Benefits and Strategic Outcomes: Are Supplemental Retirement Plans and Safer Driving Related in the U.S. Trucking Industry?

• Author: Christian S. Kuiate,Thomas R. Noland,Arthur J. Francia,Steve Werner
• DOI: http://doi.org/10.1002/hrm.21688
• Date: 01 September 2016
• Published date: 01 September 2016

Human Resource Management, September–October 2016, Vol. 55, No. 5. Pp. 885–900

© 2015 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI:10.1002/hrm.21688

Correspondence to: Steve Werner, Department of Management, C. T. Bauer College of Business, University of

Houston, Houston, TX 77204-6021, Phone: 713-743-4672, Fax: 713-743-4652, E-mail: swerner@uh.edu

BENEFITS AND STRATEGIC

OUTCOMES: ARE SUPPLEMENTAL

RETIREMENT PLANS AND SAFER

DRIVING RELATED IN THE

U.S.TRUCKING INDUSTRY?

STEVE WERNER, CHRISTIAN S. KUIATE,

THOMAS R. NOLAND, AND ARTHUR J. FRANCIA

We suggest that a fi rm’s benefi ts can relate to important organizational outcomes

that have strategic implications. We propose a number of mechanisms that could

relate benefi ts to strategic outcomes, including the notion that benefi ts can help

attract and retain the type of employees who are most likely to perform in ways

consistent with the fi rms’ strategies. We illustrate this with the case of supple-

mental retirement benefi ts in an actual setting, the long-haul trucking industry.

We report positive organization-level relationships associated with the manage-

ment choice of offering these benefi ts. Our results show that fi rms offering sup-

plemental retirement plans engage in signifi cantly safer driving practices, as

measured by the proxy of driver insurance costs, as hypothesized. These fi ndings

show that benefi ts can be related to outcomes that have strategic implications

for the fi rm. By showing that retirement plans may be of value to organizations,

we help to bridge the academic-practitioner divide and provide motivation

and guidance for additional work on this important but underresearched topic.

©2015Wiley Periodicals, Inc.

Keywords: benefi ts, HR strategy, retirement plans, risk, safety

Compensation practices have been shown

to have substantial effects on firm out-

comes (Gerhart & Rynes, 2003; Gomez-

Mejia & Balkin, 1992; Gomez-Mejia,

Berrone, & Franco-Santos, 2010; Werner

& Ward, 2004). Compensation practices have

been related to a firm’s business, division, and

corporate strategies, and their level of success

(Balkin & Gomez-Mejia, 1987; Boyd & Salamin,

2001; Gomez-Mejia, 1992; Yanadori & Marler,

2006). They have also been shown to affect finan-

cial performance (Gerhart & Milkovich, 1990),

organizational learning (Jerez-Gomez, Cespedes-

Lorente, & Valle-Cabrera, 2005), and workforce

performance (Shaw, Gupta, & Delery, 2002). The

amount and type of benefits that employees

receive is an important component of a firm’s

compensation strategy (Martocchio, 2014).

The use of nonmonetary rewards, which

include benefits such as insurance and paid

886 HUMAN RESOURCE MANAGEMENT, SEPTEMBER–OCTOBER 2016

Human Resource Management DOI: 10.1002/hrm

The use of

nonmonetary

rewards, which

include benefits

such as insurance

and paid time off as

well as the design

of the job and social

atmosphere at work,

has consistently

been acknowledged

as an important

factor in employee

perceptions, feelings,

and behaviors.

attract employees who are less risk seeking and

therefore will also be less risk seeking in their

actual driving behaviors, resulting in lower acci-

dent rates and fewer incidents of illegal driving

behaviors (Dencker, Joshi, & Martocchio, 2007;

Tetrick, Weathington, Da Silva, & Hutcheson,

2010). Other mechanisms include offering sup-

plemental retirement plans as part of a paying-

above-the-market compensation strategy or as

part of a high-performance work system (HPWS).

We believe that finding a firm-level relationship

between retirement plan offerings and safe driv-

ing practices has important implications for how

firms can use benefits to affect important strate-

gic outcomes. One such implication is that firms

may be able to determine the type of employees

that are attracted to various different benefits and

provide the benefits that attract and retain the

employees most likely to behave in a manner con-

sistent with the firms’ desired outcomes.

Using Benefi ts Strategically

Benefits are a critical part of a total reward pro-

gram (Kwon & Hein, 2013). Employee benefits

have a substantial impact on society as a whole,

the employees themselves, and the organization

(Rappaport, 2013). Employee benefits impact

society by providing a greater safety net for those

employed, reducing the need for government

spending, and allowing recipients to benefit

the economy by buying more consumer goods

(Rappaport, 2013). Employee benefits impact

employees by providing them with insurance

and services that they might otherwise not have.

Finally, benefits impact organizations through

their costs, shaping of employee behaviors, and

role in attracting and retaining human resources

(Dulebohn, Molloy, Pichler, & Murray, 2009;

Lucero & Allen, 1994; Mueller, 1996).

Because benefits are easy to imitate, it may

be difficult to directly help create a sustainable

competitive advantage through the use of ben-

efits; however, they may have strategic implica-

tions through a number of mechanisms (Jackson

et al., 2012). First, because of their substantial

and increasing cost, benefits have a direct effect

on financial performance measures (Dulebohn et

al., 2009; Martocchio, 2014). In 2012, the average

cost of benefits was about 31% of total compensa-

tion, or about $19,700 a year for each employee

(Bureau of Labor Statistics, 2012). Costs are an

important factor that should be considered in any

HR strategy (Klaas, 1999).

Second, benefits can support business strate-

gies. For example, a company may establish a cor-

porate-giving matching fund to help meet their

strategic objective of becoming a recognized leader

time off as well as the design of the job and

social atmosphere at work, has consistently been

acknowledged as an important factor in employee

perceptions, feelings, and behaviors (Kwon &

Hein, 2013; Martocchio, 2011). Although impor-

tant, the strategic use of the benefits component of

compensation strategy has received little research

attention. One reason may be that benefits tend

to be common, widely disseminated, and easy to

imitate. According to the resource-based view of

the firm, because benefits are not unique or diffi-

cult to imitate, they do not meet the requirements

needed to relate to sustainable competitive advan-

tage for firms (Barney, 1991). Although it may be

difficult to use benefits to directly help create a

sustainable competitive advantage, the benefits

firms offer may be related to important organiza-

tional outcomes that have strategic

implications (Jackson, Schuler, &

Werner, 2012).

How can firm benefits be related

to strategic outcomes? One answer

may be related to their role in the

attraction and retention of strategi-

cally important human capital. The

literature on person-organization fit

as well as the literature on attracting

and retaining employees suggests

that various different types of ben-

efits will be more attractive to differ-

ent types of employees (Boon, Den

Hartog, Boselie, & Paauwe, 2011;

Cable & Judge, 1994; Wingreen &

Blanton, 2007). Because different

employees bring with them varying

levels of competence, risk propen-

sity, and attitudes, their resulting

behaviors will also differ. However,

this is just one possible mechanism

that would explain a relationship

between benefits and important out-

comes; others include that certain

benefits may be a standard part of

certain compensation and HR strat-

egies, or better benefits may lead to

greater retention of better employees (Schiller &

Weiss, 1979).

We test for a relationship between benefits and

outcomes using firms in the U.S. trucking indus-

try. We suggest that trucking firms that offer sup-

plemental retirement plans (defined-contribution

or defined-benefit plans) will have lower property

and liability insurance premiums, a proxy for the

safer driving behaviors of employees. We propose

a number of mechanisms that would suggest such

a relationship. This includes the notion that com-

panies with retirement plans are more likely to