Human Resource Management

Fifteenth Edition, Global Edition

Chapter 9
Reward
Management

Chapter 10
Martocchio (2019)

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Learning Objectives
10.1 Define indirect financial compensation (employee
benefits).
10.2 Describe legally required benefits and the various
kinds.
10.3 Define discretionary benefits and explain the various
types.
10.4 Explain workplace flexibility (work/life balance).

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Total Compensation Components

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Indirect Financial Compensation (Employee
Benefits)
• All financial rewards not included in direct financial
compensation

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Legally Required Benefits

In Malaysian context, the law mandates certain

benefits as being provisioned by:
1. Employment Act 1955
2. Compensation Act 1952
3. Employees Provident Fund Act 1951
4. Employees Social Security Act 1969
5. Workers’ Minimum Standards of Housing
and Amenities Act 1990

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Discretionary Benefits
Benefits that are not mandated by law:
• Protection programs
• Paid time-off
• Employee services

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Retirement Plans
• Retirement plans provide a source of income to individuals
following the end of their work lives

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Life Insurance and Disability Insurance
• Life insurance: Provides cash benefit upon the death of an
insured person
• Disability insurance
– Workers’ compensation protects employees from job-
related accidents and illnesses
– Some firms provide additional protection that is more
comprehensive

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Paid Time-Off (1 of 2)
• Vacation: Provides workers with opportunity to rest,
become rejuvenated, and thus more productive
• Sick pay and paid time-off banks
– Allocate each employee a certain number of sick leave
days per year
• Parental leave
• Sabbaticals: Temporary leaves of absence from
organization, usually at reduced pay

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Paid Time-Off (2 of 2)
• Volunteerism
• Other types:
– Perform civic duties
– Handle personal affairs
– Jury duty
– National Guard or military reserve
– Voting time
– Bereavement time
– Rest periods, coffee breaks, lunch periods, cleanup
time, and travel time

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Employee Services
• Child care
• Educational assistance
• Food service/subsidized cafeterias
• Scholarships for dependents
• Relocation benefits
• Domestic partner benefits and same-sex marriage
• Other benefits

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The Job Itself as a Nonfinancial
Compensation Factor
• Answering the following questions can provide
considerable insight into value of job:
– Is job meaningful and challenging?
– Is there recognition for accomplishment?
– Do I get a feeling of achievement from doing job?
– Is there possibility for increased responsibility?
– Is there opportunity for growth and advancement?
– Do I enjoy doing the job itself?

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Job Environment as a Nonfinancial
Compensation Factor

• Sound policies
• Capable managers
• Competent employees
• Congenial coworkers
• Appropriate status symbols
• Working conditions

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Workplace Flexibility (Work/Life Balance)
• Focus on solving personal issues that detract from
employee’s work
• Can be a key factor in attracting and retaining employees
• Moved from being a great benefit to a business necessity
• Workforce today not homogeneous

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Work-Life Balance Factors: Flextime
• Practice of permitting employees to choose, with certain
limitations, their own working hours
• Work same number of hours per day as they would on
standard schedule
• Many firms are using flextime

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Illustration of Flextime

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Work-Life Balance Factors: Compressed
Workweek
• Permits employees to fulfill their work obligation in fewer
days than typical five-day workweek
• Four 10-hour days
• Often greater job satisfaction

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Work-Life Balance Factors: Job Sharing
• Two part-time people split duties of one job
• Partners must be compatible, have good communication
skills
• Trust must exist between job sharers and their manager

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Work-Life Balance Factors: Two-In-A-Box
• Give two executives the same responsibilities and same
title and let them decide how the work is to be divided
• Full-time job for both executives
• Requires work and constant communication

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Work-Life Balance Factors: Telecommuting
• Employees are able to remain at home, or away from the
office, and perform work using computers and other
electronic devices
• More popular in recent years

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Work-Life Balance Factors: Part-Time Work
• Some do not want or need full-time employment
• Highly educated professionals are often choosing part-time
opportunities
• Recent recession caused many workers to take part-time
jobs

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