Importance of Employee Benefits: Analysis of Two Journal Articles

This assignment analyzes two journal articles on the importance of employee benefits and their impact on productivity. Learnings and outcomes for accountants, regulators, and shareholders are discussed. The articles highlight the need for proper accounting and disclosure of employee benefits, and the positive and negative impact they have on employee performance. The similarities and differences between the two studies are also discussed.

Financial
Accounting
Assignment

By student name
Professor
University
Date: 5th Oct 2018.
Page 1

Executive Summary
The following assignment deals with the importance of employee benefits and the various
aspects related to the same. Two journal articles have been selected that are related to this
concept and an analysis of them have been done. The similarities and differences and learnings
from the two journals have been stated in this assignment.
Page 2

Table of Contents
Introduction................................................................................................................ 3
Analysis...................................................................................................................... 4
Purpose of the Research Studies and Research Questions.........................................5
Similarities and differences between the findings of the 2 studies.............................6
Specific outcomes and relevant learnings from the research findings.......................7
Conclusion.................................................................................................................. 9
References............................................................................................................... 10
Introduction
Page 3

Employee benefits refers to the benefits that the employees receive from the companies
that they are working for. Employee benefits can be both cash and kind and can be related to
various long term and short-term needs to the individuals who work in an organization. It is
important that proper accounting and disclosure of employee benefits is done as they form a
major part of the expenses for the company. Thus, management needs to state the various
disclosures related to the same and should make it apparent on how they are presenting their data
for the company. Employee benefits helps in keeping the management satisfied and motivated. If
they get good returns for the work that they do, they would also do the same and put the
maximum efforts for the organization. Employees are the biggest asset of any company and
management should always remember the same (Abdullah & Said, 2017). Various elements of
employee benefits would include fringe benefits, sick benefits, gratuity, provident fund, wages,
bonus etc. In this assignment we have selected two articles that discusses the various elements
that are related to employee benefits and helps in analyzing the various elements which are
related to them.
Analysis
The two articles that have been selected are - Benefit System effects on Employees’
Benefits knowledge, use and Organizational Commitment” by Robert R Sinclair of Portland
State University, Michael C. Leo of Oregon Health and Sciences University and Chris Wright
(Sinclair, et al., 2007); secondly, “Disentangling the Effects of The Employee Benefits on
Employee Productivity” by Dong Ug Kang of Korea National University, Gun Jea Yu of Hongik
University and Sang-Jik Lee of Hoseo Universuty (Kang, et al., 2016).
Page 4

Three reasons why these articles have been selected-
 Both the articles highlight the importance of employee benefits both for the employees
and the organisation
 Both the articles highlight the positive and negative impact that employee benefits have
on the performance of the employees.
 Both the articles highlight the need for employee disclosure in the annual report of the
company
Purpose of the Research Studies and Research Questions
In the first journal the different features of a benefit system are discussed with more focus
on how these affect the employer-employee relationship, the overall quality of the
communication and the quality of the system is also discussed. It is very important that
employees should get their dues as and when needed because a lack of a proper employee benefit
system might cause the employees to leave the organization and search for better opportunities.
Hence it is comprehended that a strong system of employee benefits should be developed. With
times not only this has become an important part of the overall financials of the company but it
has also increased the overall complexities that are involved with the administration of the same.
As per the author, the overall rate of employee benefits has increased from 3% to 2&% from
Page 5

1929 to 2001 (Boghossian, 2017). There are various reason and factors that affects the overall
employee benefits and that includes increase in costs like health care, standard of living, cost of
living, increased competition in the market, increasing population etc. have all contributed in the
growth of the complexity that is related to employee benefits. As the rate of inflation increases
the rate of employee benefit cost also increases (Pamela & Tamara, 2013). It is important that
maximum benefits should be derived from the policies made by the company in this aspect and it
is important that better quality should be maintained. There should be defined structure as per
which people should be paid based on their position in the organization and the kind of work that
they do and there should not be any compromise or biasness in this.
The second journals describe the effect that employee benefits and its policies have on the
overall productivity of the employees. It affects both the individual and the organization on
different levels. It has both positive and negative impact on the productivity of the employees of
the company. There are multiple views that have been stated in respect of this which includes
both positive and negative impact of this. On one end the authors have stated that employees are
very much concerned about their own benefits and they would like to invest their time and
efforts for organizations that provide them best results and the next view has been that since
employees are a group that requires money to work and hence even though they get long term or
short term benefits they would keep working for the company (Cayon, et al., 2017). There is a
very close relationship between employee benefits and the overall productivity of the
organizations. The employer tries to retain the employees and retain them in the organizations
and hence they provide them with more benefits and better returns. Every organization needs
skillful employees and management provides them the same. There are two sections in which the
employee benefits can be segregated into two sections which includes labor embodied and
Page 6

capital embodied. In this journal the organization have done a survey in the Korea and the labor
system over there and have shown the same in charts (Charles H, et al., 2015). It shows that
impact of benefits on the productivity of the employees which was negative and the impact of the
employee satisfaction of the positive. Hence, we see that in case the employees are not satisfied a
company would be affected and they would not get that results which they want and the
employees wont function based on that (Cundill, et al., 2017).
Similarities and differences between the findings of the 2
studies
The major similarities between the two studies are-
 Both the journals are focusing on the importance of the employee benefits and the affect
that it has on the productivity of the company and how both are related to each other.
 Both the journals are focusing on the effect that employee benefits have on the personal
grounds of the employee, how they work and what they deliver to the organisation. It has
both positive and negative impact and that has been mentioned in these articles clearly.
The major dissimilarities between the two studies are –
 The first journal focuses on the various factors that affects employee relationship and the
overall efficiency and effectiveness based on the same. The second article discusses the
effect of employee benefits on the productivity of the employees and they have both
positive and negative impact of that (Johan, 2018).
 The first journals discuss the positive impact of employee benefits on both employees
and employer and the organisation that they are working for. On the other hand, they
Page 7

second journal focuses on both positive and negative impact of employee benefits and
their disclosure in the annual report of the company.
Specific outcomes and relevant learnings from the
research findings
There are various outcomes that have been stated from the two journals with respect of few
specific professionals that are mentioned below:
Accountants in Australian Company:
 The accountants can understand how they should employee benefits in the annual report
of the company and the overall accounting related to that.
 The accountants will be able to understand how companies are calculating the wages and
benefits that they are paying and its disclosure in the annual reports of the company.
Accounting Regulators:
 They will understand whether proper rules and regulations have been followed by the
companies on disclosing employee benefits in the books of their company.
 The accounting regulators would understand benefits that employees are getting and
not unbiased and they are eligible to receive such benefits (Kang, et al., 2016).
Shareholders:
 The shareholders can understand that the increase in the employee benefits are scientific
and not arbitrary and there is no mismanagement in that.
Page 8

 It is also stated in the journal that employee benefits will have impact on the shareholders
of the company and the shareholders should analyse the same by checking their books of
account. Shareholders need to understand what is the basis on which the compensation is
decided and given.
The findings from the second journal has been stated-
Australian Accountants:
 The accountants will understand the employee benefits and effect on the productivity of
the company.
 The accountants will understand whether proper regulations have been followed.
Accounting Regulators:
 The accounting regulators can understand whether proper disclosures have been provided
in the books of the company.
 The regulators should understand whether they are in sync with the provisions of
Australian standards.
Shareholders:
 The shareholders can analyse whether the impact of employee benefits have been positive
or negative.
 The shareholders should check the trends with respect to employee compensation of the
company (Sinclair, et al., 2007).
Conclusion
Page 9

Based on the overall analysis it can be said that employee benefits are an important part
of the financials of the company and there is a direct correlation between employee relations and
employee benefits and the compensation paid. Thus, companies should analyze all these angles
and based on take such decisions which would help the management of the company.
References
Abdullah, W. & Said, R., 2017. Religious, Educational Background and Corporate
Crime Tolerance by Accounting Professionals. State-of-the-Art Theories and
Empirical Evidence, pp. 129-149.
Boghossian, P., 2017. The Socratic method, defeasibility, and doxastic
responsibility. Educational Philosophy and Theory, 50(3), pp. 244-253.
Cayon, E., Thorp, S. & Wu, E., 2017. Immunity and infection: Emerging and
developed market sovereign spreads over the Global Financial Crisis. Emerging
Markets Review.
Charles H, C., Giovanna, M., Dennis M, P. & Robin W, R., 2015. CSR disclosure: the
more things change…?. Accounting, Auditing & Accountability Journal, 28(1), pp. 14-
35.
Cundill, G., Smart, P. & Wilson, H., 2017. Non‐financial Shareholder Activism: A
Process Model for Influencing Corporate Environmental and Social Performance.
Page 10

International Journal of Management Reviews, 20(2), pp. 606-626.
Johan, S., 2018. The Relationship Between Economic Value Added, Market Value
Added And Return On Cost Of Capital In Measuring Corporate Performance. Jurnal
Manajemen Bisnis dan Kewirausahaan, 3(1).
Kang, D., Yu, G. & Lee, S., 2016. Disentangling the effect of the employee benefits
on the employee productivity. The Journal of Applied Business Research, 32(5), pp.
1447-1458.
Pamela, K. & Tamara, Z., 2013. Attaining legitimacy by employee information in
annual reports. Accounting, Auditing & Accountability Journal, 26(7), pp. 1072-1106.
Sinclair, R., Leo, M. & Wright, C., 2007. Benefit System Effects on Employee Benefits
Knowledge, Use, and Organizational Commitment. Journal of Business and
Pyschology, 20(1), pp. 3-32.
Page 11