Therefore, fringe benefits do help employees work more

i.

Micromanagement: (V) to manage or control with excessive

attention to minor details

efficiently, and it keeps workers satisfied and working longer for the
same employer.

Pro and Cons: Offering Employee Benefits. FiindLaw. 2016. Thomson

Reuters. Web
30 Mar 2016.
Providing Employee Fringe Benefits Can Increase Job Satisfaction and
Performance.
BizFindings. 2016. Business Findings. Web 30 Mar 2016.
The Importance of Employee Benefits. PAYCHEX. August 28, 2014.
PAYCHEX. Web
30 Mar 2016.
Gary Belsky. Top Reasons Why Americans Stay at their Jobs. TIME.
August 31, 2012.
Time Inc. Web 30 Mar 2016.
Victor Lipman. Why Do Employees Leave Their Jobs? NEW Survey
Offers Answers.
Forbes. Oct 10, 2015. Forbes. Web Mar 30 2016