Employee benefits have become fundamental to effective human resource management, and companies are increasingly recognizing their role in attracting talent and enhancing employee well-being.
For example, a recent survey showed that 88% of employers rated health benefits to be “extremely important” or “very important” to keeping their teams motivated.
As such, companies that currently don’t have an employee benefit plan should introduce it soon to boost their teams’ morale and attract top talent.
This article provides a detailed employee benefits guide, including common types of benefits and how to create a holistic package that caters to your members’ wellness needs.
What Are Employee Benefits?
Employee benefits are non-monetary compensation that companies offer their employees in addition to their salaries. Some benefits, like Social Security and Medicare, are mandatory for full-time employees as required by law.
Other employee benefits, while not ‘mandatory’, are still extremely crucial because of their impact on members’ wellness. For example, paid time off and life insurance have a direct effect on employees’ physical, mental, and emotional well-being.
Why Employee Benefits Are Important More Than Ever
Employee benefits have a significant impact on members' well-being and organizational performance.
The other major advantages of having employee benefits include:
- Attracting Top Talent: Providing employee benefits helps you attract and retain top talent, giving you an edge over competitors.
- Enhanced Employee Satisfaction: Comprehensive benefits foster a genuine sense of appreciation, driving higher retention and loyalty.
- Promotes a Healthy Workforce: Medical insurance and regular screening help reduce absenteeism from sickness. Additionally, PTO days protect employees against exhaustion and burnout.
- Improved Work-Life Balance: Company policies that support remote work and asynchronous schedules help employees to plan their shifts so they have time for self-care or to pursue personal projects.
- Improved Productivity: Employees spend about 8.2 hours at work every week worrying about their finances. This translates to low productivity, which hurts company performance. Employee benefits like 401(k) plans address such concerns, allowing members to focus on their work.
5 Types of Employee Benefits
The best employee benefits cater to specific aspects of your team’s well-being, including health, finances, and self-care.
This section covers the five main categories of employee benefits and how they impact your workforce.
1. Wellness Benefits
Implement health and wellness programs that focus on members’ holistic well-being, encompassing physical, emotional, financial, and mental aspects.
For example, you could provide fitness tracking apps to motivate employees to exercise daily. Additionally, include a leaderboard where the most active members receive gift cards that they can redeem on a wellness marketplace.
2. Insurance
Employee benefits should cover one or more of the following insurance areas:
- Comprehensive Health Coverage: Provides robust medical, dental, and vision plans to ensure ongoing employee well-being.
- Life Insurance: This provides financial security to employees’ families and dependents in case of death.
- Disability Insurance: Helps employees meet their financial obligations should they lose their ability to work due to injuries or sickness.
3. Retirement Planning
Empower employees to save for their future, reducing their financial worries.
Enroll them in 401(k) plans and commit to match their contributions up to a predetermined amount.
Also, introduce automatic payroll deductions to streamline the process and boost compliance.
4. Paid Leave
Time off with pay allows employees to take breaks from their regular schedules when they are sick or experience burnout.
Additionally, members should have the option to take leave days to go on vacations or spend time with their families. Lastly, implement policies that allow paid parental leave for new parents.
5. Additional Compensation
Provide opportunities for employees to earn beyond their standard wages to keep them motivated. This could be achieved by offering performance-based commissions and bonuses.
You could also offer indirect compensation through stock options to give employees a sense of ownership of the company, boosting their productivity and job satisfaction.
How to Build a Competitive Employee Benefits Package
Most companies have an employee benefits package to motivate their teams and boost productivity. So, how do you make your benefits package stand out to get an edge over your competitors?
Below is a step-by-step guide for creating and implementing an employee benefits package:
1. Understand Your Employees’ Needs
Start by finding out which employee benefits your team cares about.
Some members may be concerned about getting comprehensive health insurance for their families, while others may be stressed about their retirement savings.
This foundational knowledge provides insight into the employee benefits you should include in your strategy.
2. Analyze Industry Employee Benefits Standards
Check which benefits your competitors offer their employees and identify gaps that you could address to get an edge.
For example, you could provide dental and vision health insurance as add-ons to the standard medical coverage that most companies provide in isolation.
Additionally, check industry standards to determine the ‘irreducible minimums’ when it comes to employee benefits. Surpassing industry standards often helps position yourself as a better employer in your niche.
3. Start with Quick Wins
Implementing a holistic employee benefits package is capital-intensive and out of reach for many organizations. As such, identify ‘low-hanging fruits’ to start with as you build up to high-cost benefits packages.
Employee engagement programs are often the easiest way to introduce or bump up your employee benefits packages without hurting your cash flow. For example, launch career development programs, including mentorship classes and role shadowing, to prompt employees to envision their long-term future in the company.
4. Customize the Benefits Packages
Follow a ‘pick your perk’ approach when designing your employee benefits package. The goal is to allow members to choose the employee benefits that matter most to them.
Personalization tells employees that you respect their choices and interests, which encourages them to utilize the packages.
Suppose you implement an employee wellness incentive program. Members should have the autonomy to pick incentives that align with individual wellness goals.
5. Communicate Effectively
Have a communication strategy for informing your team about the proposed employee benefits packages. Explain the ‘why’ behind the changes to show members how the benefits will influence their wellness and the company culture.
Additionally, provide avenues for employees to offer feedback and suggestions on the proposed benefits packages, fostering a sense of ownership in the programs.
6. Launch the Benefits Package
Roll out the employee benefits packages gradually and educate members on how to access/utilize them.
For example, you could organize corporate wellness workshops to train employees about retirement planning and how they can access the 401(k) plans.
7. Measure Success and Refine the Package
Track how members respond to the benefits to measure employee engagement and the expected ROI.
With employee benefits packages, the ROI is often non-monetary, but instead focuses on changes in members’ motivation and job satisfaction.
Also, you could conduct pulse surveys and use the feedback to refine the benefits packages.
Cost of Employee Benefits
Among the most significant challenges when planning employee benefits is setting a budget, with companies grappling with one major question: “How do we provide holistic benefits at a reasonable cost?”
Several factors influence the cost of benefits. These include:
- Benefit Types: Understand how each benefit impacts overall costs, prioritizing those with the highest employee value and organizational alignment.
- Company Size: In most cases, the cost of employee benefits increases with the size of the team, meaning a company of 5,000 people will need to spend more than one with 50 people. However, this is not always the case. For example, companies using our wellness product packages do not incur extra charges when they add new members to their teams.
- Workforce Demographics: Your team’s age and status often influence how they utilize the employee benefits and the corresponding costs. For example, an ageing workforce will likely utilize their health insurance packages frequently and take more sick leaves, raising the incurred employee benefits costs.
- Recurrent Expenses: Employee benefits packages often come with significant administrative costs. For example, you might outsource payroll management services to assist with the 401(k) plans, which must be accounted for in the budget.
- Health Plan-Sponsored Wellness Funds: Health insurance providers often fund or subsidize employee health and wellness programs, which helps reduce the amount companies pay ‘out of pocket.’
Sample Benefits Package with Curated Wellness
Wondering how to structure your employee benefits?
This section provides a sample employee benefits package that includes wellness programs for your employees:
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Effective Date: MM/DD/YYYY Introduction: This document outlines all the employee benefits available to eligible members (permanent, part-time, and full-time). The benefits become effective at the point of signing the employment offer. I. Insurance:
III. Paid Time Off (PTO):
IV. Wellness Programs:
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Most companies offer well-thought-out employee benefits packages. The challenge comes when they need to integrate wellness into the employee benefits to keep their teams motivated or boost performance.
At SoHookd, we have nearly 10 years of experience helping companies curate wellness experiences for their employees. Our programs are built on the proven power of wellness incentives, which boost employees’ intrinsic motivation and increase participation by up to 73%.
Download our free ebook to learn how you can leverage psychology-backed incentives to promote employee wellness and drive real impact for your company, such as reducing your healthcare costs.
Frequently Asked Questions (FAQs)
Let’s wind up this guide by answering common questions we receive about employee benefits:
What’s the Difference Between Perks and Benefits?
The primary distinction between perks and benefits lies in their intended impact on employees' well-being.
Perks are often one-time or short-term to boost morale and productivity. In contrast, employee benefits are often long-term and are intended to supplement the offered salary.
Examples of benefits include health insurance or matching your employees’ 401(k) contributions, while perks may include healthy office snacks and discounts on company products.
How Much Should Companies Budget for Employee Benefits?
There’s no one-size-fits-all approach to budgeting for employee benefits. It mainly depends on the company's size, in terms of the number of employees and annual revenue.
As such, organizations could set a budget for each member and then multiply it by the number of employees. Other factors include the type of wellness benefits and whether they are provided on a one-time or ongoing basis.
What Is a “Pick Your Perk” Model in Employee Benefits?
A ‘pick your perk’ model means employees have autonomy over the benefits they receive.
For example, allow employees to pick wellness programs that support their lifestyle goals, which could be free gym memberships for some and paid yoga sessions for others.
Conclusion
The best employee benefits packages address your team’s concerns related to insurance, retirement planning, and work-life balance. Integrate holistic wellness thoughtfully into your employee benefits packages to support overall employee health, satisfaction, and productivity.
If you already have an employee benefits strategy, it should be easy to launch wellness add-ons.
SoHookd provides pre-built and customizable wellness programs that you can curate to your employees’ needs and launch within 2 weeks. Additionally, we offer dedicated support to help you onboard your team and manage other wellness-related administrative tasks.
Schedule a personalized demo to learn how our wellness product packages can help you revamp your employee benefits strategy.
