Welfare and its influence on employees

Currently in human resource management, employee welfare is becoming increasingly important because of its influence. When faced with the decision to choose a career or stay with their workplace, workers are often most concerned about welfare and incentives at the company. Similarly, a business that implements a good welfare regime will also attract talent, promote its brand, optimize labor productivity, and have a low employee turnover rate…

The article below will clarify issues related to benefits such as: concepts of benefits, classification of benefits, role of benefits for employees, and tips for building effective benefits.

1. Learn about employee benefits – What is welfare?

According to the International Labor Organization ILO, employee benefits can be understood as “types of facilities, services and amenities built according to commitments to create favorable conditions for employees.” Enable employees to work in a healthy environment, as well as take advantage of available benefits to improve their health, morale and productivity.

The Employee Welfare Research Institute (1987) offers the following understanding of benefits: employee benefits represent virtually any form of compensation other than direct wages; may be paid in whole or in part by the employer; may also be provided by a third party such as a government, insurance company or health protection organization.

In human resource management, welfare (welfare, benefit) is understood as indirect remuneration paid in the form of life support to employees, demonstrating the enterprise’s concern for the lives of employees.

Thus, regardless of the definition, benefits for employees are expressed in the form of material and spiritual benefits aimed at improving the quality of life, while encouraging growth of labor performance in enterprises.

Employee Welfare. Is it Important?

>>>Read more: Empower Your Workforce for Efficient Management with ESS

2. Types of employee benefits

Welfare is one of the rights of working people protected by law, currently divided into 2 forms: mandatory and voluntary:

2.1 Mandatory benefits

These are the minimum benefits that organizations must offer according to labor law requirements. In Vietnam, this form is clearly stipulated in the Labor Code and the Social Insurance Law, including 5 social insurance regimes for employees:

  • Benefits for sickness, work accidents or occupational diseases;
  • Maternity;
  • Retire;
  • Death.

It can be seen that ensuring a mandatory welfare regime in the company is one of the useful welfare policies for employees. When the employee or the employee’s family encounters difficulties and risks in life, these insurance policies will be an alternative channel or make up for the financial shortfall for that person, based on contributions to the Social Insurance fund.

2.2 Voluntary benefits

Voluntary benefits are benefits that organizations offer, depending on economic capacity and leadership interest.
Nowadays, voluntary welfare is gaining increasing attention and popularity. Human labor is recognized as the most crucial factor contributing to the success of businesses, and the welfare regime reflects the working environment and the specific quality of employees.

In addition to common voluntary benefits like offering health insurance and life insurance for employees and their families, many businesses are actively researching demographic characteristics in different locations. They analyze individual needs, calculate, and provide various customized benefits to enhance the quality of life for employees, aiming to attract long-term contributions to the business.

3. The influence of benefits on employees

Today, there is still a mistaken belief among many business owners that my business cannot afford employee benefits. Reality shows that the essential factors for running a successful business are keeping your employees happy and providing them with enough motivation to maximize productivity. Many studies have also proven that a happy workforce will work more effectively and stay with their job longer. Currently, different businesses are applying different welfare regimes:

  • Free lunch scheme;
  • Preferential loans, installment payments, deferred payments, low interest rates;
  • Subsidies for employees in difficult circumstances;
  • Gifts on holidays, birthdays, weddings, birthday celebrations for employees’ parents…;
  • Entertainment programs, vacations, housing, transportation, and working facilities;
  • Life insurance for employees and employees’ relatives.


Welfare Measures on the Quality of Employees Performance

In the Vietnam Digital Skills Readiness Report, 82% of survey participants believe that remote working will become more popular, especially after the COVID-19 pandemic. Around the world, a PwC survey said that 19% of employees participating in the survey were ready to work completely remotely. Another 37% expect to work remotely at least 2 days/week. In particular, 80% of Generation Z believe they can work remotely effectively. It is predicted that by 2025, generation Z, the newest factor to join the workforce, will account for 1/3 of Vietnam’s working-age population. (Source: pwc.com)

The happy workplace model serves as a motivational factor, encouraging employees to willingly exert extra effort during challenging periods for the company. It also fosters their participation in more demanding projects, with subtle encouragement from the business side.

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