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How can Fringe Benefits be Used to Increase Employee Productivity?

Tricia Christensen
Updated May 16, 2024
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Many people believe that increasing fringe benefits, or benefits that are not mandated, establishes loyalty and boosts production among employees. Some argue these beliefs are incorrect, but many others support them. It would be difficult to examine the effects of all possible fringe benefits, but looking at a few can give employers a sense of how employee productivity might be increased by offering fringe benefits.

Some countries offer free healthcare, but in other countries, people need to buy insurance. Offering health insurance is a fringe benefit, and the quality of it could be directly tied to employee productivity. In general, sick employees are not productive employees, and any insurance offered to workers should be affordable and offer reasonable amounts of coverage. Affordability should additionally take into account things like copayments and deductibles.

Higher copayments and deductibles lower employer costs, but if they bar lower paid employees from seeking medical care or wellness care, the insurance isn’t benefiting sick employees. Coverage should extend to family, as worker productivity may also be affected if family members get ill. When employees have affordable healthcare for themselves or family when needed, worker productivity can increase due to better physical health and as a result of company loyalty for receiving this benefit.

Another health-related fringe benefit tied to greater employee productivity is access to health club memberships or to onsite workout facilities. This and other wellness benefits can have a positive effect. There can be direct correlation between physical health and ability to work harder. Access to health clubs, nutritionists, weight loss programs and the like may all lead to healthier employees with more energy to work.

Certainly, employee productivity can increase with fringe benefits that are profit oriented. Earning shares of stock or part of the profit in a company communicates to employees that the company rises or falls by their efforts. This is not always the case, as profits gained can be relatively small. Other benefits that might prove more motivating are employee incentive programs, set up so that each employee has opportunities to earn incentives, like extra vacation days, gift certificates, bonuses, and et cetera, if they boost personal productivity.

Some fringe benefits are only available to executive employees, which may motivate these employees to work harder but may also alienate lower level employees of a company. Things like access to vacation condos, use of private jets, or company credit cards are generally attractive to executives. If no benefits of this kind, or even scaled down benefits are offered to others, it can foment discord. Companies should make sure to offer benefits at all levels, instead of just at the top, to keep employee productivity highest.

As great as fringe benefits may be when it comes to increasing employee productivity, they aren’t too helpful under bad working conditions. Employees deserve basic rights, like being treated with respect by supervisors and being paid fairly for their work. All the benefits in the world may not make up for consistently poor management skills or under-market pay.

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Tricia Christensen
By Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia Christensen is based in Northern California and brings a wealth of knowledge and passion to her writing. Her wide-ranging interests include reading, writing, medicine, art, film, history, politics, ethics, and religion, all of which she incorporates into her informative articles. Tricia is currently working on her first novel.
Discussion Comments
By Wisedly33 — On Nov 30, 2014

@Scrbblchick -- I think it's happening everywhere. The 2009 recession just took the bottom out of the US economy and we've not recovered yet, no matter what the "experts" say. The only bright spot is gas prices are down.

Places that can't afford to offer a lot of financial fringe benefits could still give employees benefits that would improve morale. Having company lunches or working with other businesses to offer discounts to employees for goods or services that they need would go a long way toward improving morale, and thus, productivity. When employees feel appreciated, they tend to be more productive. When they don't feel appreciated, productivity and quality suffer.

By Scrbblchick — On Nov 29, 2014

It's a pretty simple formula: fringe benefits equal happy employees. Happy employees are generally more productive employees. It's very elementary.

When companies don't provide many fringe benefits, or worse, when they take away benefits (especially in the name of "saving" money), you can see morale drain out of the employees. They stop being enthusiastic about their work, and the quality suffers. Then, they start looking for jobs elsewhere, and that hurts the company further, because they have to find replacements and train them.

It's happening at my company right now. Health insurance has gone up, no raises were given this year and no bonuses for anything. People are unhappy and they're showing it by going to work at other places. We've suffered for it.

Tricia Christensen
Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia...
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