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August 18, 2020

Impact of benefits


August 18, 2020

Every entrepreneur aspires to achieve optimum productivity in his/her organization both in terms of manufacturing and employee output. S/he will be delighted and willing to invest more money into his business if there is reasonable hope that he will meet these goals.

In this respect, employees play a critical role in boosting the output through their skills, dedication and loyalty to the enterprise. Trust and loyalty come when employees are well taken care of by their employer.

Those who are superannuated also feel satisfied when they know that they may not have to look for supplementary income if the terminal benefits to be received from their employer will be sufficient to fulfil their monetary needs after retirement.

The bulk of an employee’s compensation package comprises their salary, which is also the yardstick of his position in the organization. Nevertheless, the perquisites are of no less importance as they tend to save the employees expenses from his salary.

Usually an organization is divided into two categories: management and non-management employees. The management staff are governed by their own terms of employment contained in the letter of appointment and company policies. The non-management staff are administered both by the appointment letter and the labour laws. In case the Industrial Relations Act is applicable to the organization, it will also have a labour union, by virtue of which the non-management employees will also be called as the unionized staff.

What impact the employee welfare laws have on the enterprise’s productivity and performance, is discussed here in the context of unionized staff. Besides the salary, benefits and facilities may be voluntarily provided to their employees by progressive employers as a social responsibility.

On the other hand, the government may compel employers in general through the labour laws to contribute towards certain benefits. The most prominent statutory benefits comprise provision of healthcare under the social security scheme, old age pension, share in company’s profit, educational assistance for children and the grant of all types of leave including the maternity leave etc.

In addition, the employer may concede more benefits through the collective labour agreement (CLA) reached with the collective bargaining agent (CBA) union. Whatever benefits and facilities are provided to employees should be calculated and evaluated properly and their financing should be established on a sound basis. When required, appropriate changes may also be made to the benefits to keep them relevant and meaningful.

Employers should be fully aware about the long-term implications of benefits being given, as subsequently they can only be withdrawn through the CLA. Reckless decisions taken without applying any thought process and planning will have far-reaching financial implications for the companies.

The provision of welfare measures helps keep the morale and motivation of employees high, and facilitates in their retention with the company for longer. A satisfied employee will not look for other job opportunities, thus enabling employers to keep the best talent without confronting the menace of employee turnover.

Employees possessing improved quality of performance contribute towards higher output, providing their employer attractive return on his/her investment through increased productivity. Enterprises with happy and motivated employees also earn the respect and goodwill of the public at large.

Turnover costs in automatic and sophisticated manufacturing units are high as the process of fresh recruitment, besides requiring management time, includes expenses on advertising, training, overtime and employee induction.

When I worked at Exxon Chemical Pakistan Ltd’s fertilizer plant at Daharki in the 1970s, its environment both within the plant premises and the residential colonies was conducive to employee retention. The manufacturing units were spacious, well lighted, airy and safe to work. The company assigned top priority to employee safety and gave them attractive awards on achieving the safety targets collectively. Consequently, the employees would not only take care of their own safety but also of their colleagues so that the award would not be missed due to anyone’s negligence.

The management ensured that the employees kept the work-life balance. The employee output was higher than what the people in the company’s headquarters in New Jersey expected.

This is how satisfied and motivated employees can bring an enterprise’s productivity to an amazing level.

The writer is an industrial relations professional and teaches labour welfare laws at IBA.

Email: [email protected]