Summary on Fringe Benefits

sunandaC

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Summary on Fringe Benefits
Employee remuneration & financial incentives, though present in most of the companies, have a modest presence in a company’s compensation plan. Even in companies where they are present, they are mainly in the form of suggestion schemes or annual bonus payments, which have a moderate effect on the employees’ productivity.

Incentives related .to productivity, time saving, group performance, individual performance, ESOPs, gain sharing etc. which have a high effectiveness potential, have a predominantly low presence in most of the company’s remuneration plans. However, considering the nature and type of business the companies are involved in, this view may change as per the requirements of incentives to a particular type of business.


Semi and non-financial incentives are present substantially in most of the companies. However, most of them are present more as a matter of routine procedure, rather than with a specific purpose to motivate employees. Another feature of semi and non-financial incentives is that they, by their very presence, induce an employee to work more rather than demanding more work from the employees for achieving them. Thus, when financial rewards can be employed in the carrot and stick method for achieving higher productivity, non-financial incentives cannot be employed in the usual reward punishment situation. .

The compositions of the incentives vary according to the employee cadre. The proportion of financial incentives in the total incentive pay is more in case of non-managers and comparatively lower in the case in the managers. While on the other hand, managers are entitled to more of semi and non-financial incentives than non- managers. This can be due to the fact that financial incentives are mostly associated with productivity increase or with saving time or with suggestion schemes, which principally go on in the shop floor of the organization and hence, are meant for the shop floor workers. In addition, managers who already have a steady and good pay package do not care much about an extra pay.

Although, a substantial amount of increase in pay I the form of gain sharing or ESOPs may motivate them to boost up their efforts. In addition, managers value non-financial incentives more as their basic salary already fulfills their basic needs and they crave for status, recognition as well as their self-actualization need. A well decorated cabin, challenging work assignments, employee recognition programs, and appreciation from top management have a more profound effect on managers. Non-managers are more interested in increasing their pay and hence pay less attention to non-financial incentives.


As has been mentioned above, the type of incentive also varies taking into consideration the nature and type of business activity, the company is engaged in while in manufacturing organizations, productivity or output can be measured as a function of individual or a particular group, it is more convenient to base remuneration schemes on the basis of productivity/ output or time saved. In a marketing organization, the incentives are linked to the amount of target sales achieved by an employee.

While in a service organization where there is no quantifiable output as such, incentives are based on the performance of a particular employee in meeting his predetermined targets. Suggestions schemes are aimed at reducing cost and as such, can be used in any manufacturing organization. Service or marketing organization, where the results or profits are determined by the efforts of the employees, would demand incentives, which directly boost the morale of the employees such as gain sharing or ESOPs.


Incentives are beneficial to both- the organizations and the individual. The organization gains by spending a mere portion of their profits on incentives and employees are motivated to work more for some extra rewards. The problems, which might be caused due to incentives, are absent in most of the companies and wherever present, can be solved by proper training and education of the employees and ensuring that the incentive schemes are more fair and transparent.
 
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