Employee perks and benefits: A guide for employers
Benefits are any additional amenities provided to employees in addition to their compensation. Here's a primer on employee perks and benefits.
A comprehensive benefits package is critical in today's employment market for attracting and keeping top workers. According to Glassdoors 2015 Employment Confidence Survey, almost 60% of people say benefits and perks are a big influence in deciding whether or not to accept a job offer. According to the report, 80 percent of employees would rather have more perks than a pay increase.
Google is well-known for its extravagant amenities, including professional chef-prepared lunches, bimonthly chair massages, yoga courses, and haircuts. Twitter staff receive three catered meals daily, as well as acupuncture and improvement workshops on-site. SAS offers college scholarships to employees and children. Many smaller businesses have drawn notice for their unconventional benefits, such as vacation spending reimbursement and free books.
But what should an organization do if it can't afford Google-level perks? You don't have to break the bank to provide appealing extras.
According to a new poll performed by Fractl, employees place the highest importance on perks that are relatively low-cost to employers, such as flexible hours, additional paid vacation time, and work-from-home alternatives, after health insurance. Furthermore, the researchers discovered that some benefits could outweigh higher-paying offers with fewer supplementary benefits for some job applicants and, ultimately, output. Employees are a company's most valuable asset. As a manager, do you believe it or just say it? If you genuinely believe it, you will take it seriously and boost your investment in employee benefits.
Why do employers offer benefits to employees?
Many HR professionals spend a large amount of time on benefits packages. They are one of the most important employee engagement and retention strategies and a source of talent attraction.
The statistics speak for themselves when it comes to the value of employee benefits. According to an extensive study conducted by the Society of Human Resource Management (SHRM), 92 percent of employees regard employment perks as crucial for their overall job satisfaction (a great element of retention and productivity). Almost one-third of employees indicated work benefits as the primary reason for seeking a job outside their organization and staying at their current employment.
Benefits are among the top motivators candidates look for in job adverts, with 63 percent of job seekers polled saying they pay attention to what benefits a firm provides. This means that including benefits in your job advertising and careers page is an important component of your employer branding efforts.
Employee perks can allow you to retain high-performing employees without spending on extravagant pay raises. Employees should be paid enough to cover their bills and live comfortably, but they may accept less pay if they have decent health insurance, flexible hours, and other benefits. Compensation packing refers to employees giving up a portion of their salary for benefits, which may result in tax deductions or further gains for either party.
What are the four categories of primary employee benefits?
The most common kinds of perks are those that are most frequently encountered in businesses across countries. Many people mention health insurance, life insurance, disability insurance, and retirement plans as examples of these benefits. However, this viewpoint focuses on the various types of insurance and overlooks other equally important benefits. To broaden our scope, we combined insurance benefits and mentioned three more significant categories of benefits provided by employers:
- Retirement plans
- Additional compensation
- Time off
This category includes health insurance (dental, medical, and vision), life insurance, and disability insurance. Many countries mandate corporations to provide health insurance or medical plans, and firms routinely pay for publicly available medical care. Many firms, however, use private group or individual insurance to provide better options to their employees.
Life insurance demonstrates that the employer is concerned not just with the employee but also with their family. If the employee dies, the employee's family will get a lump sum payment to cover the funeral and other related expenses and their cost of living for a set period. Accidental Death and Dismemberment (AD&D) plans, which pay a lump sum to employees who die or are injured on the job, can enhance life insurance.
Disability insurance may cover both long-term and short-term disability and disease. If an employee becomes ill, for example, they can be compensated for the period of their illness. In the United States, certain businesses may use short-term disability insurance to pay paid maternity leave for female employees.
Employees who receive retirement benefits feel more comfortable about their future. In the United States, for example, a frequent benefit is the 401(k), in which both the firm and the employee make regular defined contributions to the employee's account.
The 401(k) is a defined contribution plan that does not guarantee employees a certain retirement benefit amount. This is due to the possibility of losing the money invested in the account if the investments fail. Employees can choose how to invest their contributions or how much to deduct from their paychecks through pre-tax deductions. Employers can also contribute in some situations by matching a percentage of their employee's contributions.
Paid time off is required by law in many countries, including the European Union (Austria, for example, has a legal minimum of 22 paid days for vacation, and Finland has five weeks). Employers in countries such as the United States are not required to provide paid vacation time. Those who do so voluntarily can gain a competitive edge in talent attraction and retention - According to SHRM, paid leave is vital to 9 out of 10 employees' overall job satisfaction.
Employers worldwide may choose to extend legally mandated leave, such as by providing additional sick days, for comparable reasons. According to a 2018 survey, 71 percent of all private-sector workers in the United States received paid sick leave as a perk from the Bureau of Labor Statistics.
Other types of leave, such as parental or bereavement leave, are treated similarly. For example, because the legislation in the United Kingdom does not provide for bereavement or compassionate leave, providing a few days of this type of leave might be of significant value. Other time-off benefits could include training days and sabbaticals, which are often elective for companies but can have a comparable impact on employee engagement.
Any money paid to employees in addition to their regular salary falls under this category. Bonuses, commissions, rewards, and gifts are examples of direct remuneration, as are stock option schemes and profit-sharing.
Contractual or discretionary bonuses may include:
- Sales commissions
- Individual or company-wide performance recognition
- One-time gifts (e.g. for exemplary actions on the job)
Union contracts frequently set bonuses. These rewards are typically part of incentive programs that encourage staff to deliver more and higher-quality output. They may also aid in maintaining morale.
However, there are arguments against monetary rewards; financial rewards can sometimes encourage unethical behavior or create envy among coworkers. For example, a salesperson who knows that the most successful salesperson of the month would receive a greater commission may steal prospects from coworkers or contribute to an unhealthy competition environment in the company. To avoid these outcomes, ensure that everyone has the same opportunity to earn bonuses, that the criteria for those bonuses are transparent to everybody, and that any differences in employee results are investigated.
Employee Benefits Services: Which Companies Have the Best Benefits Packages?
You may be wondering which businesses provide the best corporate perks at work. So, let's look at some of the best instances.
Starbucks offers an abundance of employment benefits. They have a PTO policy, health insurance, and parental leave, among other benefits.
The Starbucks partner discount is one of their most appealing benefits, in addition to their PTO allowances. This gives partners a 30% discount on purchases of beverages, products, and meals at corporate locations.
Chipotle, the Mexican Grill restaurant brand, provides tuition assistance. This employee perk allows qualifying employees to receive tuition reimbursement of up to $5,250 per year.
Employees become eligible for the program after 120 days on the job. This bonus appeals to the chain's employees, two-thirds of whom are first-generation college students.
FedEx provides a range of advantages, but employee discounts are the most enticing.
Employee discounts at the company include vacations, electronics, cell phones, movie tickets, and new and used cars, among other things. These are extremely beneficial in attracting and keeping top talent.
The following are the top 10 employee benefits in the world:
- Private Health Insurance Plan (Medical, Dental & Vision)
- Retirement and pension plans
- Retirement and pension plans
- Flexible hours and/or work-from-home
- Flexible hours and/or work-from-home
- Paid time off (Vacation, Sick)
- Company equipment
- Bonuses / Awards / Gifts (including vehicles, laptops, phones)
It should be noted that the most popular advantages vary by location, and some benefits are only available in particular places. Australians, for example, can obtain novated leasing as a perk, allowing individuals to lease cars while their company assumes the liabilities of the contract. Time off for mothers and fathers is a popular company-offered benefit in the United States, although paid parental leave is not federally mandated by law as it is in other nations (although it exists at the state level in some areas).
Employee perks in four English-speaking countries may include:
So, what are some good employee benefits?
More specifically, what employee benefits do individuals appreciate the most? The simple explanation is that employees value all benefits. However, finances are limited, and businesses must identify the combination of the benefits that will have the greatest positive impact while not breaking the bank.
First, learn what benefits are required by law to provide. This could be a matter of national or state law. Make a list and consider whether you can extend some of the benefits. Employees in France, for example, are entitled to three to five days of bereavement leave. You may decide to prolong this leave if you discover that your employees require it.
Then, investigate surveys to help you identify which voluntary benefits your organization should provide. Glassdoors Benefits Review poll in the United States examined the relationship between specific benefits and job happiness. A correlation of 1 indicates that the benefit is a good predictor of employee satisfaction, whereas 0 indicates that there is no association. Here is a list of employee benefits that have correlations greater than 0.5:
Some unusual employee benefits include:
- A pet-friendly office;
- Free food and beverages;
- Movie, concert, and sporting event tickets;
- Free library membership; and
- Paid time off to volunteer.
Best Millennial Employee Benefits
A one-size-fits-all methodology is no longer viable. With the rise of millennials and diversity in the workforce, there is a greater need to deploy various employee benefits packages. Millennials currently account for over 35% of the workforce. They are intelligent, ambitious, and active, and they will not bend old rules. And they are skilled at what they do. So, what are you going to do? So you just give them what they want. The benefits they require and do your utmost to meet their expectations.
Here are the 7 Most Sought-After Employee Benefits for Millennials:
1. Student Loan Relief
Education loans are a major source of worry for millennials. Millennials seek employers who will assist them in repaying their school loans. This could also be one of the most effective means of attracting and retaining the greatest minds of this age.
2. Cutting-edge Technology
Millennials have grown up with access to everything at all times. Information has always been at their fingertips. They also expect the same at work. Provide these digital natives with the best and most up-to-date technological gadgets to ensure excellent job performance. That's how they've always worked.
3. Benefits from Time Off
Millennials are more concerned with living a fulfilling lifestyle than achieving a work-life balance. And they work hard to maintain this way of life. However, a study shows that 25% of millennials are worried about seeking time off. Employers are attempting to change this. They are transitioning from traditional monetary bonuses to paid weekend trips.
4. Initiatives for Corporate Social Responsibility
This is a generation that wishes to work and contribute to society. Their involvement in charity initiatives has been steadily rising. The best method to engage millennials is to involve them in non-profits, Red Cross societies, and other similar organizations.
5. Get Rid of the 9-to-5 Workday
Employees who do not believe in sticking to standard workplace norms. They do not believe working from 9 a.m. to 5 p.m. is the only way to be productive. According to reports, 45 percent of employees prefer flexible scheduling above income. Another motivation to adjust your workplace's 9 to 5 system is the emergence of the gig economy and self-employment.
6. Working from Home
Working remotely or from home is the ultimate method to close the sale. Millennials value work-life balance. They prefer working in environments where they are not required to be physically and continually present to execute their job. Almost 92 percent of millennials have expressed a desire to work from home, even if only occasionally.
7. Personal Growth and Development
Giving millennials the resources and time to follow their interests is another excellent method to engage them. One method is to pay for their hobbies. Another option is to form several clubs based on the interests of the employees. Examples of such organizations include book clubs, photography groups, acting clubs, and so on.
Millennials are also interested in napping rooms, event passes, co-working spaces, free meals, and snacks.
Employee Benefits at a Low Cost
Employee benefits in the United States account for 30% of overall compensation costs, according to a 2019 analysis by the Bureau of Labor Statistics. Insurance benefits accounted for 8% of compensation expenditures, while legally mandated benefits accounted for 7.7%.
Health benefits, in particular, reached $15,000 per employee in 2019, leading firms to adopt steps to reduce the cost of employee benefits (e.g. adding more virtual care solutions).
Benefits do cost money, and their value is such that these costs will not (and should not) be minimized. However, not every benefit must impose significant financial obligations on businesses. Not every company has the finances or the means to provide generous perks to its employees. However, offering benefits helps to motivate and encourage staff. Employee perks are non-monetary, there is a lot you can accomplish without breaking the bank.
The following are 11 advantages provided by small firms that require little or no capital:
- Flexible Schedule
- Event Tickets
- Bring Your Pet to Work Days
- Volunteer Paid Time Off
- Maternity and Paternity Leave
- New Hire Welcome Packages
- Movie Nights
- Workplace Benefits - office Olympics, library
Many of these unique employee benefits are on the rise: in the United States, 44 percent of all firms that raised their offered benefits increased their employee wellness resources. These can assist in increasing morale, but they can also help you avoid indirect costs, such as lost work and productivity (roughly $1,685 per employee per year, according to SHRM). And this may be true for the majority of benefits. So, before deciding what to include in your plan, consider the potential costs and gains for each employee perk. What appears to be costly at first look may save you money in the long term.
Why Do You Need to Implement These Right Away?
According to employee engagement surveys, 50% of employees would leave their jobs for improved employee benefits.
As a result, perks are unquestionably significant. We have compiled a list of points that demonstrate the significance of employee benefits:
1. Boosts Productivity
Employees must be entirely focused to perform at their best. They are frequently unable to concentrate since they are preoccupied with things at home. These include paying medical bills and providing the best facilities for their children.
When given benefits, 20% of employees perform better.
Employee stress can be reduced by providing benefits. They sleep better and perform better when they know that things at home are being taken care of.
2. Promotes Loyalty
A manager who genuinely cares about his staff will undoubtedly develop a more loyal workforce than others. When your employee's personal and professional life are taken care of, they will wish to advance their careers inside your organization.
Employees place a high value on perks, according to 60% of respondents.
Creating a benefits package that promotes their personal and professional development is critical. Employees are more engaged as a result, and they are less likely to leave.
3. Reduces absenteeism
Health difficulties, low workplace morale, stress, childcare issues, and disengagement are some of the leading causes of absence. Absenteeism demotivates personnel, delays deadlines, and reduces overall production.
43 percent of employees believe that having insurance allows them to take fewer sick days.
Employees will be less likely to take sick leave if your company provides medical insurance. Similarly, employees encounter tuition classes, family troubles, parenting issues, and other issues.
4. Enhances Recruiting
Considering a company's benefits package before applying for a job is a common habit among employees, even to the point where 55 percent of employees would take a lower-paying job with better perks.
Benefits are the top priority for 57 percent of employees when applying for a job.
As a result, the incentives you offer can considerably assist you in attracting and retaining qualified staff. Give them the advantages they require to get the most out of them.
5. Improves retention
Employee retention refers to an employer's capacity to keep his staff. And one of the finest and simplest ways to keep your best employees is to provide them with the best perks.
51 percent of employees intend to quit their employment.
Employees must be happy to remain with a company. And giving them the appropriate benefits will undoubtedly make them feel valued and desire to stay with the company.
Employee Benefits Management: How to Do It Right!
Employee benefits have a considerable impact on the administrative side of HR, especially when it comes to regulatory difficulties. However, there are techniques to handle benefit plans more effectively to save time and reduce the likelihood of errors. Here are five things to think about:
1. Engage in the services of a dedicated employee benefits consultant.
This individual could be internal (as a Benefits Administrator or Compensation and Benefits Manager) or external (such as a Benefits Broker). They will assist you in determining the best solutions depending on your company's requirements, calculating expenses and gains, and even negotiating rates for certain benefits.
2. Obtain the appropriate software.
Managing benefit packages without technology is extremely difficult (and unnecessary). A solid employee benefits information system allows you to know which employees are eligible for specific benefits, export statistics, and manage benefits (It could also integrate with your talent acquisition software to help expedite the complete HR process.). Do your study and create a compelling business case to discover the best software.
3. Carefully weigh the benefits and costs.
This will be the duty of the finance department, but HR should maintain track of rising or falling expenses and gains. Data will be essential in developing your long-term benefits strategy.
4. In your Employee Handbook, include an explanation of benefits and bonuses.
No amount of wonderful benefits will be successful if employees are unaware of them. Create a section in your Employee Handbook to provide critical information about what your organization has to offer (use our benefits and perks template as an employee benefits package example to get started with your own).
5. Keep track of your employee's wants and needs.
Employee's requirements may alter. Offering complimentary meals and gym memberships to younger staff is a terrific way to retain them. However, as they become older and start having kids, flexible hours or parental leave may become more crucial. When necessary, listen and make improvements.
Ian Nzira is the Business Systems Software Developer at Industrial Psychology Consultants (Pvt) Ltd, a management and human resources consulting firm.
Phone: +263 242 481946-48/481950
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