Employee benefits are any perks offered to employees in addition to salary. An employee benefits package is a form of compensation consisting of non-wage perks. Not all companies offer benefits, and employers that provide benefits packages can customize them depending on their needs. The United States federal government requires companies with more than 20 employees to offer medical benefits , and unpaid family leave to full-time employees, and some states have additional requirements. These employee benefits packages may include overtime, medical insurance, vacation, profit sharing, and retirement benefits, to name just a few.
Different workplaces offer different kinds of benefits through their employee benefits packages. Some employee benefits are mandatory according to national legislation. For example, pension contributions, paid parental leave, and paid holidays are mandatory in the UK. Otherwise, employers choose employee benefits that align with their workplace culture, company values, and employees needs. Many modern benefits packages include extended health insurance, wellbeing benefits, flexible working schemes, specialized employee discounts and rewards, and professional development funding.
Human Capital is surely a valuable asset in the workplace. For the employer to make sure that all talent and skills are harnessed, they have to supply very lucrative packages for them. A perfect benefits package shows that a company cares for and values its employees. Employee benefits are to be viewed by organizations as necessary evils, which is something they have to provide because their competitors do and because employees expect it.
The Perks of Employee Benefits Utilization
\"Employee benefits can have a substantial impact on employee retention, attraction and performance.\" By Werner, S and Balkin D., 2021.
The purpose of employee benefits is frequently to recruit and keep the finest potential individuals in the local employment market. Good perks are viewed as a strategy to increase employee loyalty. If the expenses of certain benefits can be handled, it may be beneficial to supply them even if they are not legally required in every area. Many firms prefer to offer competitive perks that go above and beyond the minimum legal standards. Benefit packages consume a significant amount of time for many HR professionals. And for a good reason: they are one of the most fundamental employee engagement and retention tactics and a source of talent acquisition.
The numbers speak for themselves about the importance of employee benefits. Extensive research by the Society of Human Resource Management (SHRM) indicates that 92% of employees consider employment benefits important for their overall job satisfaction (a great element of retention and productivity). One-third of employees also cited work benefits as the top reason for looking for a job outside their organization. Its the same reason for choosing to stay at their job. Benefits are also among the top driving factors candidates look for in job ads – 63% of job seekers surveyed say they pay attention to what benefits a company offers. Offering employee benefits to prospective employees means the organization creates a competitive salary package that will attract the top talents in the field.
- Reduction of turnover rates - Employee perks can minimize turnover rates since high levels of job satisfaction encourage many employees to look for work elsewhere. An appealing benefits package provides workers with a compelling reason to remain with your firm once they are employed. Many firms provide cumulative benefits that increase in value the longer individual works for them, fostering long-term growth within the organization. Great perks make employees feel valued and appreciated growing corporate culture and lowering the risk of burnout or management irritation
- Attraction of top talent – These employee perks give the firm a competitive advantage when hiring. By demonstrating a dedication to taking care of the workers by providing a better remuneration package, one is more likely to recruit higher quality, motivated, and devoted employees. Advertising a good benefits package stimulates interest in your organization, attracting a wide variety of individuals. Excellent perks reflect a healthy corporate culture and may be the decisive factor for a top applicant who has received numerous job offers. Some candidates value their benefits package more than their compensation, providing an incentive to work with the firm even if salaries are low.
- Boosts employee morale – A benefits package may considerably increase employee morale since employees will feel valued. As a result, employee loyalty, productivity, and general contentment with you as their employer grow. Its important to remember that happy employees will speak your praises outside of work, making it simpler to attract the top prospects employees. Perks encourage workers to work hard and spend time and energy on your firms success, especially if you provide benefits that other organizations do not. The additional income demonstrates to employees that their company is committed to their long-term satisfaction and success, promoting morale and productivity.
- Healthy workers mindsets - According to empirical studies in behavioural sciences, people who work in situations that are a good fit for their interests, values, and abilities are more likely to be content with their professions (Nauta, 2013). Everyone works better when they are at their best, which is why employee perks like health insurance and wellness programs are available. Employee benefits encourage people to look for themselves outside of work, allowing them to bring their best selves to work. Offering medical, dental, or other health insurance benefits to workers can decrease the time employees need to take off work by allowing them to seek care more quickly privately. Employees may take care of their emotional and physical health through health insurance, paid time off, and other wellness benefits before it affects their effectiveness at work.
- Retain employees - Employee benefits packages are vital for hiring new employees and retaining present ones. Investing in employee perks makes employees feel valued and boosts their happiness and morale. They will also be more loyal to your firm and less inclined to search elsewhere for a better work opportunity. According to a 2018 Willis Towers Watson poll of employer-employee satisfaction, 78% of employees were more likely to stay with their present job because of their benefits program. Meanwhile, 41% of participants in a 2019 Unum survey said they were inclined to hunt for a new job with better perks.
- Increase employee engagement - In general, worker engagement refers to the relationship between a person, their employer, and their coworkers. In an ideal world, all of the above should come together to form a passionate, loyal, engaged community that feeds off of one another. It is tough to cultivate, but it is necessary for long-term success. It may come as a surprise, but employee perk packages can help increase employee engagement. This is because they foster a trustworthy, long-term relationship between employee and employer while contributing to a healthier work environment overall
- It can save the employee and employer money- When you offer and your workers choose benefits such as salary sacrifice or net pay reduction programs, your employees and the company can benefit from tax breaks on these purchases. This is not limited to the obvious perks like healthcare and pension programs. It also applies to other employee benefits, such as personal use of a corporate car, tuition fees, mobile phones, cafeteria plans, and bike-to-work programmes.
The disadvantages of administering employee benefits
There is no doubt that the advantages of offering employee benefits far outweigh any disadvantages. However, there are a couple of important points to be aware of when it comes to setting up an employee benefits program:
- Even great benefits packages can be seen as inadequate – Regardless of how wonderful the benefits package is, some employees may feel overworked and underpaid.
- The benefits cost money – Today, the typical package of employee perks is approximately equivalent to the amount provided in pay. This is a high cost that must be appropriately controlled.
Create a comprehensive employee benefits package
When developing an employee benefits policy, consider various options based on your budget and goals. While precise benefits conditions differ from firm to organization, employees generally expect a few benefits. To develop a new employee benefits package or to improve an existing one. Employee benefits packages significantly impact an employees overall salary and dedication to your organization. To that aim, examine the seven recommended steps:
1. Talent related goal setting
Employee benefits should solve the most important talent management concerns. The most important stage in employee benefits planning is also the most overlooked: creating a concrete benefit target based on the organizations people strategy and overall business plans.
2. Set a budget range
In this stage, the current benefits budget is evaluated and considered whether there is a need or capacity to increase or maintain the existing one. The biggest draw is a big-ticket item such as health care insurance. The Kaiser Family Foundation (KFF) reports that premiums continue to outpace inflation, topping $20,000 per employee for family coverage in 2019. As an employer, one has options in how much of those premiums they want to cover. But whether to provide health insurance and on what terms is probably the biggest decision affecting the benefits budget.
3. List the employees needs-to-haves
After evaluating these fundamental advantages, consideration must be given to other benefits that may resonate with employees while reinforcing the companys culture and aims. In addition, asking employees what benefits they are most enthused about, or conducting employee surveys, will assist improve the quality of benefit delivery.
4. Provide a variety of personalized alternatives.
Once you have an idea of the employee benefits you want, ensure youve included a good degree of variety and personalization. These encompass a wide variety of benefits that your employees can pick and choose from, ensuring that your companys benefits are truly useful to your diverse workforce. As mentioned above, not all your employees will have the same priorities, so you must include something for everyone. Ultimately, you want all your employees to feel like they have a benefits package designed with their needs in mind.
5. Draft the package
Based on all the research done, at this stage, the package gets put together that is:
- Within the budget
- Tied to measurable, strategic HR goals
- Linked to company strategy
- Exciting for new and existing employees
6. Communicate benefits to employees
Last but not least, giving an employee benefits package is pointless if your employees are unaware of it. You must ensure that your employees utilize perks and rewards for them to be genuinely successful and meaningful. When introducing a new benefits program (or even expanding an existing one), ensure you have a solid communication plan. Whether you send emails, organize a meeting, host an online Q&A, or hang posters in common places, ensure you spread the information widely.
7. Revisit strategy annually
Once the package is in place, the benefits can be tweaked to get better results. Through periodic employee surveys and comments from the talent management team, the employer may acquire additional, subjective insights into performance.
Golden aspects not to be left out in an employee benefits plan
When creating and implementing a new employee benefits plan for one organization, there are several factors to consider. The first is to understand the type of workforce an employer has, what kind of benefits they want, and how this would help them engage better with their job. Here are some simple steps to follow:
Step 1: The first step would be to assess current benefits and inquire about how frequently employees use them. Finally, evaluate how this utilization contributes to overall corporate performance.
Step 2: When developing a benefits program, ensure that the benefits offered to connect with the organizations long-term goals.
Step 3: The most successful benefit plans are employee-specific.
Step 4: The most crucial part of any benefits package is to express gratitude to employees. To ensure that employees believe they are irreplaceable and not interchangeable.
Here are some companies International Companies that an Employer may get motivation from.
This online streaming behemoth is well-known for its generous perks package. Netflix employees benefit from healthcare plans, good life insurance policies, paid time off, and free food at the corporation, which has a workplace ethos of \"work smarter, not harder.\" The most generous benefit is paid maternity and paternity leave of up to one year, during which employees can care for and spend time with their newborn children.
Motus provides various benefit options to its employees, including gym memberships, student loan repayments, and business day service. This offer enabled them to acquire and retain talented young professionals for whom college debt is a significant financial burden.
Amazon is a global internet behemoth with a workforce that spans continents. And the corporation knows how to keep its thousands of employees happy by providing a variety of benefits to choose from. The most notable example is its offer to allow employees to share their paid leave with their partners who do not have the same perks at their workplace.
Adobe was named to the 2018 \"Glassdoor Employees Choice Best Places to Work\" list. This is due to their efforts to encourage employee career development through various training and mentorship initiatives. They are also provided extremely lucrative healthcare, retirement plans, and outstanding educational and child daycare options. Given the highly technical industry in which the employees operate, these benefits are very important to their careers.
Types of Ideal Employee benefits
Related: Top 10 Employee benefits
- Workplace Benefits - These are the benefits that companies provide to foster a healthy work environment. This category contains the majority of a companys benefits package. Here are some examples of workplace benefits: paid time off, paid sick days, casual Fridays, remote work programs, and country club memberships.
- Benefits Related to employee wellbeing - Employee benefits in this area are concerned with the mental and physical wellbeing. They range from more basic products like health insurance to others that have become increasingly widespread in recent years, such as mental health benefits. Here are some samples to get you started on your benefits package: health insurance, on-site gym, dental and vision insurance.
- Family Planning Benefits for Employees - More firms are providing family-friendly perks such as paid maternity leave to recruit and keep employees. Its not only large firms; 10% of employers with 50 or fewer employees provide some fertility benefit.
- Retirement Benefits - Retirement benefits are monies set aside for workers to utilize as an income or pension after retirement. This retirement savings account, an appealing benefit for any employee, allows workers to set aside a portion of their salary for long-term investments. Employers frequently contribute to their workers retirement plans as well.
- Profit-Sharing - Profit-sharing programs, like retirement plans, allow employees to partake in corporate earnings. It is also known as a deferred profit-sharing plan because it allows the employee to receive a share of the companys earnings, which is normally equivalent to a percentage of the employees pay. This is given out once a year and offers employees a sense of ownership in the company. Aside from these standard employee benefit packages, businesses might provide other advantages.
- Employee Discount - Many employees today suffer financial difficulty as the cost of living continues to rise. Employers are aware of this and have devised methods to provide specific advantages to employees to alleviate stress. Some of the finest employee discounts save employees on common products like food, clothing, and gadgets. On the other hand, discounts provide workers with daily access to a wide range of consumer items and services at a reduced price.
Tanyaradzwa Shava is a Talent Acquisition Consultant at Industrial Psychology Consultants (Pvt) Ltd, a business management and human resources consulting firm. LinkedIn: Tanyaradzwa Shava
Phone: (0242) 481946-9/481950
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