As director of HR, you are discussing cost pressures on the company with the CEO and the CFO. Two possible options are suggested: reducing the amount of next year's base pay raises for employees or reducing the health-benefit program for employees. The CEO and CFO ask you which reduction will cause the most dissatisfaction among employees. With research in mind, which prediction will you share with them?

Question

Quizplus · Accepted Answer

Research suggests that employees highly value their health benefits and are more likely to be dissatisfied with reductions to those benefits than with lower raises. This is likely due to the fact that health benefits are perceived as a crucial part of total compensation, and because employees often place a high value on access to affordable healthcare. Therefore, reducing health benefits may lead to greater dissatisfaction among employees than reducing raises.

As Director of HR, You Are Discussing Cost Pressures on the Company