May 30, 2002 (08:05 PM EDT)
Employee Benefits Pay Off, Study Finds

Read the Original Article at InformationWeek

The economic slump has led companies to reduce costs in many ways, from eliminating small office perks to cutting jobs. But companies that have invested in employee benefit and compensation programs are seeing increases in productivity and revenue, according to a recent study by PricewaterhouseCoopers.

The Trendsetter Barometer, which surveys CEOs from 407 product, service, and technology companies with annual revenue of $5 million to $100 million, found that companies investing in benefit programs project revenue growth of 15.9% during the next 12 months, versus revenue growth of 14.3% for companies not investing in benefit programs. Technology companies fared best in terms of supporting employee benefits programs.

More companies are using stock options as incentives and extending the programs beyond those in management positions. And that helps boost productivity, says Paul Weaver, head of PricewaterhouseCoopers' global technology practice. "If you see someone wasting money, you question it because it's a piece of your money," he says. Companies that are performing poorly hesitate to offer profit-sharing or stock-option programs because they're fearful of diluting their holdings, Weaver adds.

Most companies continue to invest in 401(k) retirement savings plans, with 75% matching a percentage of employee contributions. And about 59% have warmed up to the idea of flexible spending accounts, which let employees pay for medical or dependent care with pretax dollars.

In InformationWeek Research's National IT Salary Survey 2002 of 10,109 IT professionals, health insurance and a 401(k) match are the two most common benefits offered to IT professionals. And only one in four IT staffers and three in 10 IT managers own company stock.