FRINGE BENEFITS EFFECTS ON EMPLOYEE PRODUCTIVITY IN THE PUBLIC

SECTOR (A CASE OF STATE DEPARTMENT OF WATER, NAIROBI COUNTY, KENYA)

BY HELEN N. KAMAU D53/CTY/PT/23327/2011

A RESEARCH PROJECT SUBMITTED TO THE SCHOOL OF BUSINESS IN PARTIAL

FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF DEGREE OF
MASTERS IN BUSINESS ADMINISTRATION, (HUMAN RESOURCES MANAGEMENT),
KENYATTA UNIVERSITY
NOVEMBER, 2013

From the study it was established that security benefits such as meal, transport and house allowances
contributed positively to employee productivity, that health of the workforce is inextricably linked to
the productivity of the workforce and the health of the nation‟s economy, that retirement benefits
strongly influenced workers‟ behavior, giving younger workers a compelling reason to continue
working for their employer and encouraging older workers to retire on a timely basis and finally that,
recognizing and rewarding employees for a job well done enhances employee productivity. Since all
p-values for all variables were found to be less than 0.05 it can be statistically concluded from the
study that fringe benefits have a significant influence on employee productivity in the public sector.

Fringe Benefit - still a Motivation?

Judit Pasztor
Óbuda University, Keleti Faculty of Business and Management
judit.pasztor@babylonglobal.co.uk
Szabina Valent
Budapest Business School, Faculty of Finance and Accountancy
valent.szabina@gmail.com
© Obuda University Keleti Faculty of Business and Management 2016. Published by Óbuda University http://kgk.uni-obuda.hu/fikusz

Willingness to accomplish additional work for benefits

The answers were positive: 60 employees (more than the half of the examined persons) are willing to do extra work if it
effects the amount of received benefits. 39 of them replied “maybe” and just 17 employees have no motivation at all. In
conclusion, fringe benefits have strong incentive affect.

Research results show that most of the employers do not inform their employees about the exact opportunities
offered by the Hungarian Cafeteria Plan. Even if the tax burden is the same between several different benefit
options, the list of given ones is usually complied by the company, without the assessment of employee needs and
preferences. If an individual looks for a new job, the “value” and content of the benefit package is not relevant
regarding the acceptance of a job offer, but when they are already hired, they are "moderately satisfied" with the
fringe benefit system – further improvement would be welcomed. Positive results are that increased sum of benefits
would effect employees' motivation towards additional work. Due to the employee’s willingness to work more,
companies could consider the range of the offered benefit selection and various information channels about the
cafeteria system.
As a conclusion, data has shown that employees can be motivated for more productive and effective work, if employers
consider the needs of individuals.

Ejiofor (1986) Usually many employees are not aware of the existence of fringe benefit program.
According to him, the time many employees become aware of the benefit in existence in their
organization is the time it is being threatened with withdrawal by management or when the
employee might have left the organization. He adds that benefits that are not properly administered
cause a lot of frustration.

Newman 1963 many employee benefit programme turns out to be moral depressant rather than
stimulants because they are not varied proportionately within the organization. They are inequitably
dispensed between senior and junior staff. Though subordinates do not expect to be treated like
their bosses, all employees are interested in what the boss gets.

Management has observed that it is in their own advantage to maintain a sound fringe benefit plan “
as employees seek security as well as leisure and deprivation in either area may lead to paralyzing
unrest that reflects itself in decreased effectiveness” Straus and Sayles 1971: 711-714

One problem always arises on the effectiveness of a benefit programme and this is lack of adequate
information provided to the employees. Lack of knowledge of the benefit programme are
astounding as they are numerous leading to poor understanding of the programme. Harrington 1970