Employee Benefits in HRM

Employee Benefits in HRM Everyone Should Know

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What are Employee Benefits?


Employee Benefits can be termed as non-cash compensation which is given to the employee. These benefits are given to the employee apart from salaries and wages. These are also known as fringe benefits that are offered with the intention to attract and retain employees.


Every individual loves benefits. Employees want to get rewards and recognition for the work they do. Therefore, many people apply for jobs in an organization by considering the benefits offered by that company. Employee benefits include various health insurance, stock options, outing plans, etc. If two organizations provide the same salary and one offers better rewards, then the organization offering the better rewards will get the edge in the market.


There are various types of employee benefits, and we’ll outline some common examples of employee benefits.

1. Paid leave, sick leaves, and vacation days

2. Life insurance

3. Health insurance

4. Dental insurance

5. Vision insurance

6. Gym memberships or discounts

7. Wellness programs

8. Childcare benefits

9. Employee recognition programs

10 Relocation assistance


It doesn’t matter how huge or small your organization is. Employee benefits are a must: Here are some of the following reasons you should be giving employee benefits.



1. Helps to Attarached Talented Employees.

If you want to hire the top talent in the market who can perform all the duties, then in this situation, a proper employee benefits plan will surely do the work. Most of the organization has implied the same. According to a study, 50% of businesses with less than 50 employees provide health care benefits.


2. Minimize employee turnaround

We all agree hiring does matter but keeping around all your employees also matters the most. And guess what? Employee benefits come in handy here. An excellent benefits package can keep your workers from switching around. Also, when you provide the benefits, it will make your employees feel better and meaningful and thus will reduce the chance of leaving.


3. Maintaining a healthy workforce.

We all know that the better you feel, the better you work, so if you want an efficient employee, you should for sure include health benefits plans, like sick leaves and regular health checkups. It’s as simple as a healthy employee = healthy business.


4. Boost employee productivity

By the time we have cleared how important employee benefits are. Hence, there’s no doubt that good employee benefits will play a part in increasing the employees’ productivity. In addition, these benefits provide mental happiness, which leads to being more productive.

The concept of Employee Benefits in HRM plays an extremely vital role for the company, its employees, and even the outsiders! Employee Benefits are the perks provided to the employees in addition to the salary. How can you expect your company to grow and reach heights when the human resources working inside aren’t happy or satisfied with the work? ‘Organizations need to show benefit to get benefit in return. No work is done for free.’


Treat employees as part of the larger organization, and their most minor contribution adds value to the company – it will create miracles afterward. Life is too short to be greedy – also helps employees with all good intentions availing the extra benefits. Ultimately, what will get your brand to the peak is your workforce itself! It’s their hard work and most miniature work that brings the matter of joys to the company.


According to the C.B. Memorial, – ‘Employee Benefits are meant to guarantee, strengthen, and boost an employee’s overall earnings. It is of value to the employees as it provides social security and health-related insurance to them. It is of value not only to the employees but also their families in major perspectives.’


According to Cockman, employee Benefits can be defined as the extra benefits provided to the employees for their overall well-being. Also, which are not a part of their salary, wages, overtime payments.’


Employee benefits in HRM are usually expects for all – they are given as an extra benefit to the employees to help them raise their living standards. In the compensation provided to the employees in salaries and wages, the companies generally help the employees with numerous extra services and programs designed to assist them in raising their living standards. Such additional services are usually called Employee Benefits.


According to Peter Drucker, – ‘The top part of a company’s investment ideally be focussed on employees’ well-being. And also, he emphasizes that what we invest in men is what we get in return. It is the only door that will give the pathway to achieving a considerable amount of industrial growth.’


Employee benefits help the employee in unseen ways. From availing the health-related benefits to the other significant life-threatening risks, management benefits to the most little rewards can stick the employee to work with your organization for the long term. Everything that you must be aware of Employee Benefits in HRM has been covered in the article below. It would be best if you stick till the end to get a better awareness of this topic.

Objectives linked to Employee Benefits in HRM

1. The Employee Benefit in Human Resource Management has several objectives attached to it. All such purposes are stated below:


2. To take care of the life and health-related needs of an employee by providing life and health insurance.


3. Providing benefits to the employees makes the company adhere to the social commitment via ‘Article 43 – Indian constitution.’ The main objective is to retain the best talent of the company.


4. Also, it helps employees maintain a good living standard and a happy life.


5. Benefits related to employee training and development programs ensure the employees’ overall growth and learning culture and eliciting results with higher productivity.


6. Special allowances turn the employees’ dream to spend some time in the social and cultural activities into reality.


7. Employee Benefits keeps them safe amidst the turmoil that life can take a turn into – without any prior information!


8. To maintain a common standard of benefits as compared to other companies.

Characteristics Features of the Employee Benefits in HRM

Characteristics Employee Benefits in HRM min

Each Employee Benefit Programmes in HRM developed in the organization consists of the standard features as discussed in the section below:


1. Every time the employer provides benefits, it’s supposed to be for each employee working in the organization. It is never targeted to a group of employees.
Employee Benefits are not performance-specific. Also, It is common for all the employees to boost their morale and make their job more exciting, worthy, and productive.


2. The cost incurred from the company while providing the employee benefit is considered the favorable cost to motivate and sustain the employee in the company for the long term.


3. Employee Benefits are generally the additional payment or compensation paid to the employees apart from their basic salary as well as wages.


4. Employee Benefits states a Labour Cost to the company. The benefits provided to the employees either in monetary or nonmonetary terms hold a cost to the company.


5. Holding a Merit or not doesn’t make any sense and doesn’t affect the overall employee benefits. They are not even on the list of parameters used to provide employee benefits.

What are the Basic Principles of Providing Employee Benefits in HRM?

1. In Human Resource Management, Employee Benefits have several principles linked with them. Let’s discover all of them today


2. Benefits designed for the employees must create sense to the employees by fulfilling their needs in some manner.


3. Cost-Benefit Analysis is done for an effective Employee Benefit. Therefore, it means that the benefit given to the employees must be balanced with the cost of the company and must be relevant to them.


4. Proper planning and individual employee surveys are conducted to know the will of an employee about what type of employee benefits interests them the most.


5. Awareness is creates among employees about such benefits and how to use them properly.


6. The basis of benefits indicates for each employee.


7. Employee benefits must be formulated and implemented to provide happiness and genuine help to the employees. No employee should be threatened further or made feel bombarded with the favors of the company as a charity.


8. All the focus must be on providing the overall well-being and welfare to the employees such that they feel motivated and adored by the company.

Types of Employee Benefits in HRM

Full-time Employees of the company are eligible to get numerous employee benefits. They are mentioned below:


1. Life Insurance Benefit

The principal purpose of life insurance is to protect the employee’s family if he dies. All the benefits get transferred directly to the
Life insurance policy beneficiary or beneficiaries. Generally, the beneficiaries are children, wives, or husbands.

A private life insurance policy for an individual generally costs the company a high amount. Such an approach is being sponsored by the life insurance companies only for the full-time employees in the medium and enormous form.


Facts & Figures:

1. Among the firms with less than ten employees, only 15.5% of them provide life insurance benefits.

2. Providing the facility of life insurance is usually determined by the total number of employed people.


2. Paid Leaves/Vacations Benefit

PTO – Part Time Off is given to the employees in the middle of working. It can come up in the form of vacations, sick leave, and holidays.

Based on the working hours committed and the performances, employees earn the paid vacation leaves from the company’s side. At the same time, sick leaves and government holidays are common to all respective of their performances.


Facts & Figures:

1. Almost 62% of the companies provide the paid vacations to their employees as an employee benefit to motivate them.

2. Almost 33% of the companies provide paid sick leave to internal employees.

3. Also, globally, after paid vacation – employee benefit, the second most common and appreciated gift among the employees is holidays which are paid.


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3. Fringe Benefits

Fringe Benefits are a bulk of benefits given to the employees in the non-cash payments. Also, it includes child care benefits, bonuses indirectly related to productivity, tuition assistance, child care spending accounts.

The tuition reimbursement feature is a great way to upskill yourself with higher studies at the current moment with these tuition fees or 50% reimbursement by the companion.


Facts & Figures:

1. No production bonuses are a more fantastic means of appreciation among full-time employees.

2. Employees belonging to the manufacturing sector have the benefits in common.

4. Medical Insurance Benefit

Medical Insurance covers all the medical fees, medication fees, hospital bed fees, surgeon fees, as well as prescription fees. It also includes the dental and optical care benefits as a whole. Employees can also be benefited under such coverages by few organizations.


Facts & Figures:

1. Organizations with more employee sizes are more prone to helping employees with such incredible benefits.

2. Overall, 53% of entire organizations offer medical insurance facilities to full-time employees.

3. Almost 12% of companies help employees to have medical insurance facilities.

4. Education Industry, health care industry, financial sector, as well as manufacturing industries are likely to provide such benefits.

5. In the hospitality sector, the leisure industry is least likely to avail its employees of such benefits.


5. Domestic Partner Benefits

To avail of the domestic partner benefit, the employee needs to perform some formalities. He needs to start with signing a form. Then he is requires to showcase his financial interdependence and the unmarried domestic partnership.

An example of the domestic partner benefits is the family health insurance-related benefits. This particular benefit is considered as the income by the federal government.


6. Retirement Benefits

Retirement Benefits are generally provided to the employees in monthly pensions or income after they end their careers. It typically falls into two categories

7. Defined Contribution Plans

Under this, an employee’s benefit is directly linked to the returns from the investment, which most in various cases isn’t assured. However, the employers’ and the employees’ contributions are specified.


8. Defined Benefit Plans or Pension Plans

In this case, all investment-related risks are borne by the employer. Under this, the benefit amount providing to the employees is predefine. The amount is based on the salary drawn by the employee in his previous years as well as the total number of experience he holds.


Facts & Figures:

1. Industries consisting of a high level of unionization offer the Defined Benefit Plans. These sectors include Manufacturing Sector, Transportation Sector, and also, Construction Sector, etc.

2. Overall, 64% of the employees in the company can avail the Defined Contribution Plans.

3. The list of employees who can avail of the Defined Benefit Plans is generally lesser in only 15.6% on average.


9. Disability Insurance Benefit

It enables the benefit of getting the lost income from the day you are met with an accident, leading you to stop working as well as earning. Also, it is of two types short-term disability works immediately and is meant for short-term physical illnesses like minor accidents or injuries.

Long Term Disability is meant for a long-term injury or a permanent ailment that will take years to recover.


Facts & Figures:

1. Long-term disability insurance is provided by almost 18.1% of the companies to its full-time workers.

2. Short-term disability insurance is provided by nearly 19.2% of the companies to its employees.

Which Employee Benefits in HRM Have got the Most Acceptance Across Multiple Eras?


People from different generations aspire to have additional employee benefits based on their convenience. Each generation encounters different social norms, perceptions, values, ethics, as well as standard of living.


What a 50 years old company thinks can create value in terms of providing employee benefits to the generation born in the ’90s can be completely irrelevant and useless for them. What can excite and motivate the millennials could be entirely different from what can excite an older employee to his retirement days.


According to Benify, Employee benefits has divided into two levels:

1. Benefits that employees find most important.

2. Benefits that employees appreciate the most.

As per the Employee Happiness Index, 2018 survey data, the following Employee Benefits are more relevant and appreciated to the workers based on Generations

1. Millennials

Most Important

1. Flexible working hours
2. Paid leaves
3. Health facilities
4. Wellness of the employees
5. Skill Refining Programmes
6. Pension benefits
7. Healthcare


Most Appreciated

1. Flexible working hours
2. Paid leaves
3. Healthcare facilities
4. Wellness of the employees
5. Skill Refining Programmes
6. Work-life balance
7. Foods and drinks


2. Generation X

Most Important:

1. Fixed working hours
2. Overtime pay
3. Paid Leaves
4. Healthy work culture
5. Pension benefits
6. Competent talent enhancing programs
7. Healthcare programs


Most Appreciated

1. Healthcare programs
2. Fixed working hours
3. Overtime pay
4. Competent talent enhancing programs
5. Healthy work culture
6. Benefits in the form of gifts, club parties, foods and beverages, activities, and outings


3. Generation Z

Most Important

1. Leniency in working hours and working days
2. Paid government leaves and monthly leaves
3. Health-related support system
4. Overall mastery programs/Upskilling with time
5. Mind-blowing pension benefits


Most Appreciated

1. Health-Related support system
2. Leniency in working hours and working days
3. Paid government leaves as well as monthly leaves
4. Overall mastery programs/Upskilling with time
5. Financial wellness programs
6. Mobility


4. Babyboomers

Most Important

1. Pension benefits
2. Flexible working hours
3. Paid holidays
4. Health-related benefits
5. Healthcare
6. Insurance facilities


Most Appreciated

1. Health-related benefits
2. Flexible working hours
3. Paid holidays
4. Foods and beverages
5. Skill enhancing programs
6. Mobility

Highlights and Results of the Findings


1. With the growing age, the older generations are more cornered to have a beneficial pension scheme. Also, it makes sense as the newbies or graduate teenagers joining the organization won’t be much worried about their pension plans that they can avail themselves of after 40 to 45 years.


2. Regardless of age, the common thing that motivates all the generations is flexible working hours and paid leaves.


3. The topmost benefits that make employees of all generations focus on their work without any distraction from the outer world are good healthcare as well as wellness benefits.


4. The youngest generation of all, I.e., Generation Z, has given priority to financial wellness. With the increase in hiring, it will become one of the most critical employee benefits.


5. The foremost important thing that came up for the younger generation is that they are more impressed and influenced by the skill development programs. Also, it is evident as young people are more tech-savvy. They are always curious to learn new skills and abilities.

Problems Might Arise While Adopting & Implementing the Employee Benefits in HRM?


Like a Rose comes with thorns, the benefits designed for the welfare of the employees can come up with unseen problems. The following issues can manifest themselves while working on the Employee Benefits Programs.


1. Lacking Cost-Benefit Analysis

Organizations thrive on spending a lot of money on designing and implementing the Employee Benefits Programmes in HRM. They usually get so focus on these corner activities that they forget to perform the Cost-Benefit Analysis. Usually, the employee benefits motivate and encourage them to give their 100% commitment to the work. But, in the absence of the Cost-Benefit Analysis, few discovered employee benefits programs can make no sense to the employees, and motivation from these is still far away.


2. Trade Union Pressure

The Employee Benefits Programme in the HRM can become cumbersome for the company owners. Because of the pressure, they receive from the Trade Union regarding implementing the certain Employee Benefits Programmes Strategies.

The problem here is that these forcibly designed programs are ineffective for the organization and are designed by setting specific goals and objectives with the benefit programs. It becomes highly problematic for them to tackle such scenarios.


3. Extra Focus on Benefit Program

Organizations that focus more and more on the Employee Benefits Programmes in HRM often end up in a default state. It develops a sense of insecurity among employees, which distracts them from focusing on their job’s primary roles and responsibilities. It leads to neglecting the numerous Human Resource functions, and when such a thing happens, employees get ignored, leading to lower productivity.


4. Ruckus Over Benefit Claim

Employee Benefit Programmes in HRM are always made with the sense of being compassionate towards their employees. As a result of sticking to their humanitarian ground, these can create the ruckus of employees with the company.

The companies hold the right to withdraw such benefits at their convenience. Also, it leads to the employees thinking that they have a 100% rightful claim towards these benefits that must continue. So, tackling such a situation can be stressful for companies.


5. Impassivity Towards Benefits

Generally, the programs relevant to the Employee Benefit in HRM are made equally and even for every employee. But some employees couldn’t grab the benefit of such programs. In the case of a maternity-related employee benefits program, – An older woman will find it utterly useless for her as she cannot conceive the baby at this age.

Tactics to Have an Effective Employee Benefit Program

Free tips are always terrific – doesn’t it? We have added some helpful tips as well as tactics for your organization to make the best and productive schemes related to the Employee Benefit in HRM.


1. The employee benefit in HRM should formulates with as much competition as it can. Since the employees are prone to get distracts and attract to their benefits from other companies, it might prove to be a threat to your organization.


2. Employee Benefits’ investment must consider an excellent and essential tool to drive efficient Human Resource Management.


3. The Employee Benefit Program beneficiaries in HRM must not be a group; rather, it should be an individual employee.


4. Employee Benefits in HRM must be adopted as a part of a significant company’s policy. Therefore, tt should adjust the existing approaches to retain skillful employees in the future.



Employee Benefits are provided to the employees for their overall welfare and also, increase the organization’s productivity. Also, it keeps the employee attached to work with the company for years without any second thought of switching it. But, since the benefits are common to all, at the same time, companies should give it a second thought that some Employee benefit programs in HRM are of no use to the employees based on their age, gender, and other factors.


Those who find such benefits meaningless and insignificant must be provided with the option of switching their employee benefits with some other valuable benefits that can prove to be of at least some help to them. This practice will keep the employee motivated, recognized, and appreciated by the company.

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