Professional Documents
Culture Documents
Employee Benefits and Its Impacts On Business Perf
Employee Benefits and Its Impacts On Business Perf
1051/shsconf/202317003021
CDEMS 2023
Abstract. Despite increasing awareness of employee benefits, there are still relatively few studies that pro-
vide a thorough examination of how employee benefits affect various performance measures organizations.
This paper provides an overview of the definition and categories of employee benefits, important employee
benefits from the employee's perspective, and the influencing factors, then analyze reasons contributing to
the mismatch of employees' expectations and actual benefits offered and the impacts of benefits on four as-
pects of business performance, namely retention, engagement, commitment, motivation, and productivity.
This systemic and comprehensive understanding of employee benefits and their impacts on business per-
formance contribute to the managerial implication of human resource management to redesign the compen-
sation package to meet the expectations of the workforce and, in return, achieve desired performance.
m15264257168@163.com
© The Authors, published by EDP Sciences. This is an open access article distributed under the terms of the Creative Commons Attribution
License 4.0 (https://creativecommons.org/licenses/by/4.0/).
SHS Web of Conferences 170, 03021 (2023) https://doi.org/10.1051/shsconf/202317003021
CDEMS 2023
bonuses, and current profit-sharing payments and sugges- portant, to have an impact on productivity and work mo-
tion awards. tivation.
5. The cost of providing services to employees, such
as subsidizing cafeterias, adoption aid, recreation and
wellness programs, clothing allowances, daycare ser- 3. Understanding of Important
vices, financial counseling, transportation benefits, Employee Benefits from Employee's
and retirement planning advice. Perspective and the Influencing Factors
Employee benefits have been described as an essential
and sufficient working condition, according to Herzberg's Based on the Importance-satisfaction Model (I-S Model)
two-factor theory [9]. Though many components of em- (Fig.1.), it is crucial to understand the relationship between the
degree of importance and the satisfaction level. [11] Though
ployee benefits could be traditionally categorized under this model was originally used to study the perception of cus-
the hygiene factor, a group of recent studies found that tomers on the quality of company performance in relation to the
extrinsic factors (hygiene factor) can also affect job satis- quality attributes they believe are essential. The model can also
faction [10]. Therefore, employee benefits are not only be applied to discovering the perception of the importance of
essential to remove job dissatisfaction but, more im- different employee benefits from the employee's point of view.
In order to determine respondents' impressions of em- perks. The study conducted by Shtembari and Haxhinasto
ployee perks in general, a study draws on a case study [14] shows that flexible working time gained the highest
approach to examine the employee benefits provided by favorability in the post-pandemic period. In addition to
one hotel in Kuala Lumpur. [12] According to the re- the external or macro-level differences that result in dif-
search, employees believe that the most significant perks ferent benefits packages offered by employers, human
they look for when selecting a new position, as well as resource management strategy and policy of the individ-
the incentives that motivate staff the most in their every- ual firm and the general characteristics and profile of the
day tasks, are: "medical limit," "insurance coverage," workforce like age [15], life stage [16] gender [17], also
"festival cash advance," "yearly pay increases," and "an- contribute to the variety of benefits offering. Fringe bene-
nual leave." The concept of "training and development" fit coverage is predicted by institutional variables more
is also mentioned as a key motivator. The perceived im- so than by worker characteristics or the nature of the job.
portance of training and development can be explained The supply of fringe benefits is generally strongly and
using Maslow's Hierarchy of Needs. Employees are not consistently influenced by firm size, sectoral location,
only motivated by the physiological needs at the lower of and unionization. [18]
the hierarchy but seek self-actualization through im-
provement in knowledge and skills.
The most important employee benefits identified in 4. Reasons Contributing to Mismatch
the Richardson and Koay's study cannot always be gen- of Employees' Expectation and Actual
eralized to another context due to the differences in in- Benefit Offered
dustries and countries, which face divergent legislative
constraints and unions. The industries with the most to The differences in what employees expect and what they
offer include banking and insurance, manufacturing, and actually receive are the result of the mismatch of em-
public administration and governance. In contrast, retail, ployers' and employees' perceived importance of benefit
food, and accommodation sector workers generally re- packages. Unlike regular wages or salaries, employee
ceive significantly lower benefits. [13] Moreover, other benefits are generally less likely to be negotiated, and
external factors, like the changes in the general social employees sometimes lack information about the benefits
environment, also affect the perceived importance of offered. A study on employee benefits communication
2
SHS Web of Conferences 170, 03021 (2023) https://doi.org/10.1051/shsconf/202317003021
CDEMS 2023
based on media richness theory shows that staff are con- as employee retention, engagement, commitment, moti-
fused regarding benefit option features and face difficulty vation, and productivity.
searching for expected information through communica-
tion channels provided by companies and barriers to
5.1 Retention
compensability when dealing with complex information.
[19] Given that employee benefits are intended to be Employee turnover is costly in terms of expenses associ-
employed over an extended period of time, it is feasible ated with recruiting, selecting, and training. In markets
that views of procedural justice concerning employee with increasingly fierce competition, human resource
benefits may have a particularly significant impact on managers are facing more significant challenges in re-
long-term expectations of fair treatment by the business. taining top talent. When compared to counterparts in the
[20] Thus, to become more effective in delivering the same industry, the quantity and quality of employee ben-
benefit and enhancing employees' perception of the sys- efits negatively impacted the resignation rate, specifically
tem's fairness [21], organizations should make the infor- the amount of health-related employee benefits and the
mation more transparent and easily accessible. percentage of employee benefit expenses over the total
Since the expectations of benefits to be received by staff costs. [28]
employees are dynamic, if companies fail to identify the By analyzing the survey responses from 1228 employ-
evolutions and adjust the packages to fit the changes, ees in Japan, a study [29] indicated that the amount of
dissatisfaction in the workforce could result. One exam- employee benefits practices that have been implemented,
ple of a growing significant benefit is child-care support which are more objective and simpler for employers to
[22], partially explained by the greater awareness of early understand, was found to be necessary as a retention-
childhood development and the rising trend of working promoting factor. In comparison, job satisfaction as a
females in today's societies. Work-family benefits have a subjective factor affects retention by lowering withdraw-
favorable impact on employee attitudes like job satisfac- al thoughts. This study made a breakthrough in distin-
tion. [23] This finding can be explained by the social guishing the objective and subjective factors in examin-
exchange theory that companies and employees recipro- ing the influences of employee benefits on retention.
cate dedication and commitment and that family-friendly In the research carried out by Bryant and Allen [6], the
benefits are traded for cooperative attitudes and behav- relationship between pay and compensation and employ-
iors. [24] Another example demonstrating the evolution ee retention is further broken down into five aspects,
of workforce preference and expectation beyond the tra- including compensation structure, procedure, types of
ditional perks is employer-supported volunteering (ESV) compensation, perceived fairness and equity, and vesting
benefits. This practice includes offering benefits related schedules. The findings are aligned with the importance
to flextime and paid time off when workers are engaged of transparent and clear communication of the procedure
in volunteer services, which has been provided by Amer- and perceived fairness discussed in the reasons contrib-
ican Express, and Home Depot. [25] uting to the mismatch of employees' expectations and
Thus, taking into account the dynamic social, econom- actual benefits offered. Therefore, just providing the
ic, legislative, and other macro-level situations, it is im- amount and type of benefits expected by employees is
portant for companies to identify the trends in employees' insufficient to reduce the likelihood of staff turnover,
expectations of benefits and motivation and make the what is also important is the perceived justice and benefit
benefits system flexible. One essential step before im- distribution process.
plementing changes to employee benefits is to understand
the voice of the workforce, their opinions on the existing
programs, and their expected tweak or redesign of the 5.2 Engagement
system. More recent research has called for the personal- Engaged workers are powerful organizational strategic
ization of benefit programs in response to changes in
assets that bring companies competitive ad-
individual age, life events, skill development, history of vantages according to the resource-based view. [30]
applied leave, and relocation. [26] This study took a sig- Proper remuneration practices encourage employees to
nificant step forward to boost employee motivation and
work diligently and are a significant factor in employee
engagement with the personalized benefits program. engagement. [31] A number of other studies also prove
Nevertheless, whether companies should offer personali- that wages and perks raise employee engagement levels.
zation as suggested in this study depends on the available
[32] However, a contradicting result was found in the
resources, HRM strategy, and careful consideration of the research done by Asri and Liani [33] that compensation
trade-offs.
and benefits do not have a direct impact on employee
engagement. However, as this study was mainly targeted
5. Benefits of Employee Benefits on at the employees from a developer firm in Batam City,
Business Performance the result could be affected by the specific external fac-
tors in Batam City and the operation performance of the
The majority of studies done to date about employee company studied, resulting in the dismal opinion of the
benefits show positive impacts of these programs on perks. Therefore, when evaluating the effects of employ-
business performance, with some taking a more compre- ee benefits on workforce engagement, it is crucial to be
hensive understanding of business performance in gen- aware of the context of the business and society in gen-
eral [27] while others focus on specific perspectives such eral.
3
SHS Web of Conferences 170, 03021 (2023) https://doi.org/10.1051/shsconf/202317003021
CDEMS 2023
4
SHS Web of Conferences 170, 03021 (2023) https://doi.org/10.1051/shsconf/202317003021
CDEMS 2023
5
SHS Web of Conferences 170, 03021 (2023) https://doi.org/10.1051/shsconf/202317003021
CDEMS 2023