The Advantages & Disadvantages of Employee Benefits

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Employee benefits are incentives that businesses create in order to draw employees to the company and reward them for good performance. Some benefits are bonus plans that award employees that make the most sales or have the highest production rates. Others are stock option plans that allow employees to purchase company stock at a discount. Some award workers based on the overall success of the company or branch.

Motivation

  • The primary advantage to employee benefits is motivation. The best kinds of benefits are used to attract talented business leaders to the organization. These leaders then increase performance as whole. Bonuses based on performance also inspire increased sales. With awards for increasing efficiency or creating new solutions for business issues, companies can also encourage creativity and change throughout the organization.

Specificity

  • If the company wants a specific level of sales, it can structure a bonus plan so that it takes effect when that level is met or surpassed. Other benefits can award specific types of behavior to help mold a company culture and give employees an idea of what traits the business is looking for. This allows companies to target specific areas for change.

Employee Interaction Issues

  • Employee benefits can have a downside, especially when competition is involved. For instance, if bonuses are relegated to those with the highest sales -- a tactic used in some investment firms -- then each employee is in competition with the others. When a new employee enters the business and seeks guidance or training from another worker, that worker benefits financially by ignoring the new employee or even giving false information, leading to a poisonous business environment.

Disregard for Ulterior Factors

  • Employee benefit plans can struggle to focus on intangible factors in the business. Some plans attempt to promote employee wellness and emotional health in a general way, but no benefit plan can easily award employees for a positive attitude or for empathy offered to other employees. Benefits might not be able to award favorable traits such as the ability to work well in teams or even lead others.

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