Managers Eye Job Benefits

March 31, 1999

31 March 1999

Managers Eye Job Benefits

The following article is excerpted from "The Journal of Commerce" of 26 March 1999.

After the downsizing, rightsizing, takeovers, and layoffs of the 1980s and 1990s, companies looking to trim their margins still more may soon target those hardy workplace entitlements known as benefits.

Corporate benefits such as health insurance and retirement plans were originally instituted to entice workers to join and stay with a company. But in the future, companies may use benefits as perks for high performers — a sort of incentive program for meeting company goals.

A survey by Towers Perrin, a New York-based international management consulting firm, suggests that both managers and employees feel benefits should be tailored to better meet workers' needs.

But while most employees are satisfied with benefits overall, many managers want them tied more closely to meeting company goals.

Towers Perrin questioned managers and workers in seven countries: Brazil, Canada, France, Germany, the Netherlands, Britain and the United States. Its findings suggest the potential for change.

Why? For one, benefits are no longer a major reason people join or stay with a company.

Of the 850 managers and 3,750 employees interviewed, only 37% of managers and 38% of employees agreed benefits were a key reason people sign on or stay with a company..

Workers also tend not to realize that benefits are considered part of their salaries, and 57% underestimate the value of benefits as a percentage of pay. About two in 10 couldn't figure the value of their benefits at all while, 11% overestimated it. (In most of the countries, benefit costs ranged from about 20% to 40% of payroll costs).

The design of benefit programs hasn't kept pace with the changing needs of the work force. Pension plans reward longevity at a company — yet an increasingly mobile work force doesn't wait for the payoff.

Increasing demand for skilled workers, the survey argues, means companies must find better incentives to attract and retain them.

In some ways this may be good news for workers. Companies may begin to develop non-traditional benefit programs to recruit, retain and boost employee performance.

Workers in all seven countries noted gaps in training and development. Ninety percent said these were important concerns, while only 59% said current company programs met those needs.

Still, 70% of workers said they were satisfied with benefits over-all, and most don't want pay linked to performance.

The study found that the best program for encouraging employees to invest in company performance may be employee stock ownership. More than half of managers (53%) and 65% of employees agree a stock- ownership program could encourage employees to take more of a stake in a company's success.

Managers in the United States and Canada in particular said they would took for potential savings in fixed salaries, health and pension benefits, while allocating extra resources to training, development and better communication about the link between benefits and performance.

Still, the benefits system, like most entrenched entitlements, may be slower to change than Towers Perrin indicates.

Managers themselves aren't convinced that benefits make effective carrots. Indeed, fewer than half said benefits motivate employees to work better.

Similarly, about 40% of employees felt benefit programs already differentiate between top and average performers.


Topic(s): 
Canadian Economy & Politics
Information Source: 
Canadian News Channel
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