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Do employees love perks - doesn't everyone, honestly? But the world of employee perks and benefits has expanded rapidly in the last decade.
It's no longer enough to offer a basic healthcare plan, some dental coverage, and bad free coffee in the cafeteria.
Expectations are higher, and employees can find roles at other companies that offer special perks if they think you're stingy.
But how can you figure out what kind of perks your business can afford to offer your employees? It would be best if you found a way to calculate those perks' cost and see what's reasonable for your company to do. Plus, it would be best to calculate the cost of not offering those perks as well, in the form of poorer recruitment and retention prospects. Sounds a little intimidating?
It doesn't need to be. We've got your complete guide to calculating employee perks right here for you.
What are Employee Perks at Work?
Employee perks are extras that you offer to your employees. That could be pretty standard benefits like health insurance, life insurance, and retirement savings plans. Or it could be fun additions like free Friday lunches, gym membership discounts, and free vehicle related expense solutions, such as purchasing or replacing tires and rims.
The world of employee perks has grown pretty vast since Silicon Valley startups began offering an extensive range of perks to their employees (check out the long list of Google perks to get an idea), and workers in other industries liked what they saw and asked for the same. Now, expectations for perks have grown as companies try to outdo each other.
Why Do You Need to Offer Perks?
The marketplace for talent has only grown more competitive over the last decade, especially for highly talented workers. Employees may have many choices for companies to join, and it can be difficult for employers to stand out from the rest of the crowd. Offering generous or highly valued perks is one way to give your company an edge in recruiting and retaining top talent.
And even though those perks come at a cost, more and more organizations are discovering that those costs are worth it because they help them hold onto their top performers, according to SHRM.
The Top Employee Perks Ideas to Offer
While each company offers a different range of perks to employees, a significant number of employers offer a few top options because they're famous. According to Robert Half, these are:
- Flexible work schedules
- Remote work options
- Paid Paternity leave
- Employee discounts
- Paid time off for volunteering
You'll notice a common trend with most of these perks - they help employees balance their time working with their personal lives. As most of your employees are likely juggling many commitments on their plates in addition to their work, they like options that help them find balance in all areas of their lives.
Which Perks are Right for Your Business?
Deciding what perks you should offer to your employees depends on several factors.
- What does your employee base look like?
- What are your company priorities?
- What is your budget?
When deciding what to offer based on your employee profile, it's helpful to look at which perks appeal most to your employee base. Do you have a lot of millennials? They tend to prioritize health and wellness options like gym membership and onsite fitness options. Are most of your workforce composed of parents? Then parental leave and flexible schedules might be a strong fit.
You should also look at your company's values and priorities and consider offering perks that align with your mission and vision. For example, if your company likes to talk about how you positively impact your local community, offering paid time off to volunteer would be clearly aligned with that mission.
And last but certainly not least, you should look at the budget you can afford to spend on perks. If your budget isn't as big as Google's (and really, whose is?), you need to be realistic and prioritize your spending on your business's most essential perks.
Calculating Employee Benefits and the Cost of Employee Perks
To figure out what kind of perks your company can afford on your budget. First, you need to calculate how much different employee perks will cost you. Like the free lunches, some perks, like we offer at Xoxoday, come with just a price tag attached. But some other perks, like paid parental leave or time off to volunteer, are a little more complex to calculate since they involve lost working hours instead of just a straightforward price.
And since the cost of benefits has increased 368% in the last 14 years, you might be in for some sticker shock when you're looking at your options. Here's a brief breakdown of how to calculate the cost of employee perks.
1. Determine Your Benefits
Calculating the value of the perks you offer is essential, so you know exactly how much total compensation each employee is receiving. After all, each employee costs more than just the amount on their paystub - they also receive benefits and perks, and the entire cost of those all adds up to their total compensation. Depending on where your business and employees are located, there may be tax implications for these perks as well.
2. Use a Perks Calculator
It would help if you didn't play guessing games with something as important as employee compensation. Instead, it would help if you used a tool designed to tell you the cost of your potential or current perks. You can find a detailed calculator for the cost of employee perks here so you can price out your options accurately.
3. Calculate the Ratio of Perks to Salary
Knowing how much the value of an employee's perks corresponds to their salary is necessary. For example, if you give employees an average of $10,000 in perks and benefits per year, and you pay them $40,000 in salary, then the actual cost of their employment is $50,000, and you can build in that extra cost when looking at how much you can afford to hire.
To Perk or Not to Perk
Now that you view the costs of the perks you want to offer or currently offer to employees, you might think your cost-benefit analysis is done. But not so fast! Have you thought about what it will cost your organization if you don't offer at least the most highly-demanded perks to your workers?
That's right - there's a cost to not offering perks as well. That cost could come in the form of higher recruitment costs because your potential employees aren't wooed by your subpar benefits and perks package. If you work in a highly competitive industry or one where your competitors all offer lavish perks, and you're behind the times, you might lose out on the highly qualified people you need to make your business succeed.
And once you've hired employees, the potential perks don't lose their value. 63% of employees say that benefits and perks are an important reason for staying with an employer. With the high cost of employee turnover, what kind of hit is your bottom line taking when you don't offer perks? The retention benefits might more than outweigh the cost of those perks.