Satisfactory employee benefits are among the top reasons candidates accept a job offer and employees tend to stay longer in a company. Find out how you can meet employee demands, and what kind of benefits you should offer to improve employee engagement, retention and satisfaction in your workplace.
Why employee benefits are important
Under certain laws, some benefits are legal requirements, such as basic health insurance. You must provide these mandatory benefitsin order to create a compliant workplace. Offering comprehensive employee benefit packages, on the other hand, is extremely important to improve employee wellbeing. It shows that you’re an employer that prioritizes health, wellness, and personal development of your employees; which in turn makes your employees feel cared for. Receiving mental health support also leads to higher employee retention rates, more motivation, and more productivity. When your employees feel that they’re individually important, they’re much more likely to feel safe in that company.
Trends in employee benefit demands
Here are the top 9 employee benefits that workers value the most, according to CIPHR:
- Paid time off (or PTO) for sick days
- Flexible work arrangements & hours
- Matching 401k contributions
- Wellness programs and mental health support
- Rewards systems for valuable work, such as performance bonuses
- Four-day work week (without pay cuts)
- Extra allowance on holidays
- Employee discounts and perks
While it’s important to keep industry trends in mind, you also shouldn’t feel pressured to include all of it. Employee benefits are not standard, and what’s more important is that you can provide for your own workers’ wants and needs.
Is flexible work a benefit?
As you can see from the list above, providing flexible work arrangements is very compelling for workers. These include four-day work weeks, location-independence, and more. However, at this point, flexible work should be considered less of a benefit, and more of a must-have. Traditional working conditions are getting more and more obsolete as the time passes, and seeing how much employee retention and productivity increase remote work brings should tell you all you need to know.
Main types of employee benefits
Here are the main types of employee benefits organizations can offer their workers, based on 3 different categories:
Health benefits
These are all essential benefits and job perks that can provide mental and physical health support for employees. Medical and life insurance Life insurance is usually among the mandatory benefits you have to provide. You can choose to provide only the basic package. Or, depending on the situation, you can choose private health care plans and make your package as comprehensive as possible. Additional things you can include in your life insurance packages are disability insurance, dental and vision coverage, family medical leave, etc.
Mental health benefits
Most comprehensive life insurances provide coverage for mental health issues as well. Checking with individual workers’ neurodiversity-related needs and mental health conditions is important, because you might need to additionally cover their medication, psychiatry appointments, or more. Other additional perks include:
- PTO )paid time-off) for mental health days
- Employee assistance and peer programs
- Access to psychotherapy
- Subscriptions to helpful apps (meditation, community, learning etc.)
Fitness benefits
Health and fitness benefits are another part of health-related perks you can provide. The most common options are a gym membership or a fitness app subscription. You can also choose to organize company-wide fitness events (such as virtual yoga sessions, hiking excursions, etc.) to try to encourage physical activity, while also strengthening social bonds.
Wellness & lifestyle benefits
These are all benefits related to improving employees’ quality of life and ensuring their overall wellness.
Unlimited PTO (paid time-off)
Providing PTO isn’t just for vacation days –it’s also a way to ensure that your employees feel content and productive. Having an unlimited time-off policy is a great way to provide autonomy to your employees, while reinforcing that their wellbeing comes first.
Paid parental leave
This is an important benefit for your workers with children or those who consider having children; to be able to have a proper work-life balance. Having both a maternity and paternity leave policy is crucial for employee equity and familial wellbeing.
Living stipends
A “living stipend” is a small allowance that is separate from wages, and is set aside to help cover living expenses. Though it varies depending on the organization, it is usually given to interns or short-term workers. Examples of what it can cover includes:
- Commuter benefits (bus pass coverage, gas contribution, etc.)
- Coverage of relocation costs
- Monthly allowance for necessary tech & tools, such as internet or software subscriptions
Financial benefits
These are the financial benefits that can be gained from employee benefits packages.
Industry wages
The most basic one that should be provided is industry grade (or above) wages. If employees cannot afford basic life necessities out of their pay, they will be more likely to experience financial anxiety, experience a drop in their quality of life, and feel discontent in their job in the long run.
Retirement help
One of the biggest perks that companies can provide is retirement benefits. A comprehensive 401(k) plan, or matching 401k contributions (where employers contribute a certain percentage on top of that which employees do) can be great solutions.
Overtime pay & performance bonus
Having an overtime pay policy is to reassure your workers that their hard work will be appreciated, and performance bonuses work the same way. Both of these options will encourage productivity, and have a positive impact on long-term company loyalty.
Self-development benefits
These are employee perks that will encourage your staff to become better versions of themselves.
Tuition reimbursements
Graduate programs can be expensive, and if that’s the only thing keeping your employees from attending one, a tuition reimbursement package is a great solution. You will be helping people follow their dream career path, while also helping them improve in their business-related ventures.
Student loan funding
Providing funding for student loans is a similar solution. This can be for previously-obtained or current loans, and you can provide a certain percentage or all of it–either way, you’ll be encouraging growth and creating deeper connections.
Training & skill improvement opportunities
Other, more specific self-development employee benefits can be provided through:
- Funding for courses & certification programs
- Subscriptions to online learning tools
- Memberships for culture clubs, committees, etc.
- Covering travel and/or accommodation costs for certain skill-related workshops or events
- A professional development stipend for employees to use however they want
Most asked questions about employee benefits
How much do benefits cost a company?
Giving a straight answer to this question is almost impossible, since it changes a lot from business to business. Employee benefits’ cost can vary according to:
- Number of total employees
- Company size
- Company location
- How comprehensive their employee benefits packages are
According to the Bureau of Labor Statistics, in the US, employee benefits consisted of 29.5% of all employment costs in September 2022. This is still a considerably small percentage of all wages, which means it’s not difficult to budget for –as long as it’s done realistically and compliantly.
How can businesses budget for employee benefits?
One of the most common methods to create a realistic budget is to allocate a certain percentage of the payroll for benefits. This is flexible enough of an arrangement that, as your company (and your offered benefits) grows, you can easily readjust accordingly. Just make sure that you stay up-to-date on legal requirements, and frequently rearrange the budget according to your employees’ needs.
How do organizations ensure compliance with laws and regulations related to employee benefits?
Based on your location, there might be some mandatory benefits that you should be providing no matter what (for example, the ACA (Affordable Care Act) in the US requires employers to give health insurance coverage). Familiarizing yourself with these laws, and consistently updating yourself on related knowledge is important to guarantee compliance. You can also get professional legal consultancy if you feel inadequate on the subject. Receiving an all encompassing employment service such as the Employer of Record by Ruul, you can make sure that the benefits your employees should receive are compliant at their location of service. After you familiarize yourself with the legal regulations, you should develop the necessary policies and monitor compliance throughout the organization. All managers should be trained on how to make sure your policies are followed, and your compliance measures should also be regularly documented. These are necessary steps to easily spot, fix, and improve upon non-compliant actions you observe.
How do businesses ensure that employee benefit offerings are competitive?
Through a process called “benchmarking”, businesses can compare their employee benefits to similar companies in terms of industry, location, employee size, etc. to see how they compare to current employee benefit trends. Conducting regular market research is also important to have a general idea of the industry standards, and will allow you to create more competitive employee benefits packages.
How do businesses handle employee benefits claims and appeals?
Employees have the right to request certain employee benefits to be provided by the company, which is done through a process of submitting benefits claims. Here’s a short step-by-step on how to run this process:
- You should establish clear guidelines for the submission process, which includes organizing the necessary documentation, timelines, and contact information. This should be compliant with laws and regulations.
- The fact that this process exists should be communicated clearly to new employees during the onboarding process, so that they know when and how they can submit benefits claims.
- Staff should be trained on the process of reviewing these claims and appeals. If there isn’t qualified staff available, you should outsource one to get started as quickly as possible. The reviewing process should also be swift, so that employees can gain access to their required benefits in a timely manner.
- Employees should be kept updated on the status of their application regularly.
How do employers handle employee benefits in the event of layoffs or terminations?
Providing COBRA coverage (if you’re operating in the U.S.) is an essential method in this case. It allows certain employees to keep receiving benefits for a short period after their employment. This can be essential for certain employees, such as ones that need extensive health insurance like disabled workers. Furthermore, what happens to their benefits according to the timing of terminations or layoffs, previous notice requirements, etc. should all be included in your employee benefits plans. Every step of the process should be extensively documented–and this all should be communicated to employees so that there are no miscommunication issues.
How do businesses handle employee benefits for part-time, temporary, remote or international employees?
Review your employee benefits to see how you can modify them to fit a wide range of employment statuses. The most comprehensive way is to offer flexible employee benefits packages. This will allow employees to choose the benefits that best suit their needs, and help increase overall employee satisfaction.
How do businesses recalibrate employee benefits during periods of financial hardship for the company?
You can try switching to less expensive plans for the mandatory benefits, or cut down on non-essential offerings for a limited time. It’s important that you keep providing for everyone’s basic needs under all circumstances, so keep reviewing and updating your financing plans regularly.
How do businesses measure the ROI (return of investment) of employee benefits programs?
You can measure the ROI of your benefits and compensation offerings by comparing your organization with others. Ask yourself:
- What are they doing differently in terms of coverage?
- What is their budget per employee?
- What type of positive impacts are they observing?
Having grounds for comparison can be a good method to measure if you’re on the right track. Another, and probably more effective, method is to run a cost-benefit analysis in your own company to evaluate the ROI of your employee benefits packages. You can determine the metrics based on two different categories
- Quantitative methods: Results based on real numbers and facts, usually finance-related. Examples include employee turnover rates, productivity increase, healthcare costs, company’s financial gains/losses, etc.
- Qualitative methods: These are based more on how your employees are feeling, which is also equally important. You should get feedback to measure employee satisfaction, and see how much your job benefits are making a positive impact, if they can be improved, etc.
Catch up with the modern world
The importance of employee benefits packages in the modern work setting is undeniable: It can improve anything from worker wellness and retention to the overall company productivity. To help make the legal and financial processes run smoother as you work with talents, you can join Ruul for an all-in-one modern work relations experience.
