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Abstract
Employee benefits comprise 30% of total compensation. In order to facilitate the strategic management of the employee benefits, this study investigates the relationship between employee benefit choices and employee characteristics. In a field sample of 155 employees actual benefit choices are analyzed with questionnaire data on the employee’s risk-taking propensities, health locus of control, perceptions of benefit importance, and expected use of benefits. Findings indicate that internal locus of control of health and high risk-taking propensity were associated with choosing the high contribution health plan option. In addition, a high estimated use of benefits and importance of benefits relative to cash compensation were related to choosing the low contribution plan option. The results illustrate that the benefit choices of employees are related to their psychological traits, suggesting that organizations can influence the performance-related composition of their workforce through employee benefit offerings.