A number of factors have contributed to employer provision of non-mandatory benefits such as health insurance and pension plans. These include self interest of the decision makers union bargaining tax advantages provided to companies by the federalgovernment for offering certain bene ts the need to be competitive and retain employees and union avoidance. The logic underlying employer strategies to voluntarily provide benefits suggests that benefit to offering share associated with employee benefit satisfaction which in turn is associated with attitudes and behaviors that serve the employers interests harris fink 1994 the implied process based on social exchange is that when employees are satisfield with benefits provided to them they arecommitted to the employer remain with the employer and perform their jobs well which in turn leads to strong organizational performance.
Benefit satisfaction has been one area that has received some research attention by hrm scholars.one might expect employee satisfaction to be related to the actuarial value of bene ts and the level i.e. amount and type of benefits of a benefits package to be positively associated with employee satisfaction micelli lane 1991 scholars have studiedthe relationship between bene t level and employee satisfaction with the bene ts package e.g. dreher ash bretz 1988 and despite its intuitive appeal such research does not support that the level of benefits offered and satisfaction with those benefits are positively associated. this paradoxical ending prompted 1992 to state: the state of knowledge about the in uence of benefits on employee attitudes and behaviors is dismal. Studies examining the links between the forms and levels of bene t coverage with valued outcomes e.g. turnover attraction offer potential important contributions to our understanding of employment relationships to begin to disentangle factors underlying the paradoxical ending that the actuarial-value of bene ts and employees benefits satisfaction are not correlated scholars have examined three distinct elements of benefits: the benefit offering construct antecedents and moderators of benefit satisfaction and organizational outcomes associated with benefit satisfaction.
Benefit satisfaction construct employee satisfaction has historically been conceptualized as a uni-dimensional construct that captures the value or level of bene ts dreher et al. 1988 in this line of research the level of benefit offerings has been assessed with a four-item benefit scale embedded in the pay satisfaction questionnaire psq heneman schwab 1985 items on this bene t scale include satisfactionwith my bene t package the value of my bene ts amount the company pays toward my bene ts and the number of benefits schedule human resource management reviewreceive. Advantages of operationalizating bene ts as part of the psq include that this approach allows measurement of bene tswithin the context of compensation is distinct from pay-related scales and consistently exhibits high internal consistency i.e. coef cient alpha values greater thanlater with the onslaught of changes in bene t delivery systems e.g. exible bene t programs conceptualized and validated a bene t offering construct consisting of two dimensions.
One dimension related to bene t level re ecting the value of bene t plans e.g. levels of coverage nancial payments provided the new dimension related to bene t system satisfaction whichre ected employee perceptionsof the system used to deliver such benefits e.g. communications billingsupport ease of use whereas the benefit level dimension focused on the specivications of the benefit plans the system dimensionre ected the employees perceptions of how benefits were administered. Given that perceptions of other hrm practices may be in uenced by both the content of the hrm practice and administration/delivery of the practice the williams et al. 2002 perspective may be expanded to compare with other hrm practices. Indeed anopportunity exists to incorporate the level and system dimensions posed by williams et al. 2002 with the content and process dimensions that bowen andostroff 2004 suggest underlie all hrm practices and the objectives/content and delivery dimensions in the training and development literature salas cannon-bowers 2001 such integration may address construct proliferationand allow ndings in the bene ts literature to inform the strategic hrm literature and antecedents and moderators of benefit satisfaction generational differences and implications for measuring benefit offerings dencker joshi and martocchio 2007 argued that individual differences in benefit preferences emerge from the particularemployment relationships with which individuals have the most experience.
For example older employees likely experiencedor observed the period when career-long employment and cradle-to-grave benefits were provided by employers. As such andgiven that they may have extensive service with an employer they may prefer bene ts in which the employer shoulders the risk of economic uctuations and provides packages with de ned benefits. In contrast given that during their formative yearsmembers of generation x and y witnessed the dismantling of internal labor markets job security and lifelong benefits these individuals may not expect or even be willing to trust employers to provide for their economic and health security. As such these employees may prefer benefit programs in which employers contributions and clarify which risks they will andwill not bear.given that todays employers are populated by individuals who grew up in different times and have different expectations of employers up to four different generations may work side by side the potential effectiveness of a one size all benefits approach is strained.
Consistent with arguments of boudreau and argued that marketsegmentation of employees and offering market segments different benefits may strengthen the benefits return-on-investment. such return-on-investment may be achieved by either varying benefit offerings by employee segments which may present legal issues or giving employees the choice among an array of benefits. A research need exists to examine preferencedifferences that exist among age groups in the workforce the implications of employee benefit decisions are among the most relevant for remaining competitive in the labor market.
From a total compensation perspective indirect compensation or benefits plays a significant factor in the attraction and retentionof employees. This is particularly true for costly benefits such as health insurance and pension plans the provision of which is an increasingly important issue to both employers and employees.