Indirect rewards or benefits form an important part of the management’s toolkit for the satisfaction and motivation of employees. Indirect rewards are benefits that an organization provides to its employees in addition to salary. When considering which to share with their employees, organisations can be using benefits strategically to support the realisation of their objectives.

There is a wide range of benefits to offer, as well as variations in the needs and preferences of employees.  It’s key to make sure employees perceive the benefits positively.  If they don’t then the benefits will not be effective. Employees mostly value salary, status or development opportunities.  It can be difficult for employees to value alternative benefits as highly.

For many organisations, there is little evidence that indirect compensation or benefits support the attraction and retention of talent.  Often they are not a factor in increasing morale and productivity or reducing turnover.  Using benefits strategically to motivate employees and increase job satisfaction must be a key aim.

A good tactic for organisations is to consult with employees before deciding which benefits will be offered. If they do consult in advance then there can be consequences. Employees do not always consider indirect compensation as part of compensation or reward and hence there is no motivation. There are many reasons for this phenomenon.  The following measures can help change this outlook.

Effective Communication

Fully understanding the benefits to be provided by the organization including the cost involved is very important in enhancing effectiveness. Benefits are not a free resource to the organisation.  Communicating the features of benefits effectively is really important.  By communicating these effectively then the organisation rap the advantages of using benefits strategically.

There are many opportunities and ways of communicating the benefits to the employees.  It’s always good to communicate verbally taking every opportunity to do so.  Using written communications in the form of handbooks, brochures, bulletins or the annual benefits statement is also imperative.

Communications can be most effective if it involves employees.  They should be demonstrating how the benefits help them. Educating employees about the importance of the benefits they receive, how they can help is key.  They need to understand the benefits form part of the whole package offered.

Conversion of intangibles into tangibles

Some benefits lose their value and importance because the monetary value is unknown.  It is always good for employers using benefits strategically to express their tangible value.  In this way their monetary value becomes visible. An example may be Annual leave.  Annual leave is often taken for granted and the actual cost and benefit is not always clear.

One organisation decided to highlight the importance and benefit of annual leave. Every employee who did not take any leave during a month was entitled to receive a fixed amount as an attendance allowance. Additionally if by the end of the year there was outstanding annual leave then the employee would be able to exchange days for cash.  The employee had to take a minimum rate of annual leave within legal requirements.

Psychological Benefits

There are certain benefits, which are of great psychological value in view of typical local conditions or culture. It is always fruitful for the management to grant benefits that create an emotional attachment with the Organization.

In Pakistan, Bangla Desh and India, one of the most important responsibilities of a family is the marriage of one’s sister and daughter.  Some organizations in these areas,  pay a fixed amount as Congratulation Allowance on the marriage of an employee, his/ her sister or daughter.  Feedback in the form of invitations to the marriage has shown its value in developing a healthy employer-employee relationship.

Another example of a psychological and productive benefit is the payment of a bonus on festive holidays. Employees are awarded bonuses for enhanced productivity at these times.  This is because there is usually an increase in sales before festive holidays. If the increased production is completed earlier than agreed, then employees can take that time as additional holidays.

This type of bonus is always cost-effective for the organisation.  It removes the requirement to work overtime which can cost a lot more.  Employees feel immediately rewarded for the effort to meet and exceed production times.

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Human Resource Professional with three decades of experience, having worked in multinational companies of repute with distinction in senior positions. A certified ezinearticles.com expert author, poet, freelance consultant and owner of three blogs. An internationalist and a peace activist. A strong believer in a NEW EQUAL WORLD based on the principles of equality, equity and empathy.