How Companies Compensate Their Employees – Part IV

This article discusses how organizations provide for their employees’ material needs: giving benefits and gifts, especially those that make life easier for the employee and his or her family members and increase available income. These activities are generally directed by the benefits staff.

[see part III]

Company benefits center around giving employees a variety of benefits and gifts and acquiring discounted services and products for them. This provides the worker two significant benefits: increasing available income and reducing some of the burden of day-to-day tasks, i.e. those related to home and family. Obviously coupons and gift certificates or discount tickets to plays help the employee afford other needs through the income that becomes available. At the same time holding a gift fair before a holiday season or providing dry-cleaning services at the company allows the employee to make better use of his free time, instead of running around to obtain various services.

Company benefits serve other needs as well. For instance, a discounted vacation package given to company employees as a group contributes to employee cohesion; a discounted lunch at a good restaurant contributes toward creating a pleasant work environment; and a foreign language course free of charge forms a part of the organization’s contribution toward the employee’s personal enrichment.

The benefits policy should be based on full equality for all employees, without drawing distinctions according to type of work or rank. Instead benefits should be awarded to individuals as people, and of course all people are equal.

Still, there are certain special circumstances that call for distinctions. In some cases the differentiation stems from the need to solve a management problem, e.g. companies with a high turnover rate that are trying to encourage employees to stay. At these companies, as explained below, the differences in the benefits the workers receive depend on their seniority, not their position. Thus a recently hired manager will receive a holiday gift of a lesser value than a worker with more seniority. A small number of organizations still adhere to the undesirable policy of linking benefits with job rank, which is likely to earn management personnel more substantial benefits than the rest of the staff.

As can be seen below in this article, benefits at various companies resemble one another in their general characteristics. One of the reasons for this is that the benefits personnel study the field, look into what takes place at other companies and organizations, do comparisons and formulate a policy and method that’s right for them. Among the tools at their disposal is professional forums for benefits managers, like the Forum for High-Tech Benefits Managers, which allow the various companies to exchange information.

Meanwhile the companies strive to renew and vary their benefits activities all the time. They are well aware that a highly developed benefits setup is an important ingredient in their organization’s appeal value. Therefore they are wary about initiating new activities that will wow the staff and could then come to be taken for granted. Furthermore the employees themselves compare their benefits to the conditions their friends have at other companies and the competition dictates changes on a regular basis.

A unique example of extensive activity in the field of benefits and gifts can be found at one of the major banks, where most of the activity is carried out by a joint benefits fund run by the bank management and the employees’ organization. The board of directors for the fund consists of five members of the workers’ organization and five members of the human resources department, and eight workers are employed to operate the fund. In order to pay for its operations the board of directors deducts 0.25% of each workers pay and provides matching funds. It also transfers to the fund another tens of millions of shekels and covers administration costs, including paying the fund’s workers. Below we’ll survey a series of typical benefits.

Holiday Gifts
Jewish holidays are an excellent opportunity for organizations to express their appreciation and fondness for their employees. Over the years organizations began to buy presents in bulk and distribute them to employees before holidays. During the past two decades companies have shown a preference for giving employees gift certificates, thereby allowing them to purchase products at various retail chains. At a large fashion chain gift certificates are given out twice a year, before Pesach and before Rosh Hashanah. The amount of the gift certificate is not uniform, but is based on seniority and not the job held. For example the current CEO, who has held the post for four years, will receive the same gift certificate a salesperson employed for a similar period receives. This policy once again emphasizes the importance the company attaches to reducing employee turnover – those who tie their fate to the company get preferential treatment.

A certain hotel chain that also experiences high employee turnover has adopted a similar approach: the amount and type of holiday gifts are determined by seniority in the job and at the company. New employees receive a travel bag for Rosh Hashanah while veteran employees receive gift certificates worth hundreds of shekels.

At a communications company the amount of the gift varies from one holiday to the next. For Pesach the gift certificates come to NIS 500 while for Rosh Hashanah the gift is NIS 200, but is unusually accompanied by a package of sweets. At a large high-tech company employees receive gift certificates for Rosh Hashanah and Pesach.

Some organizations do not give just gift certificates. For instance, at a consulting company with 200 employees, for Rosh Hashanah and Pesach workers receive gift certificates along with an individualized present. According to company managers, sometimes there’s more excitement over the present, though it’s worth less than the gift certificates, because it shows the thought that went into choosing it.

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Birthdays and Family Occasions
Benefits, by nature, are an expression of the organization’s attitude toward the employee as a person. This comes to the fore when various life events take place. A high-tech company, for instance, gives workers a present for family events, such as a wedding gift for an employee getting married (or marrying off a child), a monetary gift when a child or grandchild is born (working mothers receive an individualized present as well). On the employee’s birthday itself he receives a gift of his choice: a coupon for a breakfast for two or a movie and popcorn. Birthdays are acknowledged by an e-mail message and are noted on the human resources intranet portal so that co-workers can send birthday greetings by e-mail directly from the site. In 2007 gift providers were asked to offer a wider assortment, adding books and CDs to their gift selection.

A large insurance company gives presents worth NIS 500 for special occasions – bar/bat mitzvah, children’s wedding, births and birthdays.
Employees at a certain communications company enjoy a range of gifts, particularly to mark family occasions – birthdays, anniversaries, the birth of children or grandchildren and bar/bat mitzvahs. The company’s intranet site lists an assortment of presents and the employee chooses what he wants. Gift certificates for birthdays are valued at NIS 80, for bar/bat mitzvahs NIS 250.

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Discounted Services and Products
The desire to provide workers with benefits leads organizations to offer them a series of services designed to make their day-to-day life away from work easier. These services and products cost money, but the price is generally below market prices because they are purchased in bulk. Some of the services and products are offered at the workplace itself, saving both the employee and the organization time and energy.

A high-tech company, for instance, provides its workers laundry and dry-cleaning services, video rentals, an electronics store and film-processing services. Gift fairs are held in the company benefits gallery, located in the headquarters building). Before Purim a children’s costume fair is held in the gallery, where quality costumes are sold at affordable prices, and before Rosh Hashanah and Pesach household items, soaps, bedding, etc. are available for purchase.

The benefits fund at one bank focuses largely on reducing the costs of products and services for the staff. The fact that the bank has over 10,000 employees gives the fund considerable buying power, which it takes advantage of to obtain relatively low prices from suppliers. The fund also subsidizes the cost of the items. As a result the worker sometimes pays half the cost of the product or service purchased, or even as little as one-third.

Insurance and Loans
Another important service organizations offer their employees as part of their overall efforts to provide for their personal needs is a range of insurance policies, from car insurance to life insurance, with preferred terms. At a metal manufacturer all of the employees receive dental insurance and the factory in Yavneh even operates a dental clinic. Employees can opt to receive treatment at the onsite clinic or at a number of other clinics.

Company managers say it’s an important benefit since dental care can be prohibitively expensive, causing the worker to refrain from carrying out needed treatments. Therefore the company enables him to get coverage for his or her spouse and children.

A certain high-tech company offers every employee free health insurance and health insurance at special prices for family members. A policy is provided automatically to every new employee hired to the company; to cancel it he has to notify the payroll department.

Another type of activity that helps workers financially is providing loans with easy terms. A fashion chain, for instance, signed an agreement with one of the banks to make special loans available to its workers who need to borrow. The loan not only helps the workers, but also helps the management retain them: an employee with an outstanding loan knows if he quits he’ll have to pay back the full amount right away.

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Leisure and Enrichment Activities
One of the most prominent areas related to company benefits is leisure activities for employees and ways to enrich them educationally and experientially. These activities are constantly undergoing changes stemming from developments in the employees’ lives or evolving trends in Israel and abroad.

A communications company is assessing the staff’s current needs and benefits trends in the general public in an attempt to provide a good option. For instance, following increased public attention to the issue of health in recent years the company has initiated various activities such as lectures on health, diet programs, sports days, sports classes and periodic checkups.

In 2007 one company focused on family finances by sponsoring a series of meetings the employee’s spouse was invited to as well. At these gatherings the couples were instructed on how to properly manage the household budget. The company’s benefits department offers employees enrichment activities such as free lectures on various topics and relatively inexpensive classes. The company is able to reduce the costs in part because the price the suppliers offer is lower and also because the company subsidizes it significantly. This budget policy makes it possible to expand the range of benefits. The company’s benefits website also features discount tickets to performances, discount coupons for restaurants and stores, country club membership, etc.

The employee benefits fund at a bank subsidizes vacation and leisure activities as well as cultural and entertainment events, including activities specially arranged for the employees and their family members. For example, a performance in Caesarea closed to the public, outings at sporting and leisure facilities, and workshops and courses on a variety of topics such as cooking, arts and crafts and flower arrangement. Employees enjoy discount membership at country clubs, theaters, a film club, fitness rooms and swimming pools, and very low prices on summer camps for children of employees, comprehensive medical checkups, etc. In some cases members pay as little as one-third of regular membership fees.

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The Employee’s Family
An important aspect of company benefits relates to the connection with employee’s family. Some benefits departments make concerted efforts to strengthen it through various means and many managers hold establishing ties with the employee’s family helps him succeed and has a positive impact on his loyalty to the company.

At one high-tech company children of employees receive new book bags when they start first grade, a quality watch at the age of bar/bat mitzvah and a backpack and toiletries kit when they get inducted into the IDF. A hotel chain holds a party for children entering first grade.

At many companies children of employees take part in events surrounding Jewish holidays during their school break. At a communications company, for instance, a play with subsidized admission is available for children of employees ages 4-12 and during Hanukah an open house and happening is held at the plant for the families of the development staff.


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