MANAGING HUMAN CAPITAL: Employee Benefits and Motivation

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Today's highly competitive labor markets require those responsible for human resources area organizations to make and develop the tools to help with the motivation and retention of qualified employees.  Which is an important factor for employees and is commonly called PERSONAL BENEFITS.

In times where the role of the human resources department of a company is taking vital importance, and is beginning to be recognized as a pillar of development of an organization, it is important to analyze a performance aspect of it.  The subject matter may represent a fundamental factor in the assessment made by those working as employees (or want to) to stay in a particular organization or to accept a proposal over another.  No longer enough to offer competitive salaries, but must "seduce" current employees (or future) with other elements.  Two of them (but not limited to) what are the known benefits and compensation to staff.

It is very important to highlight the impossibility of analyzing the entire staff benefits and compensation that may exist in enterprises today, especially considering that the opportunities to develop and implement new wages may be almost infinite, with the last restrict imagination and creativity of those responsible for creating tools how are you.  This factor also will be closely tied to the subjective differences of people in all times and in each company, with the current economic situation, the world and the area where the activities are, among other variables.

An important factor to analyze in this study is whether the benefits granted to staff contribute to employee motivation, this approach stems from the interest of determining the economic or psychological, which can contribute to the perception of a company as the optimal place for work.  As a deduction can be said that no one perceives his job as the ideal, from the moment we think that the demands required by each to feel comfortable changing to an irregular rhythm, subjective and disproportionate to the potential for the company to meet expectations of its employees during a time span long and continuous in time.   

Likewise, they analyze why employees do not value the benefits that employers offer them, because from my point of view I fully agree that the benefits is a fundamental and important in any organization.





Moving on is what the topic, the following is the topic which is based on the following assignment.

"If Employees undervalue the cost of Benefits, Why Should the company drop Benefits and Not Simply add more direct compensation."  Do you Agree or disagree with this statement? Relevant Organizational Explain using examples.

Not only should discuss benefits and compensation as such, it is also important to understand the concept of business before the beginning of this work, since many factors are involved in it, in addition, each organization has its own objectives.

2.1. What is a company

An organization is a group of people which are a set of activities using a variety of resources such as: material, human, financial and technological, in order to achieve a common goal, to satisfy their respective goals set by the organization, which can be profitable or not supported by mutual commitments between people that shape it.


2.2. Benefits definition

Is to satisfy the employee, which aims to achieve income security and organizational wage to feel professionally satisfied.  It is understood by both staff employee base as professional managers.  All together they aim primarily a private benefit arising from the performance of work. 

With this, it can analyze the second condition of survival is for this reason, proper remuneration and the possibility of development of labor.

On the Other Hand John Bratton as the author refers to employee benefits as part of total reward package, which pay for time worked for employees in whole or in part by the payment of the organization (health care, dental pension).

Nowadays, the list of benefits is almost endless. They are of all costs, so that fit the size of the company.

2.2.1. Types of Employer Provided Employee Benefits

Performance Bonus

Profit Sharing

Seniority Bonus

SARs / Stock Options

Health Plan


Holiday Bonus

Mobility costs

Dining hall

Nursery school

Summer and winter colony for employees' children

Pension Plan

Discounts on products themselves

Education - language, and university graduate

Corporate Life Insurance

Disability Insurance

Auto Allocation

ATM banking plan and bonus package

Scholarship programs for children

Grant and wedding gifts

Birth gifts

Employee Assistance Program (EAP)

International flights Rebate

Friday shorts

Free days

Employee Service Centers

Calendar of events

Summer jobs for children

Hazard Pay

Health Care

Maternity, Paternity, and Adoption Leave

Paid Holidays

Pay Raise

Severance Pay

Sick Leave


Vacation Leave

Work Breaks and Meal Breaks

2.3. Compensation

2.3.1. What is compensation?


The word can be broken off as anything that people are getting for their work, which is a very important part (salaries, incentives if any, travel allowances and benefits in kind and cash) benefits (room service, private retirement plans, etc..) and incentives (prizes, bonuses, etc..), so a very important part of compensation is that I can limit the personal satisfaction obtained, directly, with doing their work and the conditions around them.


Additionally it, the companies make the compensation system in terms of cost / benefit, therefore they expect a result of investment by the employee.

In the system of rewards and punishments include incentives, therefore this is the objective of addressing the people working in the organization.  Another important point is that management creates the need to create a system of rewards and punishments to encourage employees to perform essentials tasks of the organization, also to reduce behaviors and attitudes that can be harmful to the smooth conduct of its business.

In my opinion people are always looking to do those things that are to be rewarded and put aside the punishment that will generate.  For this reason these arguments are sometimes forgotten, therefore much of the work situations without reward.


"The lack of reward and punishment at work is a psychological situation worse than the routine work, its effect is boredom, common situation today in many companies." (Calloway, pp. 119 and 120)




Set out below are some advantages from the benefits, both for the organization and the employees and also extend to the community.


For the organization


raises morale

reduce turnover and absenteeism

increases employee loyalty

increases employee wellness

facilitates employee recruitment and retention

increases productivity and reduces labor cost per unit

shows the guidelines and purposes of the company to employees

reduce discomfort and complaints

promoting community public relations


For employees


non-monetary advantages

provides assistance for personal problems

increases job satisfaction

contributes to personal development and individual welfare

offers ways to improve employee relations

reduce feelings of insecurity

offers additional opportunities to ensure social status

provides extra compensation

improving relations with the company

reducing sources of dissatisfaction


3.1. Disadvantages of employee benefits

In the UK people can perceive a costly tax rate, but there are no financial income to support the benefits.  For example, the pension system depends on the payment of National Insurance Contributions, and according to the regimes wages are reduced benefits, most notably in the state second pension.




Cut benefits granted to employees once given the benefit, removing it is to some extent seen as a kind of violation of a psychological contract you have with the worker ..

Without profit companies lose their ability to grow and develop, and that as an organization must compete with other companies that sell products or services similars. If a company has no profit so managers have good will is not productive, as employees are not satisfied with what they get from their employer s, therefore they have to manage organizational resources, both available and obtainable , is essential for achieving employee satisfaction, and therefore the most important thing is to try by all means to achieve an optimal balance between them.

From another point of view according to Peter Cappelli is the George W. Taylor Professor of Management at The Wharton School and Director of Wharton's Center for Human Resources announces: "The actual difficult economic situation could trigger another round of cuts in benefits. "The boards were leaving because they believed that some benefits did not contribute to the good image of the company," but now the question is whether these practices are important for the recruitment and retention".

Particularly if you think it will take off some benefits to employees is important to explain the reason and can help in some cases if the reason is due to factors outside the company.

In addition by Sigal Barsade , Wharton management professor says "I do not recommend the withdrawal of benefits, but if there was no other exit, management must remember that when you remove something to someone, the impression left is of injustice" she says, noting that, as a rule, the employee believes that even a small benefit is something that it "owns. "Removal is one of the most objective of provoking his anger, which, in turn, results in low motivation and behavior of revenge. The retaliation can take a psychological form, for example, less commitment to work or behavior: working with less effort. "If the management decides to withdraw any benefits, you should try to explain very clearly why he did it - so that the worker considers fair decision," says Barsade.

Another reason why companies did not want to eliminate the benefits because they do not want to lose their place in the list of best companies to work, but in my opinion not enough benefits for a company to succeed, such is Google's case, as the company reduced some benefits and yet was considered by Fortune magazine as the best company to work.

As a last observation we have anybody on the planet know what is beneficial or free is always welcome, even if not used.



Companies have a reason to be "Being Successful", be profitable, which is why they have a mission and vision, but more importantly they have the processes and retain capable and motivated people to meet the challenges proposed ; at this stage is where the management of Human Resources must work, as must have programs and performance evaluation processes organized in compensation and benefits programs.  From an objective point of view these plans must be clear and known by all people working in the company.  This an important factor to analyze, because if not communicated in a clear, people will not appreciate the benefits afforded them by the employer, and as observed in the different sources of information, employees regarding the type of information they prefer communication via email, but there is also a majority who prefer the group meeting, confirming by this that people are not inclined to individual meetings.   With the above we can see that the actions of motivation are effectively infinite, the most important thing is to understand the employee, constantly inform, encourage their innate abilities, assess, and that the area of Human Resources addresses the needs of growth and finally make you feel like a partner as the company goes forward.


The goal of the compensation and benefits programs is to encourage high performance and is the desired behavior.    Therefore the compensation program provides great benefits such as the work environment and staff welfare. 

On the Other Hand, brings significant hidden costs such as dissatisfaction, for the unfair treatment when they feel the worker identifies the relationship between the results achieved in their work, with the compensation they receive.  Salary is an important part of people, because it amounts to an income that increases the welfare and standard of living of the family and the employee.


5.1. What is it that workers value? 


The monetary aspect is not the only objective, they also are motivated by professional, friendly work environment, perform in a position commensurate with their vocation, the good relationship with your co-workers, flexibility of schedule and communication with managers.  An act for which employees are unmotivated and do not value the benefits referred to lack of feedback or feeling neglected by their bosses.   Obviously everyone needs to feel as a business asset, so for this to happen, it is important to keep staff informed of day to day business, make an identification with the company, generating a positive feedback and trainer, having a boss nice to have time to listen.  Consequently, these models produce a wonderful result in people.


Another important factor of the compensation are the working conditions in which they work and work environment, sometimes it thinks the company should have a good climate for employees to feel comfortable, but this is wrong, because when it comes to work environment relates to what extent the company has the conditions to maximize the performance potential of individuals, the extent to which the company promotes the commitment of employee satisfaction in the workplace, and to what extent the company has management principles fair and equitable.  This is a great benefit that motivates staff and that not all companies offer it.


For another thing the salary level is important, because that level of payment is primarily what we can attract, retain and motivate staff required by the company.


Likewise it should be noted that a person does not value the benefits it gives the company, as productivity bonuses for achieving productivity levels are not high enough, the failure of sales quotas or when people meet performance levels previously negotiated .  However unlike the salaries that reward demonstrated performance, the company can use incentives to encourage staff interest in achieving better results from their personal future, and creating distinctive features desired by the employer in the culture of your company.  Finally the most important is that incentives and benefits that the company designs, performances and encourage desired behaviors in the company.




(Example 1) as reported by the Bureau of Labor Statistics, states that the costs of employee benefits represent approximately 30% of the amount of work on total compensation. Yet this significant outlay often gets overlooked, or undervalued, by employees.  According to statistics from Metlife 28% of respondents thought that their full time employers pay less than $ 1,000 per employee per year in health insurance and almost half the 49% was paid less than $ 2,000.This perception significantly underestimates the actual contribution made by an employer. ( )


(Example 2) A partnership formed by two people has two employees - one familiar and one not and has an annual payroll of $ 15,000. The Company may elect to purchase coverage under the law and to extend such coverage to both employees. The company's partners are not protected because they are considered employers. ( .)


(Example 3) Coca Cola

Coca Cola compares the social benefits it offers and which are as varied as the drinks they make, because others will encourage and provide a sense of tranquility, which will be beneficial to health, in the present and future .  The package of these depend on the employee's position.  It also offers learning opportunities with The Coca Cola Virtual University University:

"An instructor in different areas in the classrooms, which include team leadership, Bottler System, Marketing and commercial

On-line learning to share key insights.

Seminars to help generate new ideas and implement them in practice;

Training and development for the development of critical skills;

To support learning at work have an extensive online library of books and other resources".

(, workouts - benefits.aspx ).


(Example 4) Sebastian Moroni Compensation and Benefits manager of the multinational SC Johnson & Son, said the example: "In the past 24 months were not performed in the company turnover, managers and directors who receive Total Compensation Statement, achieving greater knowledge and understanding of the compensation package, a comprehensive marketing and HR actions could continue with efforts to bring people together. "  Thus we can see that the members of an organization they wish to be apprised of things, so what to do. ( www.human /).


(Example 5) The firm Watson Wyatt in Argentina, says the director of compensation to be analyzed the compensation of executives and the company's goal as a reward strategy.  The strategic rewards ranging from salary and variable compensation but hiring a retirement insurance, car loan or pay master. ( )


(Example 6) Alberto Fastman Argentina president of Hewitt Associates presented as an example that there are benefits for certain levels and not others, as the car, which is given only for top jobs. Additionally, an example of common benefits in Argentina is only for the highest level, called pension plans, but this has changed and the trend is to grant this benefit to the entire organization, which is based on a supplementary pension to the officer, so both the company and the employee contribute. Another to higher levels is called stock options, "A company gives a person the opportunity to buy shares at a certain value and if the stock price increases and the person applies for option makes a difference. So if people work longer, is more productive and enthusiastic, the company is going to be better people and also because their shares increase. ( )

(Example 7) In Bayer, the benefits are not awarded based on job level, but evaluates the needs arising from staff and only then are defined: firstly have health benefits, annual medical examinations.  They also have subsidized day care and life insurance for children up to 4 years and the management level has the pension plan. Likewise bayer have the club for the integration of families. ( )

(Example 8) IBM provides equal benefits for all employees. These include the pension plan, life insurance, medical coverage and purchase of shares at a lower cost than in the market.  Adherence to this plan is 65%, while 60% contribute to the pension.  This purchase of shares to employees generates a sense of belonging.  Getting that every time the employee is aware of the company and the value of the action. ( )


(Example 9) Google offered the benefit of day care three years ago, then opened a year later, another more sophisticated, but ultimately the company realized that each child enrolled in the program cost them $ 37,000 a year compared to 12,000 on average paid by other companies in Silicon Valley, and instead to cut costs drastically increased prices and they prefered closing the center less expensive, and what you saw was that it excluded people from lower echelons. The price of childcare increased from $ 1,425 to $ 2,500 per month for one child, while the annual service charge for two children went from 33,000 to $ 57,000.  So Google has been criticized, saying it was a rare mistake with the changes in the daycare .. ( )


(Example 10) In General Electric presented as an example the ex-CEO Jack Welch, which was granted as a benefit extended to retirement, an apartment valued at 80,000 dollars per month and preferred seating for all games of the Knicks New York.  Likewise Dennis Kozlowski, former Tyco CEO, also received a flat $ 2.5 million in the Trump Tower in New York and other benefits. Even Warren Buffet perceived benefits.


(Example 11) Bonus pay (long term incentive plan)

This case is about bonus pay, long term incentive plan s, which is related with Royal Bank of Scotland boss Stephen Hester Has Been Awarded an extra bonus shares worth up to £ 4.5 million. The award made under the bank's long term incentive plan is on top of a £ 2 million annual bonus Already Confirmed by the group and Mr Hester's £ 1.2 million salary.  RBS Said Mr Hester's £ 4.5 million award is deferred shares and Would Until 2014 BE Award in full only if I met Financial performance targets related to shareholder returns, profit and Risk.  (Metro Newspaper, Wednesday, March 9, 2011)

(Example 12) health coverage " Nike "

Part-Time Employees Who Work Between 20 and 30 hours per week Qualify for Health Coverage dog the first day of the calendar year Following a year of employment screening.  There Are Benefits avalaible extra for Employees, for example employee discounts at stores, gifts program for charitable donations, scholarships for Children and employee discounts on auto and Homeowners insurance. (Http:// / 22/companies-that-give-benefits-to-part-timers/)

 (Example 13) health care, retirement plans " Lands' End "

"Additionally it to health care and retirement plans, merchandise discounts and Paid time off, Lands' End Offers access to STI Employees at company-owned recreation center, discount tickets to theme parks and movie theaters in, and an invitation to the annual company picnic. Bonus: UW-Platteville students get to take Advantage of a complementary busing system to help Them get to the company's Dodgeville facility. " ( )

(Example 14)

As short-term benefit gives the example of expatriate employees, in which companies offered a home to live, that is leased from independent third parties. This benefit is effective during the period in which the employees render the service concerned. .

( benefits.pdf)


(Example 15) if it is not short-term benefits to employees

It's the same case of short-term benefit, however, sometimes employees do not use sick leave as employees accrue more than 10 days without using the same, therefore remain in force for three years. This license is not expected to be taken in full during the twelve months of time worked. ( benefits.pdf)



(Example 16)

A plan of profit sharing states that if an employee has served for five years at a company, it must pay a portion of their earnings for five years.  This benefit is not due in full at twelve months of service and the same should be counted as long term. ( Benefits . pdf)


Example 17)    

Delph Company has a flexible compensation appropriate.  The company concluded that time gives the prize package to employees, for example if an employee needs health care Benefits, but do not need in this case spouse coverage, then gives the other party in dollars. (www.


(Example 18) Tax-deferred

Benefits are not taxed when they are received but later the same deduction.  For example the contributions made by the employer to its employee pension plan can not be passive when it does, but then be taxed. More than one IRC section May Apply to the Same Benefit. For example, education up to $ 5.250 Expenses May Be Excluded from tax under IRC 127. Amounts Exceeding $ 5.250 May beexcluded from tax under IRC 132. ( / pub / irs-tects / fringe_benefit_fslg.pdf )


(Example 19) A dvance Are included in Income

When progress is not included in the income of employees and the company provides such a fuel subsidy.  This benefit is offered by several companies to their employees (Bayer CropScience) and to be moved from one place to another.

Example: A small state agency pays a monthly mileage allowance of $ 200 to Certain Employees.The agency does the Employees Not Required to substantiate Their Expenses or Excess return and Stock. The mileage allowance Does Not Meet the rules for an accountable plan and is a nonaccountable THEREFORE plan. The $ 200 taxable Are Allowances to the Employees When Wages Paid to Them, THEREFORE, withholing Should Be done for social security, Medicare and income taxes. The employer must match the social security and Medicare Contributions. The Employer May Be Able to take on Deductions for Their Expenses These individual tax returns. ( / pub / irs-tects / fringe_benefit_fslg.pdf )



(Example 20) Incapacity Benefits

This is a case of a jobseeker has been told does not have to work because she is allergic to rubber and latex, and she could experience a possibly fatal anaphylactic shock if esposed to so much rubber. The 52 year old's claim top put on incapacity benefit was backed by judges in London. She added in 2001 she worked in a place with all elastic around, and half later she broke out in a rash. For that reason she aplied three years ago for incapacity benefits but job centre staff told her to leave jobseekers allowance, then she was granted it by a tribunal but the Department of work and pensions challenged the ruling at the Court of Appeal, arguing her allergy was common and the decision could open the floodgates to claims from other insignificant allergies. (Newspaper Metro, Thursday, March 31, 2011).


(Example 21)    Benefit nontaxable de minimis meal

A commuter ferry Fails presents engineers and some that are needed to repair machine, for reason that are they need to work overtime.  After 8 hours they are taking a break for dinner and they will continue working for an additional 3 hours.   Therefore the supervisor gives each employee $ 10 for a meal.  Then the mealis not taxable to engineers, for the benefit of the food was given for the extra time to allow who worked to end the routine work .. ( / pub / irs-tects / fringe_benefit_fslg.pdf .)


(Example 22)   de minimis meal Taxable Benefits


In some companies the employer has a policy of giving its employees breakfast or dinner if they must work an extra hour before or after regular hours.  After the payment is subject to tax because the employer indicates that the payment is done periodically, in addition to be the disbursement of food, not allowed to work overtime, but it is an incentive to do so. ( / pub / irs-tects / fringe_benefit_fslg.pdf ).


(Example 23) Retirenent Funds

Regarding retirement plans, the employer through matching employee retirement and 401K Plans help employees save money for your retirement. The plan Mentioned helps to provide employee with extra money to for Every Dollar that he saves in the retirement plan.  For example, "if the employee saves $ 100 in her savings plan, the employer will match her percentage of that amount. Business offer some employees to 100 percent on the savings match. ( # ixzz1JiXkkSPV)

(Example 24) Social Functions

An example about social functions representative are outings and company holiday parties, fund due that they have these benefits improve employee morale, and promote a team atmosphere as well. ( # ixzz1JiZDY5Nc )


(Example 25) Education Reimbursement

A typical example is Eichmann that can be when some companies pays for part or all of an employee's education.  Sometimes requires that company's employee something related to study with the business, and in some cases both contests to work for the company for a specific time employee after finish the degree. In Some businesses, an employee with education reimbursement Entire plans can pay all cost of an education. ( # ixzz1JiZlcoZe )


(Example 26) Paid Time Off

This type of benefit is valuable for employees, because It can include sick leave, vacations, breaks and holidays paid.  For example the employer offers paid time off to their employees as reward for loyalty and service.  Some companies increase amount of sick time paid vacation and the long an employee works for the business.  And is commun well as when to a long term employee earn significant dog amount of vacation time in a year with these methods.  Another incentive to work When business is for those some companies offer more holiday companies others leave that dog offers. # ixzz1JiaE6vmP

(Example 27) Clothig

Overalls and protective helmets or shoes, are included in work and safety clothes which are provided by the employer, are not liable to tax. Nevertheless, any normal clothes provided by the employer is taxable. (


(Example 28) 

Each employee is entitled to be absent five days a year short illness, and the rights that were not used can be enjoyed and taken for the following year. Therefore this is called sick leave for that reason the paid absence must be requested within twelve months .. ( Benefits . pdf)


(Example 29) 

A plan provides for profit sharing that the company should give a portion of its net profit for the period to employees who work and provide service throughout the year, ie the corresponding twelve months of service.

( benefits.pdf)


(Example 30) Starbucks

In addition to all the benefits package offered starbucks Such as retirement package, medical insurance, stock options, each member belonging to the company and work 20 hours or more a week in seattle, benefit received as a pound of free coffee each week .

(Example 31) JP Morgan Chase

"At JP Morgan Chase part-time employees working at least 20 hours per week are qualified for most benefits after 90 days of service. Helps contain vision, retirement, medical, dental, and stock purchase plans plus paid time off, adoptions assistance, tuition, and various banking-related options like checking account and credit card perks".

(Example 32)     

Davidson Technologies, despite the recession has kept the benefits to their employees.  The benefits given this 10% profit sharing and fully paid medical coverage for dependents also.  The company understands that medical expenses has been a success and that increased productivity is reflected in the employees' happiness and well compensated. ( out-there-really-care.html)


(Example 33)     

The Graham Company created a plan for its employees and the company have in common savings.  The reason why is because employees save graham funds the deductible Entire Coverage Through STI and family savings. ( )


(Example 34) Short term benefits for employees


a) Salaries, wages and social security contributions.

b) Equity in profits and bonuses payable within twelve months following the end of the period in which the employees render the related service, and

c) Short term compensated absences (such as rights to paid annual leave or paid sick leave), when expected to occur within twelve months following the end of the period in which the employees render the services ;

d) non-monetary benefits to current employees (such as medical care, housing, cars and delivery of goods and services free or subsidized). ( )


(Example 35) 


A company offers an accounting system that requires employees to tell their employees to return any excess mileage and mapping.  The excess is the salary to employees who did not return and is subject to income withholding, Medicare and social security.  So retention is required no later than the first payroll period following the end of the RPT. ( / pub / irs-tects / fringe_benefit_fslg.pdf ).