Salary or Perks - Which is more important?

Salary or Perks - Which is more important?

The biggest debate that has always existed is, which is more important - Salary or Perks? Leading companies have counted how important personalised power perks are for motivating their employees. Government sector has always attracted job aspirants because of the security and regular salary it provides. So, what is the deal here? Does the pay cheque matter or the perks? Which is more important and why? Let’s discover just where this particular debate is headed !

Perks are more important

1. Linking people practices with profitability : Employee benefits enable linkages between people practices and profitabilities. Form the standard insurance and retirement savings plans to more service oriented perks, giving bonuses always helps to cement the link between performance and profitability.

2. Perks address unique everyday needs : From perks for travel to insurance and housing allowance, they provide benefits which are of value in fulfilling the individualised needs of the workers. This is more so for SMBs that must be strategic to compete with bigger companies.

3. Perks are an approach to benefits that resonates with the workers : The workforce is restless in light of top down reward structures and hierarchical management. Through perks which are simple and cost effective, employers will gain higher return on investment in areas such as talent development, employee engagement and employee retention.

4. Rewarding innovation and productivity : Revenue sharing, ESOPs and other perks over and above the salary reward the creativity and ingenuity of the workers. This is tantamount to lauding powerful performance in the work place and plays a central role in harnessing innovation and productivity.

5. There is a strong link between satisfaction in work settings and perks : Salary may be a necessary component but perks are the icing of the cake. You can be sure that employees place high value on these benefits so much so that some of them are even ready to pay for it. Employee loyalty is also easier to garner with a powerful set of perks in the company’s arsenal.

6. Traditional incentive programs cannot match perks : Perks and other forms of recognition send a symbolic message that employees can endure no raises, threats of layoffs and extra workloads now because they have been acknowledged for their hardwork.

7. Employees are not commodified if individualised perks are given : Small perks can accomplish what big salaries cannot, when it comes to customised perks that cater to the unique needs of employees. For a real and important recognition as well as an emotional connect, perks can achieve what even 7 figure salaries cannot.

8. Perks are an integral part of successful companies : World’s largest shoe store, Zappos for example provides employees access to free lunches, vending machines, affordable gourmet coffee, endurance events and a membership for Weight Watchers to boot. It is listed as one of 100 Best Companies to work for by Fortune magazine. Successful companies and organisations realise that perks can accomplish what salaries cannot.

9. Government jobs attract people based on perks : Salaries in government jobs are not commensurate with private sector jobs, but job aspirants still prefer it in contrast to private jobs where salaries are high, but perks are not as plentiful. From housing rent allowance to travel allowance, low cost housing to other benefits, government jobs come with attractive perks that lure job seekers.

10. Perks help in achieving work life balance : No amount of money is going to create employee happiness as against perks. Small perks can have a big impact and this can ensure that people attain perfect work-life balance, an increasingly important factor in boosting employee productivity.

11. Perks are tangible and relevant : For companies and organisations, the power of a brand is not enough to either attract or retain people and when employees have incentives to stay and perform well, they will do so.

12. Creates a positive company culture : Giving perks creates a culture where people can align with the mission and vision of the organisation and how they fit into it. Perks create a positive organisational climate and reward good performance.

13. Perks can be tailored : While salaries are only a certain amount of cash reaching the employee at regular intervals, perks can be customised to suit the needs and individual preferences of employees thereby bearing a direct correlation with their happiness and consequent work productivity

14. Perks are powerful motivators : Perks can increase work motivation and help employers to get the best out of their employees.

15. Perks are the hidden paycheque : By offering employees perks, companies and organisations also help them to save on tax. Perks may even be more beneficial than their cash equivalent for this reason.

16. Perks cut down on training and turnover costs : A happy employee is a loyal one and this means perks can fulfil many functions including cutting down on training and turnover costs while boosting work morale and productivity.

Salary is more important

1. Money is the most powerful motivator : Research studies in industrial and organisational psychology and management have demonstrated that money serves as a more powerful motivator than perks. Psychologist Abraham Maslow’s hierarchy of self actualisation pegs basic needs before others such as self esteem and belongingness. Basic salary plays a very important role in meeting everyday needs such as food, clothing and shelter.

2. Salaries dictate employee choices : Salaries are the reason why employees choose to work for a certain company. In this day and age of inflation, perks are useless.

3. Salaries are regular, perks are transitory : Perks can come and go depending on whether the bonus is performance based or any other such aspect. Salary carries a surety with it that perks cannot guarantee.

4. Perks are costlier : It has been found that companies which offer more perks spend more as well. Rather than increasing perks, a stable salary is a better motivator apart from cutting down on costs to company/organisation.

5. Salary helps in employee retention : Employees hang onto jobs that are regular in every sense of the term. Timely salaries can accomplish what hefty bonuses and perks cannot.

6. Government jobs do not lure high performers : The creme de la creme of talent does not opt for government jobs where perks are high. Instead, they opt for challenging and high paying corporate jobs where the take home salary is hefty. This is so despite tax cuts, because money in hand is worth much more than nebulous perks which may or may not be useful for employees. For example, free meals may not be much of a perk for someone who is fond of cooking his/her own meals.


Perks and salaries together make up an entire package. One cannot be chosen over another. Both complement each other. In this day and age, where talent is scarce and work productivity is critical for organisational survival, the right mix of perks and salary can work wonders which each component individually cannot. If salaries are necessary, perks are performance enhancing. For the high performing worker, both are equally important considerations in deciding whether to opt for and remain in a certain organisation.
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  • RE: Salary or Perks - Which is more important? -Deepa Kaushik (12/09/15)
  • Salary is the fixed income whereas perks are added incentives over the fixed wages. A good salary amount has become an old culture when people used to have enough Government job vacancies. The present day culture is highly competent where people need to prove their existence and their supremacy over others to excel.

    It is very obvious that provided an option, everyone would go for a handsome salary package which includes all sorts of incentives and facilities for the employees. Why would anyone say no to a fixed income which does not require any special efforts? Everyone is after a easy and comfortable living, but it is becoming practically impossible to satisfy our huge population with enough income. To add to the huge crowd is the pest namely corruption which is making condition more worse and increasing the unemployment ratio.

    Perks or the incentives are more of a better option for the employers. They can cut down the portion of the salary of their employees and give a portion just to the performing ones. Also, the attractive incentives makes the employees more involved ion their work and the employers can get the best out of their employees at less payment.

    The situation prevailing the present era is all about do we need perks or just the salary without perks? With the threatening unemployment throughout the country, people would definitely opt for the job in whatever situation it be. The perks are a cherry on the cake. If given that would be great, if not, we cannot complain for the same.