A Complete Guide to Employee Benefits
The success of any company, regardless of its size, depends entirely on the quality of its workforce. The company depends on its employees to use their talent, skills, and experience to contribute to the company's growth and development.
And the talent that the employees bring to the organization needs to be maintained and motivated over a long period of time to achieve the best possible results.
According to a human resource consulting firm, Joe Lineberry, senior vice president at Aon Consulting, "The research shows that when employees feel their benefits needs are satisfied, they're more productive."
But how do you achieve this? For the most part, the salary paid by the job itself serves as a motivator for your employees to continue showing up for work every day.
Most employers are content providing salary-based compensation to their employees. However, many previous studies conducted over the past years have indicated that most company employees work with an expectation of non-financial rewards. These non-financial rewards are called employee benefits, and they can be of over a hundred different types.
"There are some benefits good employees feel they should have," says Ray Silverstein, President's Resource Organization, founder of PRO.
The most common types of employee benefits are health insurance, paid maternity and paternity leave, minimum wage, overtime, and compensated holidays.
These benefits may be mandated by the law, such as in the case of minimum wage and paid maternity and paternity leave, or the employer may offer them out of their own choice.
What are employee benefits?
Basic employee benefits
The size of a company determines to a large extent, the type of employee benefits that can be offered to the workers. All companies are required by law to offer the basic benefits, which include:
1. Consolidated Omnibus Budget Reconciliation Act -(COBRA)
Allowing ex-employees to maintain an identical level of insurance coverage from the previous employer while looking for a new job.
2. Disability benefits
Employees injured while on the job can receive worker's compensation which is covered by state workers compensation laws.
3. Family and Medical Leave Act (FMLA)
This federal law ensures that workers are allowed paid leave in case of family or health issues such as childbirth or sickness.
4. Minimum wage
The Fair Labor Standards Act (FLSA) set up a minimum wage for employers to pay hourly workers. While the minimum wage differed based on what kind of job or state you worked in, it helped ensure that employees were paid sufficiently to compensate for their work to support themselves financially.
5. Overtime
Workers are entitled to receive extra pay when they work additional hours apart from their regular work hours.
Apart from these state-mandated benefits, many companies choose to offer a variety of other common fringe benefits tailored to the worker's specific needs to create a more fulfilling job experience.
These include:
- Paid holidays
- Dental care plans
- Free food at the company
- Services such as haircuts and spa treatments
- Gym memberships
- Sponsored car and home loans
7 Types of employee benefits
Attracting and retaining talent in the workforce are two of the most important aspects of running a successful business venture. Employee benefits are non-wage compensations offered in addition to a staff member’s salary, and some of them can be quite valuable to retain talent and attractive for potential candidates.
As the proposed employee benefits package can play a significant role in negotiations between employers and talents they wish to be interested in, recognizing what your organization can offer is vital. If your business hires a combination of employees and independent contractors, one great way to create a stronger culture across your workforce is by offering benefits for international independent contractors.
Here are seven types of employee benefits your company should consider including in the package, in addition to the ones that are requested by law (such as minimum wage, overtime, compensation, and disability insurance).
1. Medical benefits
The most important employee benefits that the prospective staff cares about are their health-related ones. Medical benefits such as health insurance, dental insurance, life insurance, disability income protection, and long-term care will show the staff that your company values their contributions as well as their wellbeing.
Health and dental insurance, the most vital of all the above-mentioned medical benefits, will, among other things, help your employees get private rooms in hospitals should they need them, cover the costs of prescription drugs, and offer them a choice of different dental treatments.
Disability income protection covers the employee’s compensations in case they get sick or injured, while long-term care compensates for expenses for ill or injured employee’s care.
2. Pension and retirement benefits
Certain employee benefits aim at taking care of your workforce even after they retire. Pension covers a fixed amount of funds to the employee after retirement and at regular payment intervals.
Retirement benefits can include perks apart from a pension, like providing specific health-related advantages.
3. Family-supporting employee benefits
A considerable number of your staff members are likely to have spouses and children, while some of them might be in need to take care of their elderly family members.
Creating the employee benefits package that focuses on helping workers balance their family and work life is the right decision for every business, no matter how big or small.
Parental leave benefits include paid maternity, paternity, and/or adoption leave. This benefits offering generally also includes programs to help workers choose the best daycare for their children.
Dependent care benefits represent a notable aid for the employees that need their sick or disabled children or elderly relatives watched after attentively.
4. Education and training benefits
Respecting your employees’ wishes to learn and develop personally and professionally will grant your organization many points when it comes to acquiring and retaining talent.
Workers will highly value an employer willing to provide education and training benefits such as mentorship programs, seminars, conferences, or tuition reimbursements.
In the long run, these expenses will really pay off for your organization, bringing in and keeping competent, educated, satisfied employees who are happy to work in a company that cares about their needs.
5. Transportation and relocation benefits
Transportation benefits for employees will help them manage the costs of official travel. These perks may include reimbursements for using public transportation methods (buses, trains, or metros), covering the costs of other transportation types, or even providing vehicles such as cars or bicycles to drive to and from work.
Relocation assistance benefits help your staff members make an efficient and painless transition from their current locations to the location of your business.
Your company can even offer exclusive perks like travel benefits, which will attract many potential employees you wish to be interested in your organization. If you manage a construction site you can offer commercial auto insurance for contractors and protect your employees' vehicles.
6. Legal assistance benefits
Sometimes, your employees may need professional legal advice concerning matters such as family law or real estate planning. When it comes to real estate, they can even look for real estate brokers, allowing them to manage property transactions more efficiently and collaborate with them.
Allowing them to approach your company’s legal representatives with issues they need help with will help you score high with potential staff and the current workforce.
7. Working conditions and business expenses
The traditional understanding of the workplace is rapidly changing, and a mixture of different generations and demographics demands that companies keep up with the pace.
The demand for improving general working conditions shows no signs of stopping. Your organization should at least try to accommodate the requirements most employees today find essential at the workplace.
Offering your staff excellent general working conditions that include workplace flexibility, positive company culture, and other perks such as reasonable workload, low occupational stress, or job security will help you appeal to the best candidates for the positions in your company.
Advantages of employee benefits
“A generous benefits package is essential for engaging and retaining your talent.”- Patrick Colvin, Strategic HR Business Partner at the USA Today Network.
The decision to offer employee benefits to your workforce is not easy. There are many factors to consider before putting a benefits scheme in place. The most important issue is to consider how much the scheme will cost the company versus the overall contribution towards the company’s success.
However, the advantages of offering employee benefits are well documented and supported by years of industry research data.
Offering employee benefits as part of your worker benefits package to prospective employees ensures you create a competitive salary package that will attract the top talents in the field, as packages with moderate salaries but plenty of benefits are favored over higher salaries but lower benefits.
Such schemes also help reduce the number of employees who may leave your company to find work elsewhere because of the high levels of satisfaction they obtain from their job.
Subsidized gym memberships, dental care insurance, healthy food in the break room, pay raises, work breaks- all of these job perks help reinforce positive behavior among employees through establishing a work ethic and team building that encourage a high-performance culture.
Companies adopting this method
“Providing benefits can put you above 43 percent of competitors who don’t offer extra benefits.”- Business.org.
The advantages of offering a range of employee benefits are apparent in the success of companies such as Netflix, Motus, Genentech, Adobe, and Amazon.
1. Netflix
This online streaming giant is well known for its liberal benefits plan. With a workplace attitude of “work smarter, not harder,” Netflix employees enjoy healthcare programs, excellent life insurance policies, paid time off, and free food at the company.
The most generous benefit is paid maternity and paternity leave of up to one year that the employees can look after and spend time with their newborn children.
2. Motus
Motus offers its employees a range of benefit plans, including gym memberships, student loan reimbursements, and company day service. This offer has allowed them to hire and keep talented young professionals for whom student debts are a huge financial burden.
3. Genentech
Genentech's workplace benefits include tuition assistance, paid sick days, on-site childcare support, and great healthcare plans. Apart from this, on-site life at the company is made easier and more efficient through a car wash, haircuts, and spa services.
Employees who have worked full-time for the company for more than six years can also enjoy a six-week break along with full pay and benefits. This has helped the company consistently make Fortune's variety of “best companies to work for” lists.
4. Amazon
Amazon is a global online giant with a workforce spanning continents worldwide. And the company knows how to keep its thousands of employees happy with their job by offering a selection of benefits to choose from.
The most striking of this is its offer to allow their employees to share their paid leave with their partners who are not offered the same benefits at their company.
5. Adobe
Adobe was listed among the “Glassdoor Employees’ Choice Best Places to Work” list for 2018. This is through their efforts to emphasize career development for their employees through various training and mentorship plans.
These benefits are especially vital to the career of the employees given the highly technical field they work in. they are also offered incredibly lucrative healthcare and retirement programs and excellent educational and child daycare plans.
What to include in your employee benefit plan?
“The fact of the matter is, after health insurance, the most required benefits and perks are those that bring flexibility while improving work-life balance.” - Patrick Colvin.
There are several factors to consider when deciding to create and implement a new employee benefits plan for your company workers.
The first is to understand the type of workers you employ and what kind of benefits they want, and how this would actually help them engage better with their job.
1. Healthcare
One of the most common perks offered by most companies is health care benefits, which take a huge burden off families who cannot afford costly insurance plans.
Paid time off and paid parental leave are also highly sought after, as they allow the workers to seamlessly balance professional and personal life without having to sacrifice either.
2. Pensions
Pensions and retirement plans are great perks to motivate employees to continue working.
3. Wellness programs
Wellness programs can help companies ensure that their employees remain healthy and active.
4. Flexible schedules
Companies that offer flexible schedules retain far more employees than those that don’t, especially with today’s millennial workers' generation.
“Encouraging employees to stay home, if possible, not only reduces the stress of their day but shows them that we value their safety. In return, we often see the employees ‘online’ or still producing work remotely.” — Robin Schwartz
5. Mentorship and training programs
These programs work especially well with technical companies where employees benefit greatly from onsite training courses. Not only does it enhance the skill set of an employee, but over time this also translates into a more productive workforce.
Last words on creating an employee benefits program
Once your company has decided to put a specific benefits plan in place, the next step is to strategize and implement it.
Step 1: The best first step is to begin by taking stock of your existing benefits-what are they? Are they being used extensively by the employees? How is their use contributing to overall company performance?
Step 2: While formulating a benefits program, make sure the benefits you offer align with the long-term goals you have set for your company. Avoid wasting money on benefits nobody may use by educating your employees on the available benefits and encouraging their maximum use.
Step 3: The most successful benefit plans are employee-specific. According to paymediahcm.com, 58% of employees want customized benefits options, and you can ensure widespread use by allowing employees to choose their own tailor-made plan.
Step 4: The most important aspect of any benefit plan is to show employee appreciation. To make sure the employees feel irreplaceable and not interchangeable.
As put by Nate Masterson: “No matter what you choose, it’s important to make employees feel like people that have something to offer, not just numbers or placeholders.”