Literature Review

Employee Benefits
These are programs an employer uses to supplement the cash compensation that employees receive, to
protect the employee and his or her family from financial risks. Benefits constitute an important part of the
remuneration package. They are an addition to other forms of cash payment like wages and salaries that are
intended to improve the quality of work life for employees and increase their cooperation and productivity
(Amah et al, 2013). Employee benefits is defined as any form of compensation provided by the organization
other than wages or salaries that are paid for in whole or in part by the employer. Employee benefits are
essential for the development of corporate industrial relations. Examples include retirement plans, child care,
elder care, hospitalization programs, social security, vacation and paid holidays (Christoph, 1996). The purpose
of employee benefits is to increase the economic security of staff members, and in doing so, improve worker
retention across the organization.
According to Amah et al (2013) Employee benefits are provided for a number of reasons which include:
– To reward and promote employee loyalty to the organization
– To discourage unionization
– To make the remuneration package attractive and competitive enough to both attract and retain competent
workers.
– To provide for employees personal welfare in line with the paternalistic belief that employees cannot
provide for their personal needs.
– To provide employees remuneration that is not heavily taxed (i.e. tax-efficient remuneration package) as
most benefits are not taxed.
– To provide employees with accumulated tax free investment returns (e.g. deferred compensation).
– To satisfy legal requirements (e.g. social security retirement system)
Types of Employee Benefits
 Pay for time not worked for (e.g. sick leave, vacation, maternity leave etc).
 Insurance benefits (e.g. job –related accidents and illness benefits).
 Retirement benefits (e.g. pensions, profit sharing plans)
 Employee service benefits (e.g. counseling, subsidized childcare, transport, meals etc).
Employee benefits can be mandatory and non-mandatory. Mandatory benefits are those required by law – e.g.
pensions, workers‟ compensation unemployment insurance. Non-mandatory benefits include tuition refund,
various discounts etc.
Managing Employee Benefits
Employees want to be convinced that their employers are interested and committed to their welfare
before they can bring out their all in the service of the employers and ensure the organization‟s success. Every
employee wants a caring organization; benefits can be source of competitive advantage. Organizations need to
have a clear benefit plan in line with achieving its strategies for success. Such a plan will include the
organization‟s specific objective for providing employee benefits. The objective should take into consideration
how to satisfy employees‟ needs as well as satisfy organizations objectives. The organization‟s objectives
generally include attracting competent employees, motivating, retaining, improving their morale, providing for
their health and security needs, increasing their satisfaction, improving their quality of work life, to be
competitive and improve the organization‟s image.
To achieve the stated objective management need to carefully consider what benefits might best suit
the organization, the acceptance of such benefits by the employees, the total cost involved, the amount available
for the provision of benefits and how the results will be evaluated. The benefit program or plan so developed
must be subject to modification to suit changing circumstances in the society. Effective communication is
necessary to inform the employee about the available benefits and how they can access them. The information
should be very clear; multiple channels of communication need to be used. The value of the benefits should be
communicated in a way the employees will appreciate them. Some organizations use a computerized benefits
statement to keep employees informed about their benefits. The data is also used by management for accurate
record keeping and cost- effectiveness.
To have a competitive benefit package an organization need to carry out a survey to know what is
available in other organizations, so that they use it as a basis and add or modify theirs to have an edge. The
survey could be done through the use of interviews, questionnaires or information from consultants. The nature
of an organization‟s work force affects its choice of benefits package. An organization with many single
employees may not have the same benefit package with another whose employees are mostly married people.
Single people will prefer more money while married people will want health care and disability leave, pension
and life insurance. The benefits adopted by an organization need to be acceptable to its employees for it to be effective in achieving its desired goals. To achieve these individual employees could be interviewed or the union
executive could be consulted before the introduction of new benefit package.

Benefits Cost Control.
Several steps are taken to curb excess expenditure on benefits. These include:
– The use of time-banks in terms of vacation. This ensures employees use only time they are entitled to use.
Proper arrangement is also made by employees for their absence so that the employers do not spend extra in
recruiting and even paying benefits to the temporary staff.
– Insurance benefit costs can be reduced by screening out accident-prove candidates during selection,
maintaining an accident-free incentives (i.e. keeping aside an amount as bonus for employees doing risky
jobs who do not have accidents at the end of the year), complying with government standards on safety and
health, and rehabilitation of injured employees.
– Health benefit cost can be reduced by changing the benefit plan, reducing the medical cost payments,
reimbursing less than 100% health expenses incurred by employees, increasing employee deductions,
pegging medical expenses the organization can pay annually, use of employee assistance programmes,
direct employees attention towards health promotion and preventive health care programmes and requiring
health/medical contributions from employees. Providing healthcare coverage through a local maintenance
organization. Providing „fitness‟ and „wellness‟ programmes.
– Pension costs can be reduced by the use of contributory funding in which both the employer and employee
are expected to contribute to the fund.
– Employee service benefit costs can be reduced by the use of the flexible or cafeteria plan in which the
employer sets the maximum amount available for each employee and the employee chooses benefits within
the amount.
– Some organizations increase their use of part-time employment as such employees often receive fewer
benefits.
– Carrying out detailed analysis of each benefit expense annually to ascertain their usage.
Employee benefits represent virtually any form of compensation other than direct wages and paid for in whole
or in part by the employer, even if provided by a third party (Marsh and Kleiner, 1998).Benefits vary and serve
different social and economic needs. Several benefits are required by law. Some of the benefits include
employer contributions to Social Security, Medicare, unemployment insurance and worker’s compensation
insurance (Marsh and Kleiner, 1998). Mondy and Noe (2002) agree that, 9% from the amount of the benefits are
legally required by the law. Benefits that are to be given to the employees as provided for by law are for the
security of the employees in their future life when they are no longer in the employment.
Jackson and Mathis (2004) mentioned that employee benefits such as health insurance, vacation pay or
retirement pension are the important indirect financial rewards. The benefits given by the employer are not only
a mechanism to improve the employees’ performance, but it also helps to attract applicants in the recruitment
process. Amah et al., (2013) mentioned in their benefit research that piece rates, commissions, tips, bonuses,
stock options and others, offered by employers, including health, life and dental insurance, retirement plans,
maternity leave or child care provision could give a big impact towards the performance and commitment of the
employees. They also add that offering fringe benefits may promote greater work effort from the employees.
Benefits have always been seen as an employee reward and it can create a sense of ongoing employer
appreciation. Benefits, however, are not just to serve the employee but also benefit the management in a long
term (Amah, 2010). Few individual employers see the need to address issues related to employee
benefits.Positive feelings created by good benefits may help to change workers to be more hard working. This
will eventually result in low turnover, and increase the employees‟ performance.
According to Amah et al., (2013), there are three objectives of benefit programmes. The first is to meet the
lowest physical and psychological demands of employees so that they could fully engage themselves in work.
The second is to compete with other corporations at an equal level. When similar employee benefits are adopted
by competitors, it is necessary to offer the same level of benefit programme in order to maintain
competitiveness. The third objective is to provide social and welfare services. Amah (2010) agreed that
employees want to receive more than just a salary from their job. Other than the pay received, employee expect
other rewards for coming to work. The extra rewards given could motivate and encourage them to perform their
best. Amah (2010) believes that loyalty of the employees can be sustained when they get more than just a salary.
Everyone works with an expectation of some rewards. Employee benefits are essential for the
development of corporate industrial relations. According to Amah et al., (2013), the hygiene factor (salary,
working condition etc) will affect the employees’ work-motivation and thus productivity and their organization
performance.

Benefits and Employee Performance 

The impact of benefits on employee performance depends on the existing compensation and
performance management package in the organization. Employees respond to increase in pay and benefits with
a positive and productive attitude. Several studies have indicated that employee benefits are related to
organizational performance.SoonYew et al., (2008) findings suggested that both mandatory and fringe benefits
were having significant and positive relationship with employee commitment and organizational performance.
Fringe benefits had higher relationship as compared to mandatory benefits. This finding proposed that when
employees received more fringe benefits, their commitment to the organization tend to be higher.
Committed employees tend to be more productive and contribute to the organizational performance
(Cascio, 2003). Benefits improve business profits, increase employee responsibility, results in equitable
treatment of employees and enhance their quality of work life. Compensation and benefits have been identified
as the glue that holds many employees in place in their organizations (Odunlade, 2012).Sahoo and Mishra,
(2012) suggest that employee benefits can be a source of competitive advantage. Employee benefits motivate
their important decision when it comes to job delivery and performance (Cascio, 2003). High employee
performance followed by high monetary reward will make future high performance more likely (Odunlade,
2012).
In a study conducted by Ekere, (2013) he reported that the monthly take home package for private
health sector workers in Port Harcourt, Nigeria appears very poor and the availability of benefits was
outrageously low. A very high number of workers in this section, including health care professionals earn less
than an equivalent of a thousand United States Dollars monthly, which is insulting and not a survival income in
the very expensive economic, in lieu of the city.
Although jobs were challenging, providing learning opportunities, stress level was high and majority of
the employees were not too satisfied with their jobs. He also found that there appear to be a high turnover
employment wise, in the city as most of the workers have been in employment for 5 years and below. Employee
friendly benefits help employees to be committed to their organizations and also put in their best which leads to
better organizational performance. In the health sector, patients are better off when attended to by satisfied and
happy staffs that are happy with their jobs. Money motivates behavior when it rewards people in relation to their
performance and when it is perceived to be fair, equitable and providing rewards that the employee truly value
(Bernadine 2007)

III. Conclusion

From the available materials reviewed one can conclude that a lot need to be done in terms providing
the needed benefit that can make employees in the private health sector to be satisfied and put in their bestfor
organization to perform well and be at their best. Pay is low, benefits are scares and there is high level of stress
in the sector.

Recommendations

There is the need for the management of private health establishments to increase salaries of medical/
allied professionals in the sector. There is need to introduce benefits were they are not existing and to review the
benefits available where they are found to make them more appealing to motivate the employee to improve on
their performance. Employees‟ opinion should be sought when reviewing the benefits so that only what is
valuable to the employees are introduced. There is also need to communicate the available benefits to the
employees so that they can be aware and appreciate the organization by working harder to make the
organization perform better.

References

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[2]. Amah, E; Nwuche, C and Chukwuigwe, N. Effective Reward and Incentive Scheme for Effective Organizations. Research Journal
of Finance and Accounting. Vol.4 No. 13, 2013. Pg 73-79
[3]. Armstrong, M., &Murlis, H. (2007). Reward management. London: KoganPage Ltd.
[4]. Bernadine, H. J. (2007) Human Resource Management: An Exponential Approach. 4th ed. NJ: McGraw Hill Irwin.
[5]. Cascio, W. F (2003) Managing Human Resource:Productivity,Quality of Worklife, Profits. 6th ed. NY McGraw Hill Higher
Education.
[6]. Christoph, L. L. (1996). The effects of fringe benefits on organizational commitment with the
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[8]. Ekere, A. U (2013) Staff benefits and job satisfaction in private medical practice. The Port
Harcourt, Nigeria experience. A Project submitted to the NOUN for the award of CEMBA.
[9]. Jackson, J. H. and Mathis, R. L (2004) Human Resource Management 10th ed. Mason Ohio.
Thomson/ SouthWestern.
[10]. Marsh, B. and Kleiner, B. H (1998) “ An Overview of Trends in Employee Benefits
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[13]. Sahoo, C. K,and Mishra, S. (2012) Performance management benefits organizations and their
employees. Human Resource Management Digest. Vol. 20, Issue 6, pp 3–5.
[14]. SoonYew, Ju. (2008) “The influence of employee benefits towards organizational commitment”. Asian Social Science Journal. Vol.
4, no. 8
[15]. www.compensationresources.com/fag/impact-of-compensation-and-benefits-on-employeeperfomance-php.
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