Cafeteria model

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The cafeteria model (also cafeteria system or cafeteria principle ) is a form of remuneration model in human resources. The intention of this model is to increase motivation through individual choices. In the motivational theories, the system can be assigned to the cognitive choice theories.

General

Depending on the position, the employee receives a certain amount of points that he can freely spend on services within the cafeteria system. The offer is determined by the company. This can include direct benefits such as insurance , retirement plans , employer loans , additional salaries, benefits in kind such as childcare , benefits in cash such as sports programs, company cars, better office equipment, additional vacation, training or special time benefits such as a sabbatical . The advantage of the system is the possibility of individual adaptation to personal needs for the employee, the disadvantage are restrictions from tax legislation ( monetary benefit ).

The following characteristics can be named for a cafeteria system:

  • Possibility of customizing remuneration components
  • Periodically recurring options
  • Optional offer with several incentive elements
  • Selection takes place within the framework of a certain election budget

From a decision-making point of view, the cafeteria system represents a flexible, individual incentive system. In view of the often decreasing scope for wage increases, the cafeteria system offers attractive incentives for certain employee groups.

With increasing degrees of freedom for employees, the following design levels of a cafeteria system can be distinguished:

  • Flexible Benefits System: Scope is limited to certain social benefits, mainly insurance
  • Flexible Benefit Plan: Builds on the previous level and also includes the option to vary remuneration and vacation components
  • Flexible Human Resources System: Flexibility of all social benefits as well as the possibility of co-determination in further training and advancement opportunities.

Requirements and framework conditions

In the systemic view, a distinction can be made between formal and informal framework conditions. Formal criteria can e.g. B. collectively agreed or legal requirements that have an impact on the overall remuneration package. In principle, these regulations are country-specific; in connection with collective bargaining regulations, these can even be location-specific. It should be noted, however, that those based on the US model cannot simply be transferred to companies in Germany, as there are many legal and collective bargaining restrictions here. The overall cafeteria system can only be used successfully if the services offered also meet the needs and requirements of the employees. This requires analyzes and surveys in order to obtain a significant picture of the opinion of the workforce.

Range of services (cafeteria options)

As part of a cafeteria model, companies can basically offer many services, which in the Federal Republic of Germany are often limited to flexible working time regulations and deferred compensation , among other things . In the literature, a relatively wide range of services that can be considered for a cafeteria plan is known, which can be conceptually described using the options mentioned in the following list.

  • Money / time offers (job sharing, part-time work, flexible working years)
  • Time offers (vacation offers, flexible working hours)
  • Cash offers (tax breaks, company shares, investments)
  • Insurance (incapacity for work, life insurance, accident insurance)
  • Other offers (company car, company purchases)

In order to design a suitable cafeteria plan, in addition to internal company factors, other influencing factors such as location, structure of the workforce and industry affiliation are of decisive importance. When selecting suitable offers, the choice between collective (e.g. company-owned soccer field) or individual services is also used. Employee surveys can help with a suitable combination of options.

Advantages and disadvantages of a cafeteria system

Employee view

From the employee's point of view, the provision of a cafeteria system can express itself in an increase in job satisfaction due to the fact that the individual preference structure is taken into account. The direct participation achieved in the workplace leads to an increase in motivation. Taking into account purely material advantages, in addition to the increase in income values ​​(e.g. tax advantages, discounts), the associated procurement advantage (e.g. more favorable insurance conditions) should also be mentioned.

In the collective context, the cafeteria system can only have negative effects if there is indirect discrimination or if individual employees are treated unequally. For the individual employee, the individual wishes may differ from the range of offers or may not correspond to their ideas at all. It can also be difficult for the employee to describe the exact wishes. The resulting uncertainty, combined with the risk that the desired effect will not occur after the voting decision, can have a detrimental effect on the basic attitude of the employee.

Corporate view

Companies are very interested in the (new) employees perceiving and understanding the incentives provided by a cafeteria system as such. This form of transparency calls on employees to be actively aware of performance and costs, which in turn leads to higher job satisfaction. The use of a cafeteria system can have a major impact on the company's image among the workforce. By customizing social benefits, taking employee needs into account, potential competitive advantages can be enabled in recruiting. But this can also have a positive effect on employees' motivation to stay and thus reduce the turnover rate, as the (renewed) recruiting effort is associated with enormous costs.

The degression effect resulting from the use of a cafeteria system is of material importance. In addition to the granting of discounts for larger purchases, this can also include tax advantages due to an input tax deduction authorization. In addition, a cafeteria system makes it easier to compensate for potential wrong decisions, as the cafeteria system as such provides information about the extent to which employees are using services or not. The implementation costs incurred and the ongoing administration costs can be seen as a disadvantageous factor when implementing a cafeteria system. In principle, the costs incurred in the context of a cafeteria system can be viewed as low, but - particularly in the case of smaller companies - they can make up a relatively high proportion of the total balance.

bibliography

  • Dieter Wagner, Achim Grawert and Heiner Langemeyer: Cafeteria models: Possibilities of individualization and flexibility of remuneration systems for managers. Schäffer-Poeschel, 1993. (= source for section # Pros and cons of a cafeteria system .)

Individual evidence

  1. ↑ Dieter Wagner, Achim Grawert and Heiner Langemeyer: Cafeteria models: Possibilities of individualization and flexibility of remuneration systems for managers. Schäffer-Poesche, Dieterl.
  2. ^ Heiner Langemeyer: The cafeteria procedure. Hampp Verlag, 1999.
  3. ↑ Uta Lichius: Cafeteria models: Theoretical background and legal framework, diplom.de, 1997.
  4. ^ Dieter Wagner: Possibilities and limits of the cafeteria approach in the Federal Republic of Germany. In: Business Research and Practice 38 (1), 1986.
  5. ↑ Wolfgang Feige. 1988: Social benefits management. In: WISU - Das Wirtschaftsstudium 17 (5): pp. 262–263.