Like pay, benefits are both a provision and a motivator. In the past, organizations issued a standard package to every employee. Contemporary leaders understand that each employee values benefits differently. A flexible program turns the benefits package into a motivational tool. Consistent with expectancy theory’s thesis that organizational rewards should be linked to each employee’s goals, flexible benefits individualize rewards by allowing each employee to choose.

Flexible benefits can accommodate differences in employee needs based on age, marital status, partner’s benefits status, and number and age of dependents. Benefits can be a motivator for a person to go to work and for a person to choose one organization over another. Some organizations that have moved to flexible plans report increased employee retention, job satisfaction, and productivity. Given the motivational appeal of flexible benefits, it may be surprising that their use is not yet global.