Companies are increasingly moving to more flexible employee benefits systems and giving employees more control over their benefits, based on the assumption that this will result in greater employee satisfaction with benefits. But is this assumption unfounded? A study of Spanish employees examined the role of personality traits in the relationship between benefits flexibility and benefits satisfaction. The results indicated that personality traits, particularly self-efficacy and internal locus of control, moderated the relationship between benefit flexibility and benefit satisfaction.
Key Topics: Flexible benefits; Benefit satisfaction; Personality traits; Self-efficacy; Internal locus of control
Title of Reviewed Article: Benefit flexibility and benefit satisfaction: does employee’s personality matter?
Researchers: José Manuel de la Torre-Ruiz, Maria Dolores Vidal-Salazar, and Eulogio Cordón-Pozo (University of Granada).
Publication: Personnel Review, 2017, Vol. 46 No. 1, pp. 2-16.
Setting the Scene
With the growing focus on employee benefits in many companies, through the likes of flexible benefits and innovative benefits (e.g. onsite gyms and restaurants), employees are growing to expect more from their company’s benefits offering and benefits are becoming more central to employees’ job satisfaction (Giancola, 2013).
Benefits systems with greater flexibility take into account individual differences and give employees the ability to choose benefits that are a better fit with their needs (Mitchell & Mickel, 1999; Hillebrink et al., 2008). Such flexible benefits have been shown to help in attracting and retaining talented employees (Lin et al., 2011), and can increase employee perceptions of equity (e.g. Cole & Flint, 2004).
Despite the various positive outcomes associated with benefits flexibility, it’s relationship with employees’ satisfactions with their benefits is less established, with results of research on this relationship proving largely inconclusive (e.g. Tremblay et al., 1998; Williams et al., 2008), despite intuition suggesting that employees would be more satisfied with benefits that meet their needs. Prior studies indicate this is a complex relationship, as moderating factors may play a role (Arnold & Spell, 2006).
Self-efficacy and internal locus of control are two such personality related moderators that are examined in the present study. Self-efficacy relates to individuals’ evaluation of their ability and capacity to performance their job, while internal locus of control relates to the general degree of control individuals believe they have over their work and life outcomes (Bandura, 1982; Judge & Bono, 2001).
Prior research indicates that self-efficacy does indeed relate to reward satisfaction (e.g. Mulki et al., 2008) and that high-performing employees will have higher reward expectations (e.g., Adams, 1965; Lawler, 1981). Similarly, research has indicated that the level of control employees have over their reward choices can have a positive effect on reward satisfaction (Williams et al., 2008).
This study focuses on the effect of these personality characteristics on the relationship between benefit flexibility and two types of benefit satisfaction, namely, benefit level satisfaction, which refers to employee satisfaction with the amount of benefits, and benefit determination satisfaction, which refers to employee satisfaction with how their benefits are determined.
The present study puts forward the following hypotheses for investigation:
Hypothesis 1 – “Employees’ self-efficacy moderates the relationship between the benefit flexibility and benefit level satisfaction in such a way that the effect is weaker when the employees’ self-efficacy is high rather than low.”
Hypothesis 2 – “Employees’ internal locus of control moderates the relationships between the benefit flexibility and benefit determination satisfaction in such a way that the effect is weaker when employees’ internal locus of control is high rather than low.”
How the research was conducted
An online questionnaire was used, via Edenred, to collect information from 874 employees working at 417 Spanish companies.
Information was collected from participants in relation to the benefits they received from their employer, the flexibility of their benefits, benefits satisfaction, which benefits were most important to them, and benefits communications.
Benefit satisfaction was measured using the Comprehensive Compensation Satisfaction Questionnaire (CCSQ) developed by Williams et al. (2008).
Self-efficacy was measured using an adaption of the scale developed by Chen et al. (2001), while internal locus of control was measured using an adaption of the internal locus of control scale developed by Spector (1988).
Key Research Finding
Benefits flexibility was found to be positively related to benefit level satisfaction, and this relationship was found to be negatively moderated by employees’ self-efficacy, which offers support for Hypothesis 1. Employees with high self-efficacy had high benefit level satisfaction; however the effect of benefit flexibility on benefit level satisfaction was greater when employees had low self-efficacy.
Hypothesis 2 was also supported, as benefit flexibility was found to be positively related to benefit determination satisfaction, but the relationship was negatively moderated by the internal locus of control of employees’. The effect of benefit flexibility on benefit determination satisfaction was stronger when employees had lower levels of internal locus of control.
Additionally, benefit comparison was found to be positively related to benefit level satisfaction, and benefit communication was found to be positively related to benefit determination satisfaction, such that favourable benefit comparison and better benefit communication led to higher benefit satisfaction.
The results of this study highlight the importance of individual differences in benefits satisfaction levels. This is consistent with prior research which found individual factors such as gender and age to impact perception and satisfaction with certain benefits types (e.g. Tremblay et al., 1998; Williams et al. 2008).
Somewhat contrary to prior research on self-efficacy (e.g. Mulki et al., 2008), the current study found that self-efficacy negatively moderated the relationship between benefit level satisfaction and benefit flexibility. As such, self-efficacy served to reduce the positive impact of benefit flexibility on employees’ benefit level satisfaction. These results suggest that those with high belief in their ability to do their job (high self-efficacy) tend to be more satisfied with their benefits, but benefits flexibility is less important to them. The researchers suggest that employees low in self-efficacy may be more grateful for benefits flexibility, considering that they may not consider that they have earned this greater choice, compared to those with high self-efficacy who are more likely to feel entitled to good benefits that meet their specific needs.
Similar to self-efficacy, internal locus of control had a negative moderating effect on the relationship between benefit flexibility and benefit determination satisfaction, which suggests that satisfaction with benefits flexibility is higher for those who feel less control in other aspects of their life, and conversely for those with high internal locus of control, this control over benefits holds less importance.
Organizational and Reward Implications
While flexible benefits programs are often flaunted as the perfect one-size-fits-all benefits solution, the results of this study suggest that in order for companies’ benefits offerings to be most effective, companies must understand and take into account the individual differences between employees
This poses a complex challenge for companies, as benefits may not be perceived and appreciated by all employees in the same way, and their effectiveness will differ depending on individual differences, such as self-efficacy and internal locus of control. This study further suggests that in seeking to boost benefits satisfaction, companies can increase benefits flexibility or exert influence over employees’ self-efficacy and locus of control, which can be done through employee selection and changes to job design, among other methods (e.g. Wu et al., 2015), giving companies multiple levers in respect to addressing benefits satisfaction.
This study provides some much needed examination of the role of individual differences in employee benefit satisfaction. The results indicate that such differences can play a central role in benefit satisfaction, and more research in this area is encouraged to further determine the universality of this study’s findings as well as examine the role other personality traits may play.
Source Article: de la Torre-Ruiz, J. M., Vidal-Salazar, M. D., & Cordón-Pozo, E. (2017). Benefit flexibility and benefit satisfaction: does employee’s personality matter? Personnel Review, 46(1), 2-16.
Published by: Emerald Publishing Limited
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