Fringe benefits are an important factor in employee productivity

In organizations of varying sizes and kinds, there has been a trend of increased importance of fringe benefits. This is nothing recent or event-driven, but is important nevertheless, because organizations need to make all efforts to keep good employees, who are easily their biggest asset. A fringe benefit may be understood as some kind of extra benefit offered to the employees, which is usually in addition to the pay. This is not always linked to performance, which is what makes it different from other perks.

Why would employees welcome fringe benefits from the organization?

What makes fringe benefits important is the fact that they are generally not taxable. More importantly, they target certain needs of the employees to whom they are paid, and help them address some important expenses. For instance, let us say an organization has an annual holiday for the family for meeting set targets.

Any employee would be motivated to push herself into achieving these targets for the reward of enjoying that much needed quality time with the family, away from the bustle of work and the pressures going with it. This is an example of why organizations are attaching increased importance of fringe benefits.

Why do companies need to understand the increased importance of fringe benefits?

Fringe benefits are generally, but not necessarily affordable for bigger companies. When organizations have greater number of employees, the economies of scale weigh in their favor. They can afford special benefits to employees on a larger scale, which makes it affordable and is usually very rewarding, too.

If the organization can take of say, the children’s education or health insurance, it is taking the load off the employee’s shoulder for a major expense. This is the kind of benefit that will make the employee happy and satisfied, a direct result of which is increased productivity at work. It is well known that happy employees are the more productive ones. This realization on the part of employers has resulted in increased importance of fringe benefits.

The other side…

Conversely, when smaller organizations are unable to pay fringe benefits in some or another form to their employees, they end up hiring mediocre or inexperienced workers. This has a spiral effect, because they find it difficult to hire and keep good talent, and to keep them, they have to spend on expenses that they cannot afford because of their size. Having a good fringe benefits program will result in improved fortunes for the company. This explains why there is increased importance of fringe benefits.



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