PRINCIPLES OF FRINGES

1. Benefits and services need to be provided to the employees on the

basis of a genune interest in the protection and promotion of their well
being.

2. The benefits need to satisfy a real need. Employees resist or are

indifferent to any benefit which is not liked by them.

3. The benefits need to be cost-effective.

4. The benefits needs to be as broad-based as possible.

5. Administration of the benefits need to be preceded by sound planning.

6. The wishes of the employees as expressed by thrie union

representatives and the bargaining power of the union need to be
considered.

7. Employees need to be educated to make use of the benefits.

SIGNIFICANT BENEFIT AND SERVICE PROGRAMMES

BENEFITS AND SERVICES

 TREATS – Free lunches, festival bashes, coffee breaks, picnics,

dinner with boss etc.

 KNICK-KNACKS – Desk accessories, company watches, tie-pin

brooches, diaries etc.

 AWARDS – Trophies, plaques, scrolls, letter of application,

certificates etc.

 OFFICE ENVIRONMENT – Redecoration, office with a window, piped

music etc.

 TOKENS – Movie tickets, vacation trips, early time-offs etc.

 ON THE JOB – More responsibility, job rotation, special assignments,

trainings etc.

 SOCIAL ACKNOWLEDEMENT – Informal recognition, friendly

greetings etc.
SOME OF THE MAJOR BENEFITS

PAYMENT FOR TIME NOT WORKED – companies provide payment for the
time not worked, both on- and off-the job. On the job free time includes
lunch period, rest period, coffee breaks. Of the job time includes vacations,
sick leaves, public holidays, personal and public holidays.

INSURANCE BENEFITS – organizations offer life and health insurance

programmers to their employees. Most organization offer insurance at a cost
far below what individual have to pay to buy insurance by themselves.

COMPENSATION BENEFITS – disability and workers compensation benefits

are also offered to employees. Employees contribute funds to assist workers
who are ill and injured and cannot work owing to occupational injury or
ailment. These benefits are regulated by the workmen’s act.

PENSION PLANS – most organization offers plans to provide supplementary

income to employees after they retire. These are either company paid or
joint employee-and company paid programmes meant to supplement social
security. The company also provide superannuation.

Organization are discovering newer ways of rewarding their employees.

Xerox for example, has instituted an annual achievement award, which
recognizes employee contribution to customer satisfaction, profits, process
improvement, or team spirit improvement through a citation and a cheque of
Rs 500 to each team member.

ADMINISTRATION OF BENEFITS AND SERVICES

Organization fumble while administrating employees benefits and services.
Yeilding to the pressure of union, employees, demand or in deference to
social response trends, companies have added newer benefits and services
to list, which are already lengthy.

PROBLEMS IN ADMINISTRATION

The main problem in indirect remuneration is the lack of employee

participation. Once the fringe benefits programmes are designed by the
company, employees have a little discreation. For example, the pension
usually is granted to all the workers.
Since employees have a little choice in their benefit packages, most workers
are unaware of the benefits to which they are entitled. The lack of knowledge
often causes the employee to request for more benefits to meet their needs.

 The steps taken in coming out of the such problems in an organization

are :

 Establishing Benefits Objectives.

 Assess Environmental Factors.

 Access Competitiveness.

 Communicate Benefits information.

 Control Benefits Cost and Evaluation.

ENVIRONMEN
T

ESTABLISHING BENEFITS OBJECTIVES.

It is essential for the management to establish objectives for its benefits
programmes. In establishing objectives, the management may consider
several factors. One such consideration is employee preference for benefits.
Typically benefits accomplish four objectives :

I. Forecasting external competitiveness

II. Increasing cost effectiveness

III. Meeting individual employee’ needs and preference

IV. Complying with legal compulsions

ASSESSING ENVIRONMENT

External as well as the internal factors influence indirect remuneration

programme. Among the external factors include such aspects as government
policies and regulations, unions, and economic factors. The major
government policies which influence employee benefits and services are
wage regulation, tax policies, and special benefit laws. In addition to the
government policies, union are a dominant force to improve benefits and
services.

Organizational strategies and objectives, employee preferences and

demographic constitute the internal environment of employee benefit and
services. The preferences and demographics of a particular employee in an
organization also effect indirect remuneration. Most employee benefits are
tax-free, and hence likely to appeal to employees with higher incomes.

ASSESSING COMPETITIVENESS

Most often than not, organization offer benefits to match or outstrip those
offered by competitors. Hoe to ascertain the competitors’ benefit packages ?
These are assessed through market surveys conducted by professional
association and consultants. These survey provide data on various benefits
offered, their coverage, eligibility, and costs. The data allow employers to
assess the competitiveness of their benefits and costs, with those offered by
others.

COMMUNICATING THE BENEFITS

Benefits are communicated through booklets, brochures, slides

presentations, and regular employee meetings. An effective method is the
employee calendar which communicate the total remuneration components.
Communication helps remove ignorance of employees about indirect
remuneration. Further, employees might be able to increase the productivity
and the advantage of good employee benefits by making employees aware
of what the company does for them, that does not appear on their payslips.

EVALUATION AND CONTROL

One way of assessing the usefulness of fringes is to ascertain how far the
advantages claimed in favor of indirect monetary schemes have really
benefited the employees. There are many questions relevant in this context
these are :

I. Have the earnings of the employee improved ?

II. Has the morale of the employees gone up ?

III. Have the benefits been able to attract and retain competent people ?

IV. Have industries relation improved ?

EFFECTS OF COSTS

Cost of fringe benefits is a reliable test of their effectiveness. Employee

benefit cost can be computed on the following lines :

I. Total cost of benefits annually for all the employees.

II. Cost per employee per year.

III. Percentage to annual payroll

IV. Cost per employee per hour.