Benefits and Their Impact on Organizational Commitment – a Case Study of a Finnish Multinational Organization

Abstract

Globalization and information technology has made it easier to change jobs than ever before. As companies are fighting for talent, they are trying to come up with ways in which to decrease turnover and retain their employees, especially the talents. Therefore, they need to increase commitment to the organization. Traditionally, wages have been very important to employees in terms of rewards. However, the importance of benefits has increased and benefits already account for almost half of the total compensation an employee receives. Thus, companies want cost-effective ways in which to manage their benefits. The law mandates some of the benefits offered to the employees, and companies cannot compete with those benefits. However, voluntary benefits offered to the employees are increasingly important in terms of attracting and retaining talent in the organization. Therefore, it is highly important for organizations to manage and develop their benefits according to the views and desires of the employees in order to create commitment.

This study aims to provide insights to organizations in terms of managing their voluntarily employee benefits efficiently. The main research question of this study is “How do benefits affect organizational commitment in the case company?” First, a closer insight on the importance and use of benefits is taken and then the satisfaction with different aspects of benefits is evaluated. Then the relationship between benefit satisfaction and organizational commitment is analyzed.

The literature review presents the existing literature on benefits and the effects benefits have on organizational commitment, followed by a review on organizational commitment literature and finally the section of benefits management in a multinational organization. This study uses the quantitative method and the data is gathered from the case company. The results from the questionnaire are statistically analyzed. The questionnaire was sent to over 2,000 employees of the case company, yielding over 1,000 responses. The data was analyzed in the light of the literature from existing research reviewed for this study.

The empirical findings highlight the benefits that are the most important for the employees of the case company as well as the satisfaction with the benefits. Furthermore, the findings suggest that there is a significant relationship between benefit satisfaction and organizational commitment and that benefit satisfaction correlates moderately with organizational commitment. Several recommendations are made for the case companies and similar organizations. These recommendations include developing the staff discount card, the communication channel through which benefit information is communicated, making information about benefits easier to find and considering the monetary value of benefits to the employees. This way companies can increase the commitment levels of their employees.