Flexible benefit plans in Dutch organisations

Abstract

Flexible benefit plans give employees a greater say over the composition of their benefits than traditional Dutch benefit plans. These arrangements developed in a time of further individualisation, increasing flexibility in the workplace, and a tight labour market in the Netherlands. By giving employees a choice in the way they are paid, employers hoped to become more attractive employers, and lend a helping hand to employees who were combining work and care. In this study, flexible benefit plans (FBPs) were researched on two levels: the choice of organisations for an FBP and the choices employees made within such arrangements were both addressed. The theoretical model for the analysis of the organisational choice for an FBP consisted of a combination of rational choice and institutional pressure, as used before to explain the occurrence of new HRM arrangements. This was augmented with a third perspective, that of the organisation's sense of itself as an employer. Besides efficiency or cost considerations and a desire to fit in in their institutional surroundings, organisations were expected to judge the costs and benefits of an FBP also on the extent to which it fitted in with the general nature of other HRM arrangements they offered their employees. Data were collected amongst over 600 Dutch organisations in the market sector. Analyses revealed that bussiness considerations play a minor role in the choice for an FBP, if any. Institutional surroundings do affect this choice, particularly the behaviour of other organisations and the absence of an industry collective labour agreement. FBPs were also more common in organisations that offered many flexible and work-family oriented working arrangements. Employees' choices were expected to be affected by work and household. Data about their choices were collecte in two organisations and amongst members of a large trade union. The way benefits are paid out could be improved upon for a considerable number of employees. Participation in an FBP was particularly worthwhile for fulltime employees, higher earners and parents. The fact that participation in an FBP is more attractive to 'full members' of organisations raises questions of fairness. The majority of participants in the FBPs changed the balance between time and money in their pay. In the two organisations employees chose overwhelmingly for selling their time off, the trade union members exhibited more balanced behaviour in this respect. Time selling was popular amongst parents of older children, while parents of younger children chose more often for extending their annual leave. Selling leave also turned out to be a way employees could correct the balance between their actual working times and their annual leave. There is a considerable group of workers who do not take all their annual leave, this allows them to trade the excess in for something more useful. Employees' opinion of their employer played an unexpected role, and this may be related to whether or not people sell their time off. Contrary to expectations, the lower the grade people gave their employer, the more likely they were to have sold their time off. This suggests that the opinion of the balance between time and money in people's reward influences their time choices, and raises questions about the actual extention of working time that results from these trades.