Executive Summary:

Over the past few decades as the external environment has become more unpredictable, and the
corporations have understood that people are a critical factors in business and having the right
people at the right place at the right time with the right motivation is the key aspect in delivering
high performance. When they deeply analyzed the performance part they came know that issues
in the company performance are often linked with the human resource, the people. In order
rectify it and achieve the maximum performance the people’s responsibilities have to be altered,
the level motivation has to be changed and even the rewards have to be changed. A generation
ago the companies were focusing on product development and to secure new customers and fresh
lines of business.[ CITATION Abb05 \l 1033 ]

Due to the information explosion, liberalization of markets and trade, diversity in work force
increase in life expectancy and sprouting of free trade zones and other factors have taken away
many job titles in from the corporation .Things have dramatically changed the corporate
landscape – in the ways companies operate, in the nature and location of opportunities, social
responsibility and the nature of competition they face. The employees also had to adapt to the
changes. The companies also had to search vigorously for talent. The employee retention rates
began to decrease as there is high demand for talented and high performing work force. In order
to maintain the high standard of employees the companies had to give more emphasis on career
development, training and employment conditions. It later led to the extensive augmentation to
the reward package and there was overall increase in the rewards and other remunerations and
much higher incentive components and during this time the sparks of share based remuneration
also came in to picture. The employees had a wide range of career options and paths where all
the potential job seekers knew the how important they are how they should be treated and
remunerated at the works place. The needs and wants of the employees are different and they
needed flexible or individually tailored benefits.

Hence this paper is to critically evaluate whether the implementation of flexible benefits is worth
to satisfy the present and growing needs of the employees and also is this viable for all
organization to consider it as strategy to make the employees loyal and happy by giving them
what they want where the total cost to company (CTC) remains the same.
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Contents
Executive Summary:....................................................................................................................................i
Introduction:................................................................................................................................................1
Incentive theory.......................................................................................................................................2
Reward system design and expectancy theory:........................................................................................2
Advantages of flexible rewards system:..................................................................................................3
Main issues in organizations:.......................................................................................................................4
Google:....................................................................................................................................................4
Infosys:....................................................................................................................................................5
Implications on findings..............................................................................................................................6
Suggestions and Recommendation:.............................................................................................................7
Conclusion:.................................................................................................................................................8
Works Cited.................................................................................................................................................9
Appendix...................................................................................................................................................11
Appendix 1............................................................................................................................................11
Retirement and savings*...................................................................................................................11
Time away*........................................................................................................................................12
Benefits … beyond the basics*..........................................................................................................12
Benefits … way beyond the basics*...................................................................................................13
Appendix 2............................................................................................................................................13
Appendix-3............................................................................................................................................15

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Introduction:
Reward management deals with the strategies, policies and processes required to ensure that the
contribution of people to the organization is recognized by both financial and non-financial
means.[ CITATION mic08 \l 1033 ].Flexible benefits, Cafeteria plans, flexible compensation
whatever thy name be is a rewards system in which employees choices are given importance
rather than the company itself fixing the salary and benefits. Thus allowing the employees to
choose what is best to fix their needs. Some of the major multinational banks have recently
adopted this scheme and was successful.[ CITATION Jay94 \l 1033 ].The fresh graduates and others
employees appear to more self-serving and impatient; they wish to learn and master the
competencies quickly; they expect good remuneration packages, seek work life balance and
mobility. Flexible benefits or flexible pay is another pre-consumed notion that potential
candidates or employees will have in mind.

Flexible benefit arrangements are rapidly becoming the norm, whether for domestic
employees or for internationally mobile staff. There are opportunities to select levels of life
insurance cover, pension benefit, medical protection, and even vacation. Access may also be
provided to additional cost-effective benefits, in exchange for reduced cash, such as dental
insurance and car schemes through the company’s superior buying power. This allows the
employee to select a suite of benefits (generally at no additional cost to the company) that suits
their personal requirements.[ CITATION mic08 \l 1033 ]

Moreover, those choices can be altered over time as the employee’s requirements change.
However, choice needs to be ‘informed’, so employers are providing much greater information
on the value of benefits – often resulting in total reward statements. These can be extremely
helpful for personal financial and lifestyle planning, thereby helping employees to manage
their work-life choices.[ CITATION Ste95 \l 1033 ] Flexible working, whether by hours of the day
or by location, pro- vides much greater scope for an employee to organize their work and non-
work activities. Some organizations have managed to accommodate more part-time working
patterns. Part-time working is not a new phenomenon. It has long been used to suit the business
demands of a company. In today’s world, it is being introduced to suit the needs of the

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individual rather than the needs of the company. For some employees, flexible working extends
to sabbaticals or career breaks.[ CITATION Rob09 \l 1033 ]

Incentive theory
A reward, tangible or intangible, is presented after the occurrence of an action (i.e. behavior)
with the intent to cause the behavior to occur again. This is done by associating positive meaning
to the behavior. Studies show that if the person receives the reward immediately, the effect
would be greater, and decreases as duration lengthens. Repetitive action-reward combination can
cause the action to become habit. Motivation comes from two sources: oneself, and other people.
These two sources are called intrinsic motivation and extrinsic motivation, respectively.
[ CITATION Ste95 \l 1033 ]

Applying proper motivational techniques can be much harder than it seems. Steven Kerr notes
that when creating a reward system, it can be easy to reward A, while hoping for B, and in the
process, reap harmful effects that can jeopardize your goals.

Reward system design and expectancy theory:

Establishments have the capacity to remunerate individuals in countless ways. Because they
can vary both the kinds of rewards they give and the reasons for which they give them,
Organization can draw from an almost infinite number of approaches to reward individuals.
People don’t automatically come to work, continue to work, or work hard for an organization.
They need to be motivated to take a job with a company, to come to work each day, to continue
to work there, to learn, to perform efficiently, and to accept change. The most widely accepted
explanation for why people are motivated to work, perform, learn and change is rooted in
what psychologists call expectancy theory.

Expectancy theory argues that people are mostly rational decision makers who think about
their actions and act in ways that satisfy their needs and help them reach their goals. The
theory assumes, and research evidence confirms, that people generally try to deal rationally with
the world as they see it. It views people as proactive, future-oriented and motivated to behave
in ways that they believe will lead to valued rewards. It does not suggest that people will

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always resist change. Quite to the contrary, it suggests that they will seek it if it leads to their
receiving valued rewards.[CITATION Edw06 \l 1033 ]

Since organizations get the behaviors they reward, organizations that wish to perform well
and change effectively need to create systems that reward both performance and change.
This sounds simple, but it is not easy to do. It is also not what most organizations do. All too
often, they reward stability more than change, seniority more than performance and job size
more than skill development.[ CITATION Edw06 \l 1033 ]

Advantages of flexible rewards system:

 Tax and National Insurance efficiency

  Cost control what employees want there will

  Employee choice

  Helping with recruitment

  Improved retention

  Improving motivation

  Being seen as a modern and forward thinking employer

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Main issues in organizations:

The organizations selected are Google and Canon; they both are information technology based
companies. In which Google focuses on soft wares and services whereas Canon focuses on products and
after delivery services. The organizations are selected is because both these are very large MNCs and they
both have the flexible rewards system or the cafeteria rewards system

Google:
Google is a multinational public company specializing in internet based services, Cloud computing and
advertisements. Google had flexible benefits strategy almost from the time of its foundation. Often
Google’s flexible benefits and working environment is rated as exemplary. Google is often voted in the
top list as ‘one of the best place to work ’.Google’s flexible rewards system helped goggle a lot when it
had deal with employees from the chain of mergers and acquisitions it has performed over the years.

Luxurious package:

Google is regarded as one of the best place to work and the luxurious package is one of the reason they
are awarded this .They spend large portion of their revenues in to employment benefits

Employee friendly & Office refreshments:

Google is known for its employee friendly campuses were good refreshment are also provided free so that
employees can relax and work and spent some time in creativity and innovation

Flexible package

Google has one of the largest and complex flexible packages. They have so much option to choose from
the employees are often confused what plan to select.

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Infosys:
Infosys is an information technology Services Company headquartered in Bangalore, India. Infosys is
one of the largest IT companies in India with 114,822 employees (including subsidiaries) as of 2010.It
has offices in 33 countries and development centers in India, China, Australia, UK, Canada and Japan.
[ CITATION Wha10 \l 1033 ].Infosys is often selected as the best managed company in India.

No flexible benefits: Except for USA and Canada Infosys does not have a flexible benefits package.
Flexible benefits are now a days a normal system but Infosys still follows the old school thought.In usa
and canada they implemented Flexible benefits is because they have tax reductions

Region (country) wise rewards system: They follow a region specific or country specific fixed reward
system.

Fixed benefits with low base salary:

Infosys HR policies are basically to give fixed benefits and low base salary. Their salary is often lower
than most of smaller companies in the same domain. The employee tends to remain working is mainly
due to

More investor friendly:

Infosys got 2nd rank in the investor friendly companies in Asia-pacific and it having high growth rate with
a considerable amount of profits. They are turning in to profit oriented conglomerate which used to be
built up on values and tradition and loyalty towards employees.

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Implications on findings
Google :

Very expensive: Google spent a lot of their income on their flexible rewards system and other
perks and remuneration

Less productivity: As Google has a very employee friendly and less strict environment
.Therefore the employee becomes pampered with all the benefits and they do not do any work.

More creativity and innovation: As they are given more benefits and free time to innovate they
tend to do a lot of creative work. Ample funding is also given to the employees to think innovate
and create.

High employee retention rates[CITATION Min10 \l 1033 ]: Google even after investing a lot of
money on HR policies and employee benefits. Employees still tend to leave the company.

Infosys: See Appendix # 3

Less, employees friendly: Infosys was founded on tradition , principle and values but in the late
2000s it is moving towards more profit oriented and investor friendly .They used to be employee
friendly but now they are not.[ CITATION Min10 \l 1033 ]

High retention rates: as they give less salary and fixed benefits and their pay structure is less
than the industry average along with heavy load of work employees tend to leave.

Average productivity: Employees are not motivated by less pay and more work so they tend to
show only average productivity

Work life balance is not good: Infosys tend to treat employees as work horses and they use
them to the maximum extend. Because of this they have work more than the standard time
without extra pay thus altering the work life balance.

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Suggestions and Recommendation:

Google: Even after giving employees, business jet to pedicure the retention rates are not so good.
[ CITATION Mic09 \l 1033 ].After identifying the research conducted by glassdoor.com it is evident that
employees are leaving Google not for a better pay or they are not leaving because they are not happy with
the remuneration. Most of the previous employees suggest that the work culture is not good and as the
employees are given more freedom in Google like they can bring in their pets to office and wear casuals
to office. All the workers may not like this and again some believe that compelling to innovate is not a
good practice.

Then again the employee retention rates prove that the Flexible benefits or the luxurious remuneration
packages are giving the desired motivation for them to stay back. Some of Google’s previous employees
believe that the packages of Google made them less productive and cultivated the seed of laziness in
them. Google’s employees are allowed to spend 20% of their time to creative innovation. Some
employees do tent to waste time and money of the company for this. What I would suggest is to have
team based innovation activities where all the members are collectively responsible for the completion of
a task.

Google’s employee remuneration packages are very expensive and they tend to drain a lot of juice from
the revenues .These packages as I analyzed are highly expensive and mere fancy stuff which are neither
giving adequate productivity nor lowering the employee retention rate. If Google wants to be more
investor friendly I would suggest that they should reduce their expenses on fancy remuneration package
and increase their capital as most of these are mere waste. They should develop a balanced salary package
with above industry standards.

Infosys: Infosys follows fixed rewards remuneration package with country wise differentiation. The fixed
benefits package was very good in the last two decades now the situation has changed in India due to the
western influence and more brilliant work force.

Infosys shows an increase in retention rates (Refer : Appendix 3) and researches done by economic times
shows that Infosys is turning more investor friendly rather than employee friendly.it is high time that
Infosys has to change the rewards system from fixed to a flexible package .All the major players in the
industry have already shifted to a flexible package and most companies pay a higher package.

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Infosys should give more attention to employees and they need to make a flexible remuneration package
where both investors and the employees should be happy. The flexible package should design in such a
way that it must not have much influence on the revenues but must be motivating to the employees.

Conclusion:
Many redundancies have been avoided in the current recession because so many companies now have a
flexible approach to pay, delegates at a reward seminar heard. Despite criticism of bonuses in the wake of
the banking crisis, Vicky Wright, senior reward consultant at Watson Wyatt and current president of the
CIPD, said that, in reality, performance-related pay had helped to stem job losses.[ CITATION Rob09 \l
1033 ].

From an employee point of view, the ability to shape a benefits package that is most relevant to
their own circumstances is likely to improve appreciation of the benefits they can access.  It also
enables them to access a broader range of benefits as a flexible benefit plan can offer a much
wider range of benefits and a fixed spending allowance will control the cost to the employer.
[ CITATION Mic09 \l 1033 ]As of today’s current scenario Flexible Rewards System is the best
practice. Most cases both the employees and the employers are satisfied .Although
implementation is expensive the organization will reap the profits in a shortly and this would be
the most cost effective rewards system with the highest rate of employee acceptance.

[2194 words]

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Works Cited
Abbott, K. (2005) 'A Flexible Approach to Reward', EBF.

Amstrong, m. (2008) Employ reward management and practise, 3rd edition, new delhi: Kogan
Page India.

Anonymous (2009-2010) Canon USA Reviews, [Online], Available:

http://www.glassdoor.com/Reviews/Canon-USA-Reviews-E4149.htm [10 September 2010].

Arrington, M. (2009) Why google employees quit, 18 January, [Online], Available:

http://techcrunch.com/2009/01/18/why-google-employees-quit/ [10 September 2010].

Dowlin, P., Festing, M., Engle, A., 2008, International Human Resource Management: managing
people in a multinational context, London, Thomson Learning.

Edward, E.L. and Worely, C.G. (2006) 'Designing Employee Reward System That Keep on
Working', Ivey Business Journal, vol. I, no. 3, pp. 1-5.

Evans, P., Pucik, V., Barsoux, J., 2002, The Global Challenge: Framework for International
Human Resource Management, New York, The McGraw-Hill companies.

Eric Schmidt (2010) Life at google, [Online], Available:

http://www.google.com/jobs/lifeatgoogle/benefits/ [12 September 2010].

Joseph, M. and John, S. (2010) HR-policy-Is-Infosys-losing-employee-friendly-status, 12 March,

[Online], Available: http://economictimes.indiatimes.com/news/news-by-industry/jobs/HR-
policy-Is-Infosys-losing-employee-friendly-status/articleshow/5696332.cms [12 September
2010].

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Kerr, S. (1995) Academy of Management Executive, [Online], Available:

http://pages.stern.nyu.edu/~wstarbuc/mob/kerrab.html [10 september 2010].

Lewis, J.C. (1994) 'Flexible Pay has Nice Twist', ABA Banking Journal, January, pp. 98-105.

MacLachlan, R. (2009) Flexible pay has helped prevent redundancies, November, [Online],
Available: http://www.peoplemanagement.co.uk/pm/articles/2009/11/flexible-pay-has-helped-
prevent-redundancies.htm [18 September 2010].

Richards, J. (2009) Flexible Benefits, June, [Online], Available:

http://www.cipd.co.uk/subjects/pay/empbnfts/flexiben.htm [12 September 2010].

What we do (2010), January, [Online], Available: http://www.infosys.com/about/what-we-

do/Pages/index.aspx [12 September 2010].

Windham International Global Reward Trends Survey Report (1999). Strategies for successful
rewards system. In: Goss, Y & Hynes, G. E. (2005). Strategies for successful rewards
system..Journal of International Business Research [online]. 4(1) p 97-109. Available from
http://www.alliedacademies.org/Publications/Papers/JIBR%20Vol%206%20No
%201%202005%20p%2097-109.pdf [Accessed 5/07/2010]

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Appendix

Appendix 1

GOOGLE: Medical Insurance: 3 Carriers

Carriers for California:

 Blue Shield: PPO (Preferred Provider Organization) or HMO (Health Maintenance Organization)
 CIGNA: PPO or HMO
 Kaiser: HMO

Carriers for Other States:

 Blue Shield: PPO (Preferred Provider Organization) or OOA (Out of Area)

 CIGNA: PPO or HMO

Dental Insurance
Comprehensive coverage through Delta Dental.

Vision Insurance
Exams, contacts, lenses and frames all generously covered.

Flex Spending Account Plan

Includes Medical Flexible Spending Account, Dependent Care Assistance Plan, and Qualified Transportation Benefit.

EAP – Employee Assistance Program

Services for employees and their dependents include free short-term counseling, legal consultations, financial counseling, child
care referrals, pet care referrals, and more.

Life and AD&D Insurance

Automatic coverage at 2 times annual salary.

Voluntary Life Insurance

Option to purchase additional life insurance.

Short Term & Long Term Disability

Short Term Disability Insurance coverage provided at approximately 100% of take-home pay. Long Term Disability coverage
provided at 60% of salary once Short Term Disability is exhausted.

Business Travel Accident Insurance

Automatic coverage at 2 times annual salary.

Retirement and savings*

Google 401(k) Plan

Employees may contribute up to 60% and receive a Google match of up to the greater of (a) 100% of your contribution up to
$3,000 or (b) 50% of your contribution up to $8,250 per year with no vesting schedule! We offer a variety of investment options
to choose from through Vanguard, our 401(k) Plan Administrator. To help you with those tough investment decisions,
employees can access Financial Engines to receive personalized investment advice.

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529 College Savings Plan

This plan provides employees with a way to save money for post-secondary education.

Time away*

Vacation

 1st year: 15 days

 4th year: 20 days
 6th year: 25 days

Holidays
12 paid holidays (sick days taken as necessary)

Maternity Benefits
Up to 12 weeks off at approximately 100% pay, eligible for an additional 6 weeks if employed at Google for more than 1 year.

Parental Leave (for non-primary caregivers)

Up to 7 weeks off at approximately 100% take-home pay

Take-Out Benefit
To help make things easier, new moms and dads are able to expense up to $500 for take-out meals during the first 3 months
that they are home with their new baby.

Benefits … beyond the basics*

Tuition Reimbursement
We’ll help you pursue further education that’s relevant to what you do. You must receive grades of “B” or better. Why a “B” or
better? Because we said so. Tuition reimbursement is up to $12,000 per calendar year.

Employee Referral Program

Good people know other good people. Our best employees have been hired through referrals. Google encourages you to
recommend candidates for opportunities here and will award you a bonus if your referral accepts our offer. We pay out these
bonuses a month after the referral starts at Google.

Back-Up Child Care

As a California employee, when your regularly scheduled child care falls through Google will provide you with 5 free days of
child care per year through Children’s Creative Learning Center (CCLC). There are 13 Bay Area locations serving ages 6 weeks –
12 years.

Gift Matching Program

Google matches contributions of up to $3000 per year from eligible employees to non-profit organizations. Bolstering employee
contributions to worthy causes with matching gifts doesn't just mean helping hundreds of organizations, both locally and
globally; it’s also a tangible expression. We want Googlers to get involved – and the company is right behind you.

Adoption Assistance
Google assists our employees by offering financial assistance in the adoption of a child. We’ll reimburse you up to $5000 to use
towards legal expenses, adoption agencies or other adoption professional fees. Parental leave and take-out benefit also apply.
See Time Away.

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Benefits … way beyond the basics*

Food
Hungry? Check out our free lunch and dinner – our gourmet chefs create a wide variety of healthy and delicious meals every
day. Got the munchies? Google also offers snacks to help satisfy you in between meals.

On-site Doctor
At Google headquarters in Mountain View, California you have the convenience of seeing a doctor on-site. Physical therapy and
chiropractic services are also available.

Shuttle Service
Google is pleased to provide its Mountain View employees with free shuttles to several San Francisco, East Bay and South Bay
locations.

Financial Planning Classes

Google provides objective and conflict-free financial education classes. The courses are comprehensive and cover a variety of
financial topics.

Other On-Site Services

At Google headquarters in Mountain View, you'll find on-site oil change and car wash services, dry cleaning, massage therapy,
gym, hair stylist, fitness classes and bike repair.

Other Great Benefits

Halloween & holiday party, health fair, credit union, roller hockey, outdoor volleyball court, discounts for products and local
attractions.

Babette, Massage Programs manager

* Benefits vary depending on location and are subject to change without notice. Please check with Human Resources at your
specific

Appendix 2
INFOSYS
Infosys offers a robust package of benefits that are comprehensive and competitive within our industry.

HEALTH CARE
Coverage for all health care benefits starts from the date of reporting to work.

Medical Insurance
Employees and their dependent family members are covered under a PPO plan. This is a premium plan that offers comprehensive coverage for health
care - including emergency and preventive care - and is very liberal about the choice of the health-care providers.

Dental Insurance

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Employees and their dependent family members are covered under a PPO dental insurance plan. This is a plan that offers comprehensive coverage
including orthodontia and is very liberal in the choice of the dental-care providers.

Vision Care Plan

The Company has a self-funded vision care plan. Employees and their dependent family are covered.

Life Insurance
Employees are covered under a group insurance plan that provides up to $50,000 of Life Insurance coverage. Employees may purchase additional
coverage.

AD&D
Employees are covered under an Accidental Death and Dismemberment plan that provides a cover of up to $50,000.

INCOME PROTECTION PLANS

Short Term Disability Insurance

Voluntary Disability Insurance plan (for California employees) and a plan from a UNUM (for employees outside California) replaces up to 66-2/3
percent of salary for up to 90 days if an employee is disabled and unable to work.

Long Term Disability Insurance

This provides continuing income for long-term disabilities. After 90 days, this coverage (in combination with the Voluntary Disability Insurance plan for
California employees) pays a monthly income up to 66-2/3 percent of pre-disability earnings to a certain maximum.

401(k)
After completion of one year of employment, employees may contribute up to 20 percent of their compensation on a pretax basis to the Infosys 401(k)
plan. The maximum annual contribution, established by the Internal Revenue Service, is currently $12,000 per year. The company does not provide a
matching contribution.

VACATION TIME
Employees start with 2 weeks of paid vacation per year. The vacation days increase with service based on a schedule. In addition, the Company
observes the statutory public holidays as applicable.
The above mentioned benefits are indicative in nature. Their distribution is governed by company and government policies that are likely to change
from time to time without prior notice.

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Appendix-3
Infosys: Attrition rate for infosys for the period April-June 2006 was 11.9%. But now it has increased to is 13.7%, same as in the last quarter.
(Wants to Know More)

     

Here is a graph showing the number of employees of Infosys from the year 1994 to 2006

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