Are companies maintaining social benefits in constrained economic times?

This is a preprint of a book chapter to be published in Contemporary Issues in Entrepreneurship Research. Social

and Sustainable Enterprise: Changing the Nature of Business (Eds. Underwood, S., Blundel, R., Lyon, F. and

Schaefer, A.). 2012. Vidal Salazar, M.D., Cordón Pozo, E., Ferrón Vilchez, V.

Volume 2. Pages: 141-166. Emerald Books ©. ISBN: 978-1-78190-254-7.

DOI: 10.1108/s2040-7246(2012)0000002011

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Are companies maintaining social benefits in

constrained economic times?

María Dolores Vidal-Salazar1 University of Granada

Vera Ferrón-Vilchez2

University of Granada

Eulogio Cordón-Pozo3

University of Granada

1 Department of Management. Economics and Business School. University of Granada. Campus Cartuja S/N, 18071, Granada (Spain). Phone: (0034) 958 241 000 Ext. 20171. Fax: (0034) 958 246 222. E-mail: [email protected] 2 Corresponding Author. Department of Management. Economics and Business School. University of Granada. Campus Cartuja S/N, 18071, Granada (Spain). Phone: (0034) 958 249 596. Fax: (0034) 958 246 222. E-mail: [email protected] 3 Department of Management. Economics and Business School. University of Granada. Campus Cartuja S/N, 18071, Granada (Spain). Phone: (0034) 958 242 341. Fax: (0034) 958 246 222. E-mail: [email protected]





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Are companies maintaining social benefits in constrained economic

times?

Abstract

1- Purpose: Is the current economic crisis affecting the quality of working

conditions within organisations? More specifically, due to constrained economic

times, are organisations reducing the social benefits they offer to employees? This

study analyses whether the current situation of economic downturn influences

companies’ maintenance of social benefits. Social benefits are those remunerations

in kind voluntarily offered by an employer beyond what is established in labour

laws and collective agreements

2- Design/Methodology/Approach: In doing so, this study conducts an

analysis of the evolution of social benefits in sample of 171 employees, comparing

the situation before and during the economic crisis.

3- Findings: Results showed that, in general, social benefits offered by

companies to their workers have been reduced due to economic recession.

4- Originality/value of the paper: Understanding the topic addressed in

this work is interesting for scholars, regulators, and practitioners because the

diminishing of social benefits due to the economic constraints could be able to

yield negative consequences for the employees’ involvement with the firm and its

subsequent negative impact in the business performance.

5- Practical/Social implications: This work contributes demonstrating the

need of paying greater attention to indirect remuneration. This issue is intimately

related to the Internal Corporate Social Responsibility of the company.

Keywords: Social benefits, remunerations in kind, economic crisis, social

security systems.





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Are companies maintaining social benefits in constrained economic

times?

1. Introduction

At the height of an economic recession many companies are applying more

conservative policies and are focusing their management on savings. Budget cuts,

implemented to reduce costs, are affecting the management of human resources

departments, which are modifying compensation policies. Compensation design is

a tool that allows the company to adapt itself to diverse situations and employee

needs (Lawler, 1990); therefore, it is a very effective way to control and encourage

employee behaviours. For these reasons, many organisations develop

compensation systems to promote employee behaviour that enables the

organisation to reach its objectives (Valle-Cabrera, 2003). One common type of

compensation used to increase motivation, keep talent in the enterprise, and

improve workers’ productivity entails complementing direct remuneration with

remuneration in kind, consisting of a whole range of social benefits. Social benefits

are defined as those remunerations in kind voluntarily offered by an employer

beyond what is established in labour laws and collective agreements (Pardo and

Luna, 2007). Note that the compensation system in any company expresses how

the organisation operates; that is to say, a company’s salary policies and social

benefits reflect the values that form its idiosyncrasies.

This chapter aims to examine (a) the importance that workers place on

social benefits and (b) whether companies are modifying their attitudes with

respect to such benefits because they do not consider this type of compensation to

be essential in periods of recession. This study attempts to answer the following

question: Is the current economic crisis affecting the social benefits that companies

offer to their employees?





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Understanding the idea addressed in this work is interesting for scholars,

regulators, and practitioners for two main reasons. First, the prior literature puts

forward the possibility that the achievement of employees’ satisfaction and

motivation correlates with the existence of social benefits within companies. As a

result, the diminishing of these social benefits due to economic constraints could

yield negative consequences for the employees’ involvement with the firm and

bear a subsequent negative impact on business performance. Second, on the basis

of improving voluntary social policies, firms could differentiate themselves from

competitors, moving from a situation based on the idea of postponing social

objectives of the firm as a consequence of the economic crisis to a situation based

on trying to overcome the economic downturn, basing efforts on obtaining benefits

from the achievements of a motivated and satisfied workforce.

Consequently two questions emerge related to two topics: non-monetary

compensation policies developed by companies, and workers’ evaluation of such

compensation. With regard to the first aspect, what are the social benefits

commonly offered by companies to their employees? The answers lie in an analysis

of social benefits more often offered by companies according to several factors:

size (i.e. number of employees) and ownership (public institutions versus private

companies). As for the second aspect, which social benefits are more important

(i.e. best valued) to employees? This chapter attempts to answer this question by

classifying respondents according to certain social and demographic

characteristics (e.g., gender, education level). All this information enables the

creation of a wide ‘portrait’ of the importance that workers ascribe to this type of

compensation and, likewise, to show how the application of social benefits has

varied due to the effects the economic crisis has had on companies in the concrete

Spanish case.

The chapter starts by exploring the concept of social benefits. Then we

discuss the influence of diverse legislations from several countries on the

establishment of such benefits (in many cases, they are a social safety net, given

that minimum mandatory benefits are established in some countries’ legislation).

Finally, we provide a descriptive study of the Spanish case, by analysing how the

economic crisis has influenced the social benefits companies offer to their workers.





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In doing so, this research presents an analysis of the evolution of social benefits

through a sample of 171 employees that compares the situation before and during

the economic crisis.

2. Theoretical review: Main remunerations in kind

The importance of remuneration for organisations’ efficiency is determined

not only by its impact on business costs (Milkovich and Newman, 2007) but also

because the manner of rewarding employees is an element of motivation with

considerable influence on employees’ behaviour in terms of their tasks within the

organisation (García-Tenorio and Sabater, 2004). Although the human resources

literature generally accepts that the manner of remunerating personnel influences

organisational results in a direct way (e.g., Gómez-Mejía and Sánchez, 2006), there

are diverse opinions about the most effective compensation design (Gerhart and

Rynes, 2003).

Following Goméz-Mejía, Berrone and Franco-Santos (2010), total

compensation received by an employee for his work comprises three components:

fixed remuneration (i.e. salary regularly received), variable remuneration (i.e. that

part that a worker earns depending on his performance), and social benefits.

Another usual classification differentiates between direct remuneration,

constituted by monetary rewards received by employees according to their level of

performance or the knowledge and abilities related to the occupied position (i.e.

base salary plus incentives), and indirect remuneration (i.e. social benefits),

constituted by those rewards received by employees through protection programs

and services in which the company, instead of giving a direct payment to the

employee, assumes determined social expenses (protection, well-being, security,

leisure, etc.).

Thus, social benefits are defined as those services paid for or provided by a

company to its employees that do not imply a salary increase but do imply an

improvement in work conditions (Pardo and Luna, 2007). The employee receives

these benefits for being part of the company; indeed, the employee’s family may be

also beneficiaries. Social benefits are strongly related to the social responsibility of





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business. According to prior literature (e.g., Miceli and Lane, 1991; Milkovich and

Newman, 2007; Patricio-Jiménez, 2009; Gomez Mejia et al, 2010), the origin and

development of social benefits are due to diverse causes that can be summarised

as follows:

1. Importance of attraction and retention of talent.

2. Increasing staff motivation

3. Demands from trade unions and collective agreements.

4. Other demands from labour law.

5. Way for companies to achieve tax deductions.

6. Wish to contribute to the well-being of employees and the entire

community.

There is much literature concerning these issues (e.g. Gómez-Mejía et al.,

2010), especially referring to the effects of different remuneration systems on

managers. However, more research for studying the effects of the diverse

components of remuneration in kind on the behaviour of non-management staff is

still necessary. Despite the increase of this type of remuneration, prior studies

highlight that employees do not always value the offered benefits since, in many

cases, they do not know the value of the benefits programs that the company offers

them (Dolan, 2003). For that reason, organisations must obtain direct and truthful

information about employees’ preferences and adapt social benefits programs to

their needs. Increasing communication between managers and employee

participation in the design and choice of these benefits are factors that may

increase the company’s chances of obtaining greater performance.

It is very difficult to make a comprehensive classification of social benefits,

since the only limit for developing and implementing new manners of payment is

the imagination and creativity of those responsible for putting them into practice.

Therefore, each organisation offers a benefits plan according to its own criteria,

based on diverse needs. First, in most organisations, social benefits policy has been

decided unilaterally by managers, given that employees’ demands are usually

related to direct remuneration (i.e. salary increases). Nonetheless, this tendency is

changing, above all in large companies, and the need to implement flexible benefits





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plans is being considered, that is, plans are more often being chosen ‘à la carte’4.

Second, the companies offering social benefits to their employees operate in

different ways by defining one or more social benefits packages. For instance,

although some companies prefer a general and equitable plan for all staff and

without any distinction because of professional standing, other companies divide

their personnel into several levels and offer differentiated plans for each of these

levels. This situation is still more complex if it is considered that the same benefit

can be applied in a different way depending on the company. Finally, note that

benefits can vary considerably in accordance with: (1) the economic circumstances

of each organisation, (2) economic context of each area where the company is

located, and (3) application of social legislation in each country and/or activity.

Even so, some authors have made an effort to classify the current offer of

social benefits in organisations because of numerous existent possibilities. For

example, Pardo and Luna (2007) indicated the existence of benefits related to five

categories: health, job position and well-being, training and information, economic

security, and leisure and free time; other social benefits not considered in previous

categories. Table 1 shows several examples according to this classification.

Table 1. Social benefits classification TYPES OF BENEFITS EXAMPLES

RELATED TO HEALTH BENEFITS Medical insurance, life and/or accident insurances, dental

care plan, extended parental leave.

JOB POSITION AND WELL-BEING

BENEFITS

Flexible work hours, car provided by company, mobile

phone, laptop, nursery, canteen, car park, gym, break room,

work clothes and tools…

TRAINING AND INFORMATION

BENEFITS

Employee training expenses, school expenses, grants,

specialised magazines…

ECONOMIC SECURITY BENEFITS

Pension plans, salary advances, loans with no interest,

housing purchase allowances, stocks options, discounts on

company’s products…

LEISURE AND FREE TIME BENEFITS

Trips paid by company, paid personal days, cultural

activities, sport activities, leaves…

OTHER BENEFITS Discounts on insurances, mortgages, loans, luncheon

vouchers, gifts, legal and/or financial assistance…

Source: Own elaboration from Pardo and Luna (2007).

4 Flexible benefits plans attempt to offer employees the possibility of choosing among a wide range of social benefits offered by the company, requesting those in which employees are really interested according to their needs.





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The importance of the existence of social benefits offered by companies to

their workers can be seen through some studies evaluating the best companies to

work for by means of diverse well-known rankings. For instance, in 2011, social

benefits were a key element when evaluating the best companies to work for

according to Fortune magazine (Fortune, 2012). Until a few years ago, direct

remuneration was considered a fundamental factor in the evaluation of a company;

however, the existence of social programs for employees is currently an essential

aspect. The following international companies exemplify this fact (Fortune, 2012):

• SAS: offers health benefits, nursery and childcare, and a good balance

between personal and professional life.

• Google: employees can use 20% of their work hours to undertake

any project that they wish.

• Qualcomm: promotes numerous leisure activities for staff such as

baseball games, surf classes, kayak and rafting tours, etc.

• Cisco, Adobe, and Salesforce.com: offer large nursery services, pay

for six sabbatical weeks, and offer other non-monetary benefits.

• Sodexho Pass: allows variable starting and ending work hours at the

office and offers luncheon vouchers, nursery, language and computer training,

and private health insurance.

• Microsoft Iberica: has mobility and teleworking programs for all

employees, offers choice of work hours (in agreement with supervisors), and

the chance to ask for a leave because of personal reasons, prohibits meetings

after 6.30 p.m., and provides access to company applications/software from

home.

• Indra: offers flexible work hours, paid leave for urgent personal

reasons, and significant opportunities for teleworking.

In Spain, the Great Place to Work Institute has elaborated an index of the 50

best companies to work for, whose common denominator is that 67% of their

employees state they have a body of personalised social benefits not found at other

companies (Great Place to Work, 2012). These data are based on a report that

collected the opinions of 15,000 employees, wherein a comparison was made





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between 7,500 employees working for companies considered to be among the best

companies to work for in Spain and another 7,500 workers from other companies

(not considered the best to work for).

Consequently, the aim of this chapter is threefold. First, although there is

much literature on compensation, following the classification proposed by Gomez

Mejia et al. (2010) on direct and indirect compensation, most studies have focused

on direct monetary compensation (base salary and plus incentives), but there are

very few studies that focus on analyzing the indirect remuneration. Thus, the first

objective of this work is to shed more light on this concept and its components,

that is, the social benefits that companies offer to employees and their families.

Second, likewise the literature on compensation has focused largely on the upper

levels of the organization, evaluating reward systems that apply to managers,

while less work has been done about pay systems for non-management employees

(Gomez -Mejia et al., 2010). This point is especially relevant because most of the

salary costs are concentrated in non-managerial levels as these levels are much

more numerous. Thus, the impact of wage changes at these levels has a direct

effect on corporate profitability, justifying their need for in-depth study. Finally,

given the current international economic recession, the third aim of this work is to

analyse how the crisis is affecting this type of indirect remuneration. The focus on

saving and more conservative expense policies at companies are affecting human

resources departments, which are modifying both direct and indirect

remuneration policies. For instance, a recent study by Deloitte on salary payments

in Spain in 2011 estimated that salary increases in 2012 will not exceed 2.5%, a

lower percentage than expected inflation. Moreover, the study estimated that 10%

of companies would freeze salaries. This freezing can suggest that employees

attach more importance to the existence of social benefits in their companies.

Hence, it is especially relevant to know what the companies’ stance is

during this period of budget austerity. A more conservative attitude could indicate

that companies consider the decrease of income (and/or profit) to be a hindrance

to the maintenance of social benefits, so they only focus on maintaining the level of

salaries because it is considered an inalienable right. In contrast, another

perspective considers that, given the current uncertainty, it is impossible to





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maintain the level of salaries; therefore, it is necessary to turn to other human

resources management tools such as social benefits. Companies following this

approach are boosting social benefits packages in order to compensate for salary

freezes and reduction, since such organisations consider social benefits to be a

potential way to motivate and satisfy employees, as well as guaranteeing that the

best employees stay with the company.

3. International overview of social benefits

3.1. Social security systems

When considering the social benefits companies offer to their employees, it

is important to bear in mind that there is no international legal homogeneity on

social security issues, with each country having its own regulations in this matter.

This fact is highly relevant when evaluating the social benefits that companies offer

to their employees, since such benefits are usually supplementary advantages

beyond basic welfare coverage, which states, through their regulations, oblige

enterprises to grant. Even in countries where welfare coverage is quite limited, the

social benefits that companies offer to their employees are basic requirements for

labour security and stability. For instance, health coverage in the United States,

where medical insurance must be paid by each citizen, is completely different from

health coverage in Europe, because most of the social security systems in the

European Union countries offer universal and complete medical protection to the

entire population. Therefore, health coverage (as a social benefit offered by

companies) will be much more appreciated in countries whose regulations do not

demand such a benefit than in those in which health coverage is widely offered or

complete. Thus, the starting point to evaluate the importance of social benefits

offered by companies must be based on the comparison of social security

programs established in each country. According to the International Social





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Security Association5 (ISSA), an organisation under the authority of the

International Labour Organization (ILO), social security systems are defined as any

programme of social protection established by legislation, or any other mandatory

arrangement, that provides individuals with a degree of income security when

faced with the contingencies of old age, survivorship, incapacity, disability,

unemployment, or rearing children (ISSA, 2012). It may also offer access to

curative or preventive medical care.

The first social security systems arrived in Europe at the end of the

nineteenth century. However, these systems reached their greatest development

throughout the twentieth century because of decolonisation and the appearance of

new independent states after World War II (ISSA, 2012), and finally became a

fundamental human right (articles from 22 to 25) in the Universal Declaration of

Human Rights in 1948 (Universal Declaration of Human Right, 1948).

The latest advances in the social security legislation of each country were

gathered in the Seoul Declaration on Safety and Health at Work, which took place

on 29 June 2008 (Seoul Declaration, 2008). Currently, legislation in countries with

social security systems includes benefits programs for retirement, labour

accidents, occupational diseases, maternity, disease, family allowances, and

unemployment. Nevertheless, according to ISSA estimations, ‘around 50 per cent of

the global population has access to some form of social security, while only 20 per

cent enjoy adequate social security coverage’ (ISSA, 2012). In other words, any

social benefit may be included—in a coercive way—in the labour regulations of a

particular country (e.g. maternity leave), whereas social security laws in other

countries may be more or less demanding with terms, conditions, and other

aspects (e.g. number of weeks established for maternity leave), or may not even

consider such a contingency6.

3.2. How the economic crisis is affecting worldwide social security systems

5 The ISSA is the principal international institution bringing together social security agencies and organisations. It provides access to information, expert advice, business standards, practical guidelines, and platforms for members to build and promote dynamic social security systems worldwide (www.issa.int). 6 The ISSA offers information about the diverse national profiles to facilitate international comparison.





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The impact of the current worldwide economic recession is generating

some negative effects for working conditions in general and, particularly, for social

security systems. For example, according to the ISSA (2012), some of the

pernicious effects may be:

• a higher frequency of labour accidents because of the increasing

intensity and pressure at work;

• perception of job instability; this implies a direct impact on workers’

health and well-being;

• potential reduction of investment in preventive measures by

employers, given the difficult circumstances of the labour market.

This last point is especially important for the analysis of the evolution of

social benefits offered by companies to their employees. In the last few years, the

international economic context has plunged into a serious recession, forcing

companies to focus on cost reduction at the expense of other corporative

objectives such as the expansion and improvement of social benefits for workers.

Moreover, given the circumstances, governments are allowing companies to freeze

(and even diminish) both ordinary salaries and the offer of public benefits related

to social security systems. With reference to ordinary salaries, in 2010, the Spanish

government implemented an austerity plan that reduced civil servants’ wages by

five per cent and froze pensions, along with other budget cuts in the field of labour

security (Francis, 2010). With reference to cuts in social security government

programs, the German system, one of the oldest (established in 1883) and with the

greatest reach (includes prescription medications, prevention holidays, one year of

total unemployment insurance, and home allowances for the unemployed, among

other measures), is also being modified to the detriment of the offer of social

services to citizens (Francis, 2010). The ‘Hartz IV’ plan has cut several public

benefits, including some limitations for unemployment insurance and the

implementation of strict controls on German health costs (Francis, 2010).

Therefore, given the economic recession and the austerity situation with

respect to the public financing of social benefits, it is especially relevant to analyse

whether companies have reduced, maintained, or improved (as a motivation

measure for their workers) the offer of social benefits, as well as to study how





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much employees value the social benefits offered by their companies, given the

public cuts in social security systems.

4. Methodology

In order to evaluate Spanish companies’ behaviours with regard to offering

social benefits and to analyse employee perceptions of this type of remuneration, a

questionnaire was developed, which was administered to employees from diverse

companies operating in Spain (see Appendix 1). The questionnaire was sent by

mail during December 2011 and responses were compiled during January 2012.

Overall, 600 surveys were sent out and 171 completed surveys were received. The

response rate was 28.5%.

The questionnaire asked respondents about their perceptions on how social

benefits offered in their companies had changed, by comparing the situation

‘before the economic crisis’ with the current context. Items related to social

benefits were 45 initiatives classified into six main areas: health, job position and

well-being, training and information, economic security, leisure and free time, and

other social benefits. Table 2 shows data for describing the general profile of

respondents.

Table 2. Profile of respondents Gender

Men

Women

47.1%

52.9%

Education level

Doctoral degree

Master degree

Bachelor degree

High School graduate

Less than High School

4.1%

28.7%

32.7%

31.0%

3.5%-

Type of business

Private

Public

52.4%

47.6%

Company size (employees)

< 10

From 10 to 49

From 50 to 249

>250

12.4%

27.1%

10.0%

50.6%





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Table 2 shows that the sample is balanced in relation to sex of respondents

and type of business, including individuals with different education levels in

organizations with different sizes (number of employees).

5. Results

5.1. Social benefits in Spain before the crisis and currently

All the items related to social benefits instructed respondents to ‘mark the

level of this social benefit in your company before and during the economic crisis’.

The respondents could answer: (1) this social benefit does not exist in the

company, (2) this social benefit barely exists, (3) this social benefit exists at a

satisfactory level, (4) this social benefit exists and its coverage is broad, and (5)

this social benefit exists and its coverage is very broad. In order to summarize

results, items were aggregated in two groups: ‘this social benefit does not exist in

the company’ (for those respondents who coded 1) and ‘this social benefit exists in

the company’ (for those respondents who coded from 2 to 5). Table 3 displays that,

before the economic recession, social benefits offered by companies were, in

general, diverse; however, those related to job position and well-being were the

most widespread. Although social benefits related to job position and well-being

still have a strong presence, considerably fewer respondents indicated that their

companies offer the same benefit currently, when comparing results of the

situation before the economic crisis with the current context. For instance, 87.7%

of the respondents indicated that their companies offered leave for various

purposes before the economic recession, whereas this percentage in the current

situation (i.e. during the crisis) is reduced by 8 points (80.7%). This shows that the

economic crisis is strongly affecting this type of benefit within organisations.





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Table 3. 15 social benefits offered on a broader scale before and during the

crisis

Social Benefits before crisis % Social Benefits during crisis %

1 Leaves (exams, process of moving, visits to

the doctor) 87.7

Leaves (exams, process of moving,

visits to the doctor) 80.7

2 Training expenses for employees 84.2 Extended parental leave

(accumulation of period of lactation) 77.2

3 Extended parental leave (accumulation of

period of lactation) 83.0 Training expenses for employees 76.6

4 Periodic medical check-ups 81.9 Periodic medical check-ups 74.9

5 Salary advances or loans with no interest 72.5 Laptop provided by company and

Internet access 66.1

6 Laptop provided by company and Internet

access 67.8

Salary advances or loans with no

interest 64.9

7 Flexible work hours 58.5 Flexible work hours 57.3

8 Work clothes and Tools 56.7 Work clothes and tools 55.6

9 Rewards (by seniority, by accomplished

objectives, etc.) 55.6 Mobile provided by company 52.0

10 Paid personal days 55.6 Paid personal days 50.9

11 Life and/or accident insurance 53.2 Rewards (by seniority, by

accomplished objectives, etc.) 48.5

12 Mobile provided by company 53.2 Car park 47.4

13 Car park 50.3 Life and/or accident insurance 45.0

14 Discounts for employees on company’s

products or services 46.2

Discounts for employees on

company’s products or services 42.7

15 Gifts (Christmas presents, company

products) 46.2 School expenses for children 40.4

5.2. Private companies versus public companies

In order to analyse whether there are significant differences between

public-sector companies (i.e. companies owned by the state) and private-sector

companies with regard to effects of the economic crisis on social benefits offered to

employees, we have created an indicator summarising the economic recession’s

impact on the offer of social benefits in the prior mentioned six areas (see Table 1

and Appendix 1). This indicator was calculated as follows: the numerator is the

difference between the percentage of respondents indicating that their companies

continue to offer a particular social benefit during the economic crisis and the

percentage of respondents indicating that their companies offered a particular

social benefit before the economic crisis; the denominator is the number of social

benefits in each area. Table 4 shows the perceptions of respondents, differentiating





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between those that work in the public sector and those that work in the private

sector.

Table 4: Comparison of social benefits between private and public companies Private Companies Public Companies

Social Benefits Before

crisis

During

crisis Change

Indica

tor

Before

crisis

During

crisis Change

Indica

tor

BENEFITS RELATED TO HEALTH

Private medical insurance 34.8 31.5 -3.3

-3.1

28.1 21.9 -6.2

-8.2

Periodic medical check-ups 74.3 69.7 -4.6 89.1 78.1 -11

Life and/or accident

insurance 55.1 48.3 -6.8 51.6 40.6 -11

Medicine expenses 16.9 14.6 -2.3 34.4 29.7 -4.7

Dental care expenses

(employee and/or family) 14.6 14.6 0.0 76.6 68.8 -7.8

Eye care expenses

(employees and/or family) 11.2 11.2 0.0 81.3 71.9 -9.4

Extended parental leave

(accumulation of period of

lactation)

71.9 65.2 -6.7 98.4 90.6 -7.8

Psychological treatments

(stress) 13.5 11.2 -2.3 51.6 40.6 -11

Treatments to give up

smoking 7.9 5.6 -2.3 39.1 34.4 -4.7

JOB POSITION AND WELL-BEING BENEFITS

Flexible work hours 61.8 62.9 1.1

-1.0

56.3 53.1 -3.2

-2.0

Company canteen 40.4 38.2 -2.2 20.3 18.8 -1.5

Car provided by company 49.4 47.2 -2.2 18.8 17.2 -1.6

Mobile provided by

company 67.4 67.4 0.0 34.4 31.3 -3.1

Car park 49.4 47.2 -2.2 53.1 50.0 -3.1

Break room 41.6 38.2 -3.4 31.3 29.7 -1.6

Gymnasium 3.4 2.2 -1.2 3.1 3.1 0.0

Nursery 7.9 7.9 0.0 7.8 7.8 0.0

Work clothes and tools 57.3 56.2 -1.1 64.1 62.5 -1.6

Laptop provided by

company and Internet

access

68.5 69.7 1.2 64.1 59.4 -4.7

TRAINING AND INFORMATION BENEFITS

Training expenses for

employees 79.8 76.4 -3.4

-1.7

89.1 76.6 -12.5

-6.0

Training expenses for

family members 12.4 12.4 0 17.2 15.6 -1.6

School expenses for

children 23.6 22.5 -1.1 68.8 60.9 -7.9

School transport expenses 6.7 6.7 0.0 21.9 21.9 0.0

Special grants for children

(university, stays abroad) 14.6 14.6 0.0 29.7 23.4 -6.3

Subscriptions to specialised

magazines or newspapers 21.3 15.7 -5.6 25.0 17.2 -7.8


Pension plans 31.5 30.3 -1.2 -3.0 37.5 26.6 -10.9 -7.1





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Salary advances or loans

with no interest 65.2 60.7 -4.5 84.4 71.9 -12.5

Parental or adoption

complement 28.1 25.8 -2.3 32.8 28.1 -4.7

Accident or leave

complement 30.3 29.2 -1.1 37.5 31.3 -6.2

Grant for house purchase 16.9 14.6 -2.3 39.1 34.4 -4.7

Participation in company’s

profit 25.8 19.1 -6.7 15.6 9.4 -6.2

Remuneration in shares or

stock options 20.2 19.1 -1.1 10.9 7.8 -3.1

Discounts for employees on

company’s products or

services

65.2 61.8 -3.40 20.3 17.2 -3.1

Rewards (by seniority, by

accomplished objectives,

etc.)

52.8 48.3 -4.5 62.5 50.0 -12.5

LEISURE AND FREE-TIME BENEFITS

Cultural activities (cinema,

shows, and theatre tickets) 27.0 23.6 -3.4

-2.1

25.0 21.9 -3.1

-6.5

Trips paid by company 27.0 23.6 -3.4 23.4 20.3 -3.1

Paid personal days 41.6 40.4 -1.2 81.3 70.3 -11.0

Subsidised sport activities 15.7 15.7 0.0 37.5 31.3 -6.2

Leaves (exams, process of

moving, visits to the doctor) 80.9 75.3 -5.60 95.3 84.4 -10.9

Paid sabbatical year 3.4 4.5 1.1 7.8 3.1 -4.7

OTHER SOCIAL BENEFITS

Luncheon vouchers 25.8 23.6 -2.2

-4.8

7.8 6.3 -1.5

-1.5

Discounts on

insurance/mortgages and

loans/health insurance

policies/hotels/restaurants

23.6 23.6 0.0 25 21.9 -3.1

Work travel expenses 43.8 40.4 -3.4 10.9 10.9 0.0

Housing purchase

allowances 7.9 9.0 1.1 25 23.4 -1.6

Gifts (Christmas presents,

company products) 62.9 43.8 -19.1 15.6 7.8 -7.8

Financial and/or legal

assistance 28.1 23.6 -4.5 15.6 18.8 3.2

Predisposition to contract

children and/or couple 32.6 27.0 -5.6 6.3 6.3 0.0

As Table 4 shows, private-sector workers perceive, in general, a diminishing

in the offer of social benefits in all areas. More specifically, we can highlight the

diminishing of ‘Christmas presents’ (-19.1), ‘life and accident insurance’ (-6.8),

‘expanded maternity leave’ (-6.7), and ‘employee participation in the company’s

profit’ (-6.7). According to the indicator used, the most affected area of social

benefits reduction is ‘other social benefits’, followed by items ‘related to health

benefits’ and ‘economic security benefits’. However, there only seems to be a weak





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impact of the economic crisis on the offer of ‘job position and well-being benefits’

in the case of private-sector companies. In this area, it is observed that the

diminishing of the offer has been slight, in respondents’ perception, and the

evolution has even been positive in some cases. For example, there are increasing

offers of ‘flexible work hours’ and ‘laptop provided by company and Internet

access’. These results were expected to a certain extent. Spanish private

companies, highly affected by the economic recession, are notably reducing the

offer of social benefits to their employees. However, because of a quick loosening

of the labour context (e.g. flexibility in remuneration, contracting, function, and

work hours), social benefits related to flexible work hours or to work from home

have increased.

With respect to the results obtained in the case of public-sector workers,

there is a clear tendency for diminishing social benefits during the economic crisis,

as in the private sector. Values in the ‘change’ column are mostly negative;

nonetheless, the most significant is the greater reduction of social benefits, in

comparison with data from private companies. In other words, public-sector

companies are perceived to have reduced non-pay benefits more than private

companies. In the case of public-sector companies, substantial negative values are

seen in the areas related to health benefits (-8.2), economic security benefits (-7.1),

leisure and free time benefits (-7.1), and training and information benefits (-6.0).

Only the results in the area of job position and well-being benefits are similar to

those obtained for private companies.

Moreover, in order to check whether companies’ capital ownership (private

companies versus public companies) is a significant variable for the analysis of the

offer of social benefits before and during economic crisis, ‘the average social

benefits offered’ by both public companies and private companies was analysed

based on the collected sample. Table 5 shows that private companies offered a

lower average number of social benefits than public companies both before and

during the economic crisis.





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Table 5: Average social benefits according to ownership (public versus

private) Type of business

Private Public

Before crisis 16,62 (8,31) 18,86 (6,86)

Nowadays 15,40 (8,31) 16,46 (7,76)

Difference -1,21 (4,72) -2,39 (5,85)

Means; standard deviation in parentheses

Since ‘the average social benefits offered’ does not follow a normal

distribution, the different results between public companies and private

companies were contrasted using the Mann-Whitney U test. Table 6 shows the

results of this analysis. According to these results, although public companies

offered a higher number of social benefits than private organisations before the

economic crisis, and this difference was statistically significant, the current

recession has put the offer of both types of companies on the same level and,

currently, discrepancies are not statistically significant. This fact is easy to explain:

the economic recession caused public expense control measures to correct the

Spanish public deficit, which are strongly affecting the offer of social benefits by

public organisations. Thus, according to respondents’ opinions, the current

recession is causing a reduction in the offer of social benefits to public workers in a

more drastic manner than in private companies.

Table 6: Mann-Whitney U test Type of business

Private Public Asymp. Sig. (2-tailed)

Before crisis 73,62 81,7 Z = -2,313 (0,021)

Nowadays 69,98 86,76 Z = -1,113 (0,266)

Means were shown; statistical significance in

parentheses

5.3. Social benefits based on company size

With respect to possible effects because of company’s size, Table 7 shows

that the average of social benefits offered depends, to a large extent, on the number

of employees at the company. Table 7 shows results for the average of social

benefits offered by companies according to company size (i.e. number of





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employees). Likewise, in order to check whether there were statistically significant

differences, we used the Kruskal-Wallis non-parametric test, since there are more

than two groups. Table 8 shows the results of this test. Differences in the offer of

social benefits depending on company size are persistent during the economic

crisis.

Table 7: Average offered social benefits according to company size

Size (number of employees)

< 10 10 to 50 51 to 250 >250

Before crisis 11.67 (6.46) 18.52 (8.50) 14.94 (6.63) 18.94 (7.16)

Nowadays 9.86 (6.00) 16.32 (8.32) 14.41 (6.40) 17.28 (8.05)

Difference -1.8 (5.88) -2.2 (5.21) -0.52 (1.32) -1.66 (5.55)

Means; standar deviation in parentheses

Table 8: Kruskal-Wallis test Size (number of employees)

< 10 10 to-

50

51 to

250 >250 Asymp. Sig. (2-tailed)

Before crisis 45.10 88.20 68.44 97.30 Chi-Squared (3 df) = 21.321 (p<0.01)

Nowadays 44.90 87.47 75.76 83.12 Chi-Squared (3 df) = 19.191 (p<0.01)

Means were shown

5.4. Perception of importance of social benefits in Spanish companies

One of the research aims was to check whether companies’ offers of social

benefits are adequate for workers’ expectations, and to evaluate the relative

importance given by respondents to diverse social benefits. This was measured

through a five-point Likert scale, in which 1 represents minimum importance

while 5 represents maximum importance. Respondents were asked to ‘evaluate

the importance you give to each benefit, regardless of whether your company

offers it (or offered it before the economic crisis and does not offer it today)’. Table

9 shows the average value (in descending order) for the importance given by

respondents to each social benefit. By comparing the information in Table 3 with

the results of Table 9, it can be observed that, in general, the offer of social benefits

by companies is adjusted to the social benefits most valued by workers.

Nonetheless, there are certain social benefits that, despite being valued by

employees, are not offered by companies and do not appear in Table 3. For





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instance, pension plans, dental care expenses, and parental or adoption

complements are benefits well valued by employees, but not usually offered by

their companies.

Table 9: The 15 social benefits most valued by respondents

Social Benefits

Overall rating Order by sex

Area N Mean

Std.

Dev. Order Men

Wom

en

1 Eye care expenses 163 4.20 1.03 1 3 1 Health

2 Training expenses for employees 161 4.11 1.06 2 2 3 Training and

information

3 Flexible work hours 162 4.09 1.16 3 1 4 Job position and

well-being

4 Leaves 158 4.01 1.07 4 6 2 Leisure and free-

time

5 Periodic medical check-ups 165 3.99 0.97 5 4 5 Health

6 Life and/or accident insurance 161 3.82 1.19 6 5 11 Health

7 Rewards (by seniority, by

accomplished objectives) 158 3.76 1.29 7 8 7 Economic Security

8 Pension plans 157 3.75 1.19 8 7 10 Economic Security

9 Salary advances or loans with no

interest 157 3.75 1.06 9 9 8 Economic Security

10 Paid personal days 158 3.70 1.28 10 12 6 Leisure and free-

time

11 Laptop provided by company

and Internet access 162 3.67 1.36 11 11 9

Job position and

well-being

12 Parental or adoption

complement 158 3.63 1.22 12 13 12 Economic Security

13 Car park 161 3.58 1.43 13 10 13 Health

14 Extended parental leave 160 3.42 1.29 14 21 14 Health

15 Dental care expenses 162 3.41 1.28 15 17 15 Health

A high percentage of coincidence can be observed between genders,

although there are certain relevant differences. For example, the chance to have

life and/or accident insurance occupies the fifth position in the rank of benefits

most valued by men, whereas women do not consider it too relevant (eleventh

position). Furthermore, women give higher importance to leaves and personal

days. As a consequence, given that men and women can value social benefits

differently, every company must take into account such differences when

designing its offer of social benefits.





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6. Conclusion

This work is focused on the concept of social benefits, understanding as

those remunerations in kind voluntarily offered by an employer beyond what is

established in labour laws and collective agreements. We contribute to prior

literature in several ways. First, our findings demonstrate the need for companies

to pay greater attention to certain aspects of remuneration which, although not

contained in the base salary, greatly influence the assessment made by employees

on their own company. Social benefits are part of the concept of Internal Corporate

Social Responsibility (hereinafter, Internal CSR) of the company. Internal CSR is

defined as a part of the CSR focused on managing human resources in a social,

sustainable, ethical and caring way (e.g., Carneiro, 2008). According to this

concept, the retributive system adopted represents one of the most important

assets of the company. Thus, if a company is willing to apply Internal CSR, it will

have to pay special attention to the implementation of appropriate policies for the

professional and personal development of its employees (EC, 2001). The existence

of social benefits not only greatly improves working conditions but also the

personal conditions of employees, encouraging actively the reconciliation between

work and family life and providing access to certain products or services which are

difficult to access individually by employees. Therefore, this retributive instrument

is one of the elements to consider when companies decide to establish a plan of

Internal CSR.

Second, over the last few years the international business context has been

suffering a serious economic recession, which has resulted in several companies

being focused on cutting overall costs and neglecting other corporative objectives

such as social aims. This study analyses whether the current situation of economic

downturn influences the maintenance of social benefits by companies. With regard

to this analysis, on the one hand, the comparison between the situation before the

economic crisis and the current context shows that, in general, social benefits

offered by companies to their workers have been reduced. Moreover, this

reduction has been larger in public companies. This can be explained by the lower

number of social benefits already offered by private companies before economic





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crisis. Therefore, during the economic recession, the difference between the public

and private sectors has stopped being statistically significant. Nevertheless, note

that, in general, some aspects considered social benefits such as flexible work

hours, laptops provided by the organisation, and Internet access are being offered

to a large extent during the economic crisis, since companies are attempting to

have more flexible employees. On the other hand, the respondents considered, in

general terms, that social benefits received were adequate to meet their

expectations. Nonetheless, it would be appropriate to keep improving the

adaptation of the social benefits programs to staff needs, since some of the most

demanded benefits such as pension plans, work travel expenses, maternity

complements, housing purchase allowances, and nursery service are barely offered

in Spanish organisations. This adaptation to employees’ needs is particularly

important considering the differences in the preferences shown by men and

women, whose labour and family needs are partially different.

Finally, this work opens new research lines toward an in-depth analysis of

the essential role played by the inclusion of social benefits in the human resources

management of the company. For instance, future research could analyze the

impact of the existence of social benefits on organizational climate and labor

relations within the firm. Further, it could be also interesting to analyze whether

the commitment level of employees is related to the existence of social benefits

within the firm.





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Appendix 1 Table A1: The 45 social benefits included in the questionnaire

TYPES OF BENEFITS

BENEFITS RELATED TO HEALTH

Private medical insurance

Periodic medical check-ups

Life and/or accident insurance

Medicine expenses

Dental care expenses (employee and/or family)

Eye care expenses (employees and/or family)

Extended parental leave (accumulation of period of lactation)

Psychological treatments (stress)

Treatments to give up smoking

JOB POSITION AND WELL-BEING BENEFITS

Flexible work hours

Company canteen

Car provided by company

Mobile provided by company

Car park

Break room

Gymnasium

Nursery

Work clothes and tools

Laptop provided by company and Internet access

TRAINING AND INFORMATION BENEFITS

Training expenses for employees

School expenses for children

School transport expenses

Special grants for children (university, stays abroad)

Subscriptions to specialised magazines or newspapers


Pension plans

Salary advances or loans with no interest

Parental or adoption complement

Accident or leave complement

Participation in company’s profit

Remuneration in shares or stock options

Discounts for employees on company’s products or services

Rewards (by seniority, by accomplished objectives, etc.)

LEISURE AND FREE-TIME BENEFITS

Cultural activities (cinema, shows, and theatre tickets)





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Trips paid by company

Paid personal days

Subsidised sport activities

Leaves (exams, process of moving, visits to the doctor)

Paid sabbatical year

OTHER SOCIAL BENEFITS

Luncheon vouchers

Discounts on insurance/mortgages and loans/health insurance

policies/hotels/restaurants

Work travel expenses

Housing purchase allowances

Gifts (Christmas presents, company products)

Financial and/or legal assistance

Predisposition to contract children and/or couple

Are companies maintaining social benefits in constrained economic times?

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