Having read “A Story about Motivation” on the Harvard Business Review, it got me thinking about the rational of having benefits and long service awards which usually among the “key attraction” of large companies.  Today, most organizations around would boast of having additiona benefits such as car allowances, birthday celebrations (to create family environment) and long service awards (to encourage loyalty).

I believe when a new benefit is being introduced, human resources or the compensation specialist will need to first look into the strategic objective of introducing such programs.  The failure in many organizations is the lack of strategic approach in rolling out new benefits.  Most organizations does it based on “if other companies does it, we should too!” or “these are the things that were done since the good old days”.

Company cars, birthday celebrations and long service awards are among the few items I found could be better off removed if not done properly.  They are usually what I would call “legacy rewards” which does not add to motivation or loyalty.  Let’s look at them individually:

Company Cars:

• I believe such benefits came from the good old days when cars were not as affordable as they are today and when there were much lesser cars on the road.  Organizations started providing company cars to managers or sales professionals who will need to travel frequently.  Today, when cars are more a necessity than a luxury in the city, it’s probably no longer a benefit that makes sense.  We could see that even fresh graduates nowadays could afford a car (yup, I recognize that it’s usually on long loans, but it still does not remove the fact that cars has became necessity).
• Interestingly, some people do own nicer cars than the ones the company are going to assign to them, which makes a mockery out of the whole benefit.
• In order to reduce “maintenance cost” and “disposal cost”, companies are beginning to give “car allowance” in place of cars.  These allowances incurrs the same tax and EPF as the basic salary.  So why not make it convenient to bundle them all into one?  Espcially for organizations that car allowances are given base on seniority rather than business needs, putting them back into the basic salary would reduce the paperwork and workload of HR operations.
• Some people say “we made it an allowance so it’s easier to pull it back when times are bad”.  But in reality, how often does this happen?  And it is really easier to pull it back, I don’t think so.  But the additional work to separate it is a definite.

Mobile phone allowances:

• If they given based on business needs, it makes sense.  But if it’s based on seniority, refer to the above.

Country Club membership:

• This applies most to bankers.  In the past, bankers needs these memberships to entertain clients.  In today’s world, these memberships are used more for family rather than the business.  So maybe it’s about time to think about the relevance of the membership and its original objective.

Long Service Awards:

• When we were in the manufacturing economy, it definitely does make lots of sense to give long service awards.  That’s not true today, because:
  • Loyalty doesn’t quite exist today - let’s face it, it’s true.
  • When you’re in the production line, the longer your are in the role the more familiar and the faster you’ll be.  Not definitely true in today’s world as well.
  • I see many organizations giving pens, watches, necklace … etc long service awards.  These items often only cost the fraction of the employees monthly salary.  It’s of different value when we’re talking about factory workers in the production lines compared to many today in the knowledge economy.  These does not make those in the knowledge economy look forward to it or motivate them to stay for it.  Maybe a plaque, trophy or certificate could have done the job much better.
• Sometimes when it’s not sufficient to motivate, it’s better off without because it will only serve as a “reminder for employees to complain about how bad the benefits are”.

Birthday celebrations:

• It’s a nice thing to show employees that we remember, but that’s only nice if it didn’t come from HR, other wise it will just be “an item without emotions” and the employee would be “working without passion”.  It’s really a 2 way thing.
• Also, if the celebration requires the employee to have lunch with senior management team or dining over the weekend, think about this - “Does the employee really value it, or is he/she feeling obliged to turn up?”

Just a simple summary, when we’re looking into motivation, look into few important items:

• Original objective
• Is it sufficient to motivate? (if it’s not, it’s better off without)
• Are we implementing just because the other organizations does it?
• Is this something that I want if I’m the employee?
• Is giving such benefits better than cash? (I.e: does the company save significant cost by providing such benefits rather than outright cash?  If it doesn’t, then what’s the point?  To further illustrate this point, medical or life insurance is one that leverages.  The company could provide insurance for all employees at a lower cost than to have each employee going individually to get their coverage.  Then, that’s the right benefit to provide.)

Just a thought, when everything is going “no frills”.  “No Frills Compensation” could be the next that comes (and may be better than flex-ben).  Saves operations cost, makes things simple for employees.

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Tags: compensation and benefits, hr, Human Resources, long service, loyalty, motivation, no frills

This entry was posted by Clayton J.C Tan on Tuesday, March 30th, 2010 at 2:07 pm and is filed under Human Resources, Leadership & Management. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.