Antecedents and consequences of the introduction of flexible benefit plans in China

Abstract

The present study had two aims. The first was to explore the extent of flexible benefit plans (flex plans) within China and to make predictions about future trends. The second aim was to examine the relationships between the use of flex plans and two measures of labour market performance: the ability to attract essential employees and the level of labour turnover. The results from a survey of 324 firms in China reflecting a response rate of 32.4% showed that although there are presently a limited number of firms that adopt flex plans, the number is likely to increase in the next few years. Second, the probability of the adoption of flex plans was not found to vary with the mode of ownership and firm location. Third, flex plans were found to be adopted by firms for several practical reasons including their perceived role in cost containment, improved recruitment and retention, enhancement of job satisfaction and labour productivity. The take-up of such plans, however, was found to be inhibited by perceived administrative burdens and costs, and the limited number of staff qualified in benefit provision. Finally, the adoption of flex plans was significantly related to labour turnover and improved recruitment capacity.

Keywords:

• China
• employee benefits
• flex plans
• labour market performance
• reward systems

Acknowledgements

This research was supported with funding from the Youth project of the National Social Science Foundation of China (Project No. 10CGL019) and also by ‘Project 211 (phase III)’ of the Southwestern University of Finance and Economics. The authors would like to thank Professor Michael Poole and two anonymous reviewers for their valuable comments on the draft.