Fringe Benefits

Fringe benefits, which do not bear direct relationships to job performance, range from 25 to 40 percent of the total sales compensation package. Some are required by federal and state law for example, payments for social security premiums, unemployment compensation, and worker’s compensation. Most, however, the company provides for other reasons: to be competitive with other companies in the industry or community, to furnish reasons for employees to remain in the company’s service, and to comply with what employees expect as fringe benefits.

Figure below shows fringe benefits currently offered by U.S. companies. As the variety of fringes has expanded, individual fringes have been added that appeal more to some groups than others-people with bad teeth are the ones most interested in dental insurance, while those with children are the ones most interested in plans for paying educational tuition fees for dependents. Similarly, given a choice between supplemental life insurance and increased retirement benefits from the savings plan, a fifty-nine-year-old probably would pick the latter, ‘but a thirty-two-year-old father of five might opt for the life insurance.

An increasing number of companies offer a “cafeteria” approach to fringe benefits. In this approach, the company offers a core of basic benefits-the benefits required by law plus other traditional benefits, including paid vacations, medical, disability, and death benefits and a retirement program. Employees then use credits (based on age, pay, family status, and years of company service) to obtain optional benefits not included in the core; this lets employees select those benefits that best fit their needs. Because needs for benefits change,

Fringe Benefits Compendium of Types Available to Sales Personnel in Some Companies

Time Holidays Vacations Sick leave Personal leave Sabbaticals Pregnancy leave     Retirement Problems Social security (mandatory) Pension plan’ Profit sharing Salary reduction plans   Insurance and ‘medical Physical examinations Medical payments and Reimbursements Hospitalization insurance Dental insurance Disability insurance Life insurance Travel insurance Accident insurance Worker’s compensation (mandatory) Unemployment insurance (mandatory) Cancer insurance Psychotherapy expense

Organization dues Trade association Civic clubs Country clubs Professional association     Miscellaneous Automobile Use of vacation spot Parking Dry cleaning and laundry Lunches (all or part) Secretarial services Employee stock purchase plan Company-provided housing Legal services Financial counseling Tuition for continuing education programs , Financial support for dependents’ Education Credit unions Discounts for purchases of company products Child care payments Matching funds to charities and schools Company, social events Company sports tournaments Retirement counseling Career counseling Payment of moving expenses

Employees are given opportunities to change their selection of those benefits that best fit their needs. Because needs for benefits change, employees are given opportunities to change their selections. Companies using the cafeteria approach also have “awareness programs” aimed at making employees aware of the benefits available.