Flexible Benefits: its effects on employee and organisational outcomes

Topics: Employee benefit, Cafeteria plan, Employment compensation Pages: 20 (4656 words) Published: October 12, 2014


Flexible Benefits: its effects on employee and organisational outcomes Abstract
The primary purpose of the present study was to examine organisational and individual outcomes of implementing flexible benefits. The current study has presented evidence on some of the main reasons why firms have (or have not) adopted flex benefit plans. The use of the benefits model has made links to the external and internal environmental drivers of benefit preferences and has stated that these drivers play a vital role in pushing organisations to adapt to flexible benefit plans. The main driver explained in the review is the changing composition and evolving values of current workforce. Examinations of literature revealed that flexible benefits have a constructive effect on organisational outcomes and individual behaviour from psychological and economic perspective. From psychological perspective, areas such as job satisfaction, organisational commitment, psychological contract and role of flexible benefits to deliver organisational equality are covered. Economic gains with the help of social-exchange theory is explained which suggest that employees feel obliged to give in return to the employer in exchange of the valued benefits. Other financial benefits such as lower labour turnover, decrease in absenteeism rate and more appreciation of their benefits is gained through such benefits. Although there are still problems associated with the implementation, administration and issues concerning trade unions. Nevertheless, the changes in labour force composition and worker values may enhance the importance of flex plans over the next few years.

Contents
Purpose……………………………………………………………………………………………………………………………….…………..3 Methodology…………………………………………………………………………………………………………………….……………..4 Flexible benefits: Meaning………………………………………………………………………………………………..……………..5 Drivers of Flexible benefits…………………………………………………………………………………………….….……………..5 Individual and organisational outcomes of implementing flexible benefits………………….….……………….7 A. Psychological Perspective…………………………………………………………………………….……..………………..8 B. Economic Perspective…………………………………………………………………………………..…….………………..9 Concerns and drawbacks……………………………………………………………………………………………………….…………10 Conclusion……………………………………………………………………………………………………………………….….…………..11 References……………………………………………………………………………………………………………………………….………13 Appendix……………………………………………………………………………………………………………………….………….……..16

Purpose
Effective compensation practices provide organizations with a competitive advantage by increasing their ability to attract and retain employees. However, as much as this is the case, benefit packages must consider the organization’s ability to pay on an on-going, sustained basis (Long 2001). Therefore the current challenge in the field of benefits for most organisations is to design attractive packages at the same time be cautious about how much money they spend on employees. Escalating costs associated with providing benefits have compelled changes to benefit packages, and options such as flexible benefit plans have become common in organizations. Here, the employer aims to maintain employee satisfaction level at the same time control cost (Stredwick and Ellis, 1998). Even though flexible benefit plans have been implemented since the early 1970s, growth of such plans in the UK remains low. However, there are some points to be considered as to why the growth of such plans has been not yet widespread. Existence of fiscal policy (taxing benefit) and the free health service provided by the government of UK has limited the growth of such plans (Wright, 2009). Another argument by Russel (1991) is that organisations in the UK have a ‘paternalistic’ approach when it comes to occupational welfare benefit policies. This can be explained with reference to a number of voluntary benefits which are common in workplaces such as annual leave, pension’s scheme and other benefit...

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Appendix
Appendix 1: Flex models (Chow Koo, 2011, p.18)
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