Feasibility Study

Employee benefits encompass a broad range of benefits—other than salary—that companies provide to their employees. Some of these benefits, such as workers' compensation, social security, and unemployment insurance, are required by law. The majority of benefits offered to employees, however, are bestowed at the discretion of the business owner. Such benefits, which are commonly called "fringe" benefits, range from such major expenditures as paid holidays, health insurance, paid vacations, employee stock ownership plans (ESOPs), and profit sharing to more modest "extras" like bestowing performance awards and prizes, providing an employee lunchroom, or paying for a company picnic.

Employee benefits are an indirect means of compensating workers, but they can be quite important in fostering economic security and stability within the work force. Insurance coverage, for instance, is often terribly expensive, so the company that offers medical and/or life insurance to employees as part of its benefits package is bestowing significant savings on those employees and their families. Companies, however, must be careful when putting together a compensation package for their work forces, and prudence is especially important for the small business owner. As Irving Burstiner remarked in 1989 in The Small Business Handbook, "all the 'extras' that firms have added to the basic compensation of their employees over the years amount to a sizable cost factor today." Noting that financial 'fringe benefits' can often add up to a startling amount of money, Burstiner added that "small firms are cautioned against adopting these fringe benefits too quickly and too freely. Some are almost mandatory if an organization is to compete effectively for personnel against other firms in the industry. Other fringe benefits, while perhaps desirable, should be postponed until the company is in a strong, healthy position."

Employee benefits are any kind of compensation provided in a form other than