Employees are 1.9X more likely to trust that their employers are on their side and 1.8X more likely to have confidence in the leadership if they received attractive benefits packages. So if you thought that you could provide generic employee benefits and achieve an engaged workforce, it is time to reevaluate your approach.
You need to provide benefits that deliver real value to your team, especially in terms of job satisfaction and retention.
In this guide, we’ll discuss how to choose employee benefits, including the core perks to have and common pitfalls to avoid.
What Are Employee Benefits and Why Do They Matter
Employee benefits are forms of compensation you can offer to your team members in addition to their salaries. Some federal and state laws require employers to provide mandatory benefits, such as Social Security and Medicare.
Beyond mandatory benefits, you must decide which additional benefits you are willing to offer your staff. Some common benefits include paid time off, paid parental leave, and unemployment insurance.
Reasons why employee benefits matter include:
- Improves Job Satisfaction: Providing benefits shows your employees that you care about them, boosting morale and motivating them to work diligently.
- Boosts Recruitment Efforts: Offering employee benefits helps you stand out from the competition when recruiting talent, ensuring you always have competent, innovative staff.
- Promotes Work-Life Balance: Flexible work arrangements, such as remote and hybrid work, allow your employees to plan their schedules so that they can allocate time for personal use, such as spending time with family.
- Promotes Employee Health: Offering comprehensive health insurance coverage for employees and their dependents enables them to maintain good health by scheduling regular checkups as a preventive measure.
- Better Productivity: Providing a benefits package helps your employees worry less about healthcare expenses, child care, and retirement planning. As a result, they can focus on their work responsibilities, which improves their individual productivity and overall company performance.
Current Trends in Employee Benefits
The employee benefits landscape is quickly evolving due to shifting workforce demographics. For example, today’s employees expect personalized, flexible benefits that enhance their holistic well-being, not just finances. As an employer, you must adapt to the changing benefits trends to stay ahead of your competitors.
Let’s take a look at the trends that will shape employee benefits in the next five to 10 years:
- Customizable Benefits: There is increased pressure to offer a wide variety of benefits, allowing your employees to choose perks that work for them rather than a one-size-fits-all approach.
- Flexible Work Schedules: Employees are increasingly pushing for flexible work schedules, so you must also consider implementing remote work and hybrid work models to attract top talent.
- Mental Wellness Programs: Employees want mental health support programs to help them cope with stress and burnout. Examples of such initiatives include paid counseling sessions and guided meditation.
- Financial Wellness Programs: Members expect their employers not only to provide competitive compensation but also to offer financial wellness support that helps them build wealth. Examples include debt management seminars and retirement planning workshops.
Core Employee Benefits Categories to Consider
Implementing a holistic employee benefits package rarely (almost never) means throwing money at every trendy perk. Instead, you should focus on employee benefits that have the highest impact on retention and satisfaction.
Your employee benefits package should always include the following perks:
- Insurance Benefits: These benefits primarily focus on preserving your employees' health and financial well-being following unexpected events. For instance, life insurance, unemployment insurance, and disability insurance cover your employees’ dependents in case of death, job loss, or injury.
- Wellness Benefits: These are corporate health and wellness programs that improve your employees' physical, financial, and mental well-being. Initiatives that promote physical well-being include providing healthy snacks in the office and paying for gym memberships, while those focused on mental well-being include counseling services and yoga.
- Retirement Plans: Common retirement benefits include matching employee contributions to 401(k) plans and other pension schemes.
- Time Off: Providing PTO allows members to take much-needed breaks from their hectic schedules, helping them avoid burnout without the added stress of not having income during that period.
- Financial Incentives: These benefits allow your employees to take home additional monetary compensation beyond their salaries. The most common form of financial incentive to consider is performance-based commissions and bonuses.
How to Choose Employee Benefits
One of the best ways to maintain a happy and motivated workforce is to offer holistic employee benefits. However, you must do this while balancing cost, value, and impact, which requires understanding what truly matters to your team.
So what’s the best strategy for picking the perks to include in your employee benefits package? We list them below:
1. Know Your Team
Understand your employees' needs, demographics, and preferences. Remember, the needs of a middle-aged employee differ significantly from those of an entry-level graduate.
The middle-aged employee may be married and have children, so they might value health insurance above all other benefits, while the graduate might prefer a subsidized gym membership.
2. Check Industry Standards
Analyze what employee benefits your competitors are offering their teams, and ways to outdo them to gain an edge in the job market.
You should especially take a keen interest in exceptional benefits that instantly stand out, such as personalized wellness gifts, as they set you apart and increase your appeal to top talent.
3. Understand Legal Requirements
Establish your employee benefits package on a solid foundation by first including all perks mandated by federal laws, including Social Security, Medicare, and unemployment insurance. Additionally, ensure compliance with the Family and Medical Leave Act or the Affordable Care Act, depending on the size of your workforce.
Next, consider how state and local regulations might influence your employee benefits package, but this differs across the US.
4. Choose Benefits that Reflect Your Company's Culture
Prioritize benefits that align with your organizational goals and values, as this ensures a deeper connection and boosts team participation.
For example, if you are a startup, your team may enjoy spontaneous, competitive wellness challenges that drive creativity and innovation. In contrast, healthcare workers might prefer purpose-driven activities that show them how their efforts impact the real world.
5. Prioritize High-Impact Benefits
Before employees sign on to your company, they often look for core employee benefits. These include comprehensive healthcare plans, paid time-off, retirement planning, mental health support, and career development opportunities.
As such, ensure you offer these core benefits, as they often influence your employees’ decision to stay or leave your organization.
6. Incorporate Wellness Incentives
Include a wellness incentive program as part of your benefits package to make your team enthusiastic about the benefits. For example, suppose you offer gym subscriptions as part of your health benefits. Employees may underutilize the perk, especially if they are juggling between work and personal commitments.
So how can you get them excited about going to the gym regularly? By offering wellness incentives to help them break the psychological barriers, such as procrastination.
Download our free ebook to learn how to leverage psychology-driven incentives to boost employee benefits update and utilization. At SoHookd, we offer the only wellness-focused marketplace that enables employees to redeem gifts that align with their lifestyle goals.
7. Evaluate Various Healthcare Plans
Health insurance is a must-have employee benefit when designing your package. In fact, a recent survey reported that 73% of employees considered health benefits when deciding whether to stay in a company or leave. As such, you must pay special attention to the health benefits you offer to ensure they meet members’ expectations.
It is crucial to understand the different types of healthcare plans and what each offers, so that you can pick the best one for your team.
Standard plans include:
- Health Maintenance Organization (HMO): Limits comprehensive care coverage to a specific network of doctors and hospitals.
- Preferred Provider Organization (PPO): Allows patients to see any doctor without a referral when seeing specialists, though they will pay more for doctors outside the network.
- High-Deductible Health Plan (HDHP): Low monthly premiums but high annual deductibles, so your employees will pay more out of pocket.
8. Measure Uptake
Define what success means for your employee benefits strategy, and outline essential metrics to track. For example, suppose the primary goal of the employee benefits is to increase motivation and job satisfaction. This requires conducting regular surveys to track members’ motivation and net promoter scores.
You could then use the data insights to refine your benefits package by removing what members rate as ‘not helpful’ and improving the perks they value most.
How to Choose the Right Benefits Provider
Once you’ve established the benefits to include in your package, the next step should be to choose a benefits provider to help you implement them seamlessly. And here’s the thing: the right benefits provider is more than a vendor, and functions as an extension of your HR team.
Use this checklist to pick the best-fit benefits provider for your team:
- Customizable Packages: Every employee has varying benefit needs influenced by age, life stage, marital status, health status, and other factors. Therefore, the provider you choose should be able to personalize the benefits to match your members’ unique needs.
- Tech-Savvy: The provider should have the capacity to leverage various technologies to improve the effectiveness of the employee benefits. For example, when launching wellness programs, the provider should help you set up live and on-demand wellness webinars that members can access anytime, anywhere.
- Ongoing Support Services: Pick a benefits provider that helps you manage administrative tasks associated with the proposed benefits. The dedicated team will help you implement the benefits programs, troubleshoot tech-related issues, and train employees to access and use the perks.
- Transparency and Communication: The provider you choose should give you a comprehensive cost structure with no hidden fees. They should also regularly report on the effectiveness of the benefits program and offer guidance on how you can improve it.
- Reputable: Go for providers with a proven track record for reliability and customer service. They should also have excellent data protection safeguards in place to ensure your benefits programs comply with HIPAA guidelines.
Common Mistakes to Avoid When Choosing Benefits
Here’s the truth: even established companies fail from time to time when designing their employee benefits packages. All it takes is a misstep like overlooking one demographic, and the benefits uptake rate falls short of your expectations. The good news? You can avoid most pitfalls once you know what to look out for.
Discover how to avoid these common mishaps when designing your next benefits package:
- Overlooking Employee Input: Failing to involve your employees when choosing benefits often causes them to disengage, resulting in underwhelming utilization rates. To avoid this, conduct surveys and focus groups to understand employees’ benefits needs and incorporate them into the packages.
- Poor Budget Management: Many employee benefits packages fail because they are too expensive to sustain or prioritize the wrong perks, resulting in high-cost, low-impact programs. Optimize your budget by prioritizing core benefits and then adding more niche perks incrementally.
- Complicating the Benefits Packages: Some organizations believe the more benefits, the better. However, this exposes employees to decision fatigue, affecting utilization. Provide variety within the core employee benefits to facilitate faster decision-making.
- Not Monitoring Utilization: Failing to assess how employees access and utilize the benefits can result in offering redundant or unpopular perks, undermining employee engagement. Conduct regular reviews to determine which benefits employees want and refine your packages to match their preferences.
Frequently Asked Questions (FAQs)
We’ll wind up this guide by addressing some questions you might have about choosing employee benefits:
What Are the Hidden Costs of Employee Benefits?
The hidden costs of employee benefits include administrative expenses for managing and maintaining the packages, personnel costs, and compliance-related fees.
Underutilized benefits may also be counted as hidden costs because they affect the program's ROI and can be considered a loss for the company.
How Do Employee Benefits Influence Employer Branding?
Employee benefits are an indicator of an organization's value system. Offering comprehensive benefit packages shows that you value your employees' well-being, which enhances your reputation within the job market and society in general.
Consequently, offering comprehensive employee benefits can improve your company’s appeal to top talent.
Can Employee Benefits Reduce Workplace Stress?
Yes. Employee benefits can drastically reduce workplace stress. Benefits such as retirement perks help employees worry less about their long-term financial security.
Additionally, mental wellness programs like yoga and meditation help employees reduce burnout.
Can Offering Too Many Benefits Backfire?
Yes. Offering too many benefits can have a negative outcome for your team. For example, employees may experience decision fatigue, leading them to choose fewer benefits than recommended.
Also, offering too many benefits can contribute to feelings of unfairness, especially if some employees feel the perks are targeted toward a specific demographic.
Conclusion
The right employee benefits work hard for your company, ensuring members are motivated and engaged, while also helping you attract top talent to your team. However, picking the right benefits needs more than relying on your intuition.
You must engage your employees to learn their preferences and incorporate them into your benefits packages. Also, we recommend working with a benefits provider to help you balance between cost and employee engagement.
At SoHookd, we have nearly 10 years of experience partnering with companies of all sizes to implement employee benefits packages that drive real impact for the organizations. Our packages are procurement-friendly, with no contracts or PEPM fees, which makes them suitable even for small businesses.
Schedule a one-on-one call to discover how our employee benefits packages can drive engagement for your team.
