What are employee benefits?
Employee benefits are the privileges or compensations you provide for your workforce over their base salaries and wages.
Employee benefits may come in many forms. Some benefits are required by the legislation, while others are optional. Regardless of its structure, an employee benefits package is part of the employment contract.
In other words, any form of indirect pay offered to an employee, either mandatory or voluntary, can be classified as an employee benefit.
An attractive package of benefits increases the work value and contributes to employee wealth. Employers also prosper as the employees remain happy and engaged, reducing employee turnover rates.
Main types of employee benefits
You, like most managers, want to attract and retain talented employees, improve employee relations and morale, and gain certain tax advantages.
A comprehensive employee benefits package gives you a competitive advantage in the current workforce market. It can be the ultimate argument for talented recruits to choose you over a competitor.
Having the right mix of benefits is essential for you and your employees, but what does it look like?
First, there is no one-size-fits-all recipe that will satisfy everyone. The list of benefits is fluid, constantly changing, and adapting to the workforce environment.
Typically, most benefits fall under one of the following four types of employee benefits:
- Benefits at work
- Health benefits
- Financial benefits
- Lifestyle benefits
This list is basic; however, with it can grow. Let's dive in and look at different examples of employee benefits.
Benefits at work
The following benefits help your employees perform at their best and increase productivity.
At some point, each one of us needs a break to reset. Show your employees you value their well-being and offer them an attractive paid time off package that covers:
- Paid vacation days
- Paid sick leave
- Parental leave.
PTO is among the most common idea of employee benefits we can find among employers.
LeaveBoard helps small and mid-sized business in tracking and managing PTO effectively using automated cloud-based HR apps.
Flexible hours and remote working
The labor market looked very differently at remote working five years ago. COVID-19 forced small, medium, and large businesses to adapt quickly. According to Owl Labs State of Remote Work report, 77% of respondents agree that after COVID-19, having the option to work from home would make them happier. Don't let this opportunity slip away!
If you want your employees to perform their tasks effectively, you must assess their needs and create a list of items and resources. You must include: computer/portable devices, desks, seating, and office supplies (pens, paper, highlighters, etc.)
Paid skills development
Rapid technological advancements make skills development crucial. This is a high-value benefit for employees as they can grow professionally without worrying that it will affect their wages or waste training opportunities.
The workforce market today is challenged by post-pandemic effects; high levels of attrition; increased focus on diversity and inclusion; and rising healthcare needs and costs.
Employers are trying to expand health benefits and manage healthcare costs in this environment. According to a Mckinsey survey, the "Great Attrition" is pressuring employers and raising their awareness of the importance of employee health benefits.
When your team members are worried about aspects of their personal life, it can impact their work and engagement. Poor health is one of the main reasons for underperformance in the workplace. A typical group health package consists of the following:
Medical screenings – cover consultations, regular check-ups, emergency medical intervention, etc.
Dental insurance – can be a part of your overall medical benefits, but sometimes dental insurance is a separate benefit. You must include it in your employee health benefits if you want a smiling workforce.
Mental health coverage – burnout, stress, and prolonged pressure are the problems of the modern-day worker, and you can no longer ignore them.
In addition to salary and job security, employees seek to ensure their lifestyle when they retire or to support themselves if they become ill or disabled after an accident. If you want to be competitive in the workforce market, you should offer financial security by providing the following types of benefits:
Life insurance – is one of the most searched-for employee benefits. If you want the best employees and what is best for them, you should consider providing life insurance plans for as long as they are with you.
Retirement/pension planning – retirement removes one of the major contributors to financial future stress. According to Willis Towers Watson's 2022 Global Benefits Attitudes Survey: Retirement is the top-ranked benefit employees want employers to prioritize. If you contribute to their future, you can be sure your employees will contribute to your present.
Disability benefits – Accidents and illness are unavoidable. By providing disability benefits, you show your employees that you care about them while they care for themselves.
This category of benefits helps your employees maintain a work-life balance and improve their lives outside working hours. Additionally, this category is becoming increasingly important for employees as work conditions change, especially in the post-pandemic era.
Here are some benefits you can offer to employees:
Health and wellness – your employees' health impacts productivity and expenses in the workplace. Poor choices regarding nutrition and physical activity take their toll on efficiency due to absenteeism (missing work) and presenteeism (working at reduced capacity at work). Aiding your workforce in meeting their health and wellness goals is in your best interest.
Fitness – you can include corporate wellness programs, gym memberships, onsite workout equipment, nutritionist and exercise coaches, rewards for meeting health goals, preventive health screenings, and flu shot clinics.
Mental wellness – you should offer benefits that ease concerns from inside and outside the office. You can consider mental health counseling, support groups, flexible schedules, outdoor time, casual dress codes, subscriptions to apps for meditation, music, etc.
If you want to go above and beyond for your employees, think of some more unconventional employee benefits to offer:
- Pet-friendly office
- Free food and beverages
- Movie, concerts, and match tickets
- Free library membership
- Paid time off to volunteer
- Photography or music clubs.
Best employee benefits to attract millennials
The millennials come like a storm and change the traditional ways of working. They are bright, ambitious, and will not conform to the old norms. And they are good at their work.
Here are the six most sought-after employee benefits for millennials:
Student Loan Assistance
Education loans are one of the biggest causes of stress among millennials. Help them pay off their student loans, and you will attract and retain the best minds of this generation.
Millennials have grown up with technology and information at the tip of their fingers. They expect the same at work. Equip these digital natives with the latest technological devices for excellent job performance.
Corporate Social Responsibility Initiatives
Millennials are fighting for their beliefs. They will choose to work for your enterprise if you allow them to collaborate with NGOs that share their causes: climate change, eliminate famine, prevent domestic violence, etc.
Remove The 9 to 5 Working Program
Don't expect millennials to conform to a traditional 9-to-5 work schedule. They would prefer flexible scheduling over pay. Consider implementing flexible working programs that suit them best and see productivity levels rise. When you hire a new millenial, you should definitly reflect upon offering this example of employee benefit.
Millennials love working at unconventional places where they don't have to be physically present to do their job. According to a study from Indeed, A large majority of millennials and Generation Z would quit their job if asked to return to the office. Don't confine them in a cubicle and become their favorite employer.
Give millennials the means and time to pursue their hobbies, and you may seal the deal. You can pay for their hobbies or set up diverse clubs like book clubs, photography clubs, drama clubs, etc.
Why are employee benefits crucial?
In recent years, we have witnessed a change in employees' preferences. Regardless of age, employees choose the employer that offers a comprehensive package of benefits rather than one with higher salaries.
Whether they are just junior-level and want to work from a cafe or a library, or they
are senior-level and plan to spend their retirement traveling or enjoying family, all employees want the same thing: benefits.
A new revolution is changing the labor market. If you want a seat at the winners' table, it is time to reward and motivate your staff with employee benefits.
Attract great talent
Companies that offer incredible benefits packages attract top talent.
A Glassdoor study from 2016 showed that about 60% of people report that benefits and perks are essential factors in considering whether to onboard with a specific employer.
Then, the Covid-19 pandemic happened. We started to prioritize our health and well-being. It only makes sense for this to carry over into the workplace.
If you aim to attract top talent to your company, offer them a stellar benefits package, and they will choose your business over those who do not appreciate them beyond the traditional salary!
"60% of people report that benefits and perks are a major factor in considering whether to accept a job offer." - Glassdoor
Improve employee retention
Offering employee benefits means you believe in your company and its people. Once you have attracted your ideal candidate, benefits will keep them happy.
The value and type of benefits you are offering impact your employee retention plan. A satisfied staff member is less likely to be tempted by other job offers.
In addition, according to the Glassdoor Employment Confidence Survey, 79% of employees would prefer new or additional benefits to a pay increase!
DID YOU KNOW?
"4/5 of people employees would prefer new or additional benefits to a pay increase." - Glassdoor
Motivate your employees
According to the LIMRA study, 2022 BEAT Study: Benefits and Employee Attitude Tracker, employee benefits play a crucial role in workers' satisfaction. According to the research, nearly two-thirds of workers say their current benefits package makes them at least somewhat more likely to remain with their employer. Four in ten say their benefits make them considerably more likely to stay in their current job.
It is simple: great benefits = happy and motivated employees!
"63% of workers say their current benefits package makes them at least somewhat more likely to remain with their employer - Limra"
Many studies, including research that involved 700 people conducted by the Social Market Foundation and the University of Warwick Centre for Competitive Advantage in the Global Economy in Britain, back up this conclusion. They found that workers who were given "happiness shocks" (like fruit or snacks - not actual electricity jolts) and then asked to perform a task were up to 20% more productive than control groups who weren't given such happy "shocks."
20% of participants were more productive than control groups who did not receive happy “shocks” - Social Market Foundation
Working with a steady team over a long period is crucial; it contributes to your company's progress and promotes team spirit among your team members.
Invest in your reputation
An incredible employee benefits package improves your brand, internally and externally. Happy, loyal employees will speak highly of your company, making it easier for you to position yourself as a more authentic and attractive employer brand from the outside too.
How to manage employee benefits effectively?
Now you know what employee benefits are and why they are so important, let's see how to manage them effectively. Here are five things to consider:
Step 1. Hire a dedicated employee benefits specialist
This person will help you find the best benefits package based on your employees' needs, calculate expenses and gains, and even negotiate prices for certain benefits.
Step 2. Find the proper software
In the current advanced technological era, it is difficult and unnecessary to manage benefits packages without the help of computers. An employee benefits software provides details regarding the employees' benefits reports, export reports and administers overall benefits.
Step 3. Keep track of benefits and costs
It is the finance department's responsibility to measure the benefits costs. Nonetheless, HR must keep track of fluctuations in expenses and gains. This data is vital to crafting your long-term benefits strategy.
Step 4. Describe the benefits in your Employee Handbook
Benefits will not be valuable if employees don't know they have them. Include a chapter in your Employee Handbook to provide essential details on your company's offer.
Step 5. Monitor employees' wishes and needs
Employees' needs may change. If honest communication is one of the core values of your company culture, ask your employees what motivates them to bring their best at work. Listen and make changes when needed.
The long-term advantages of providing employee benefits greatly outweigh the initial cost it requires.
Benefits help your employees maintain a healthy work-life balance, allowing them to reach their expected level of job satisfaction.
As an employer, offering benefits to your employees shows that you want to invest in their future.