The 2023 Guide to Creating an Employee Benefits Package
The 2023 Guide to Creating an Employee Benefits Package
Employee benefits are a critical part of your brand.
Whether you’re in real estate or e-commerce, retail or the manufacturing sector, you can’t have a discussion about talent acquisition without mentioning employee benefits. They are a foundational pillar of who you are as an employer.
Your employees and job applicants will also judge you based on the employee benefits you offer. And as the Great Resignation continues to create shockwaves in the workplace, you’ll want to rethink your employee benefits to reduce turnover.
In other words, your employee benefits might mean the difference between nurturing a happy workforce and scrabbling to improve retention.
If you’re looking to build an effective benefits plan or boost an existing one, this post is for you. In this guide, we present the basics of employee benefits, including what they are, types of benefits, why employee benefits are important, and employee benefits best practices.
What Are Employee Benefits?
Employee benefits, also called benefits in kind, are non-wage payments that supplement employee salary and can include everything from medical insurance and critical life cover to tuition reimbursement, stock options, and gym membership.
Basically, employee benefits are additional perks on top of an employee’s salary. They can be tangible or intangible and boost an employee’s perception of a company.
Why Are Employee Benefits Important?
An attractive employee benefits package benefits both the employees and the employer.
1. Attracts Top Talent
According to EBRI research, 78% of candidates’ decision to accept or reject a job offer is influenced by the type of benefits the employer offers.
But it’s not just the job applicants who value brands based on the type of benefits they offer. Studies show that 58% of employees will switch jobs if the competitor offers attractive perks. So, to attract the best talent, you’ll want to offer attractive perks.
2. Improves Employee Work-life Balance
Poor work-life balance is one of the top reasons employees quit their jobs.
Employers can remedy this problem by offering benefits, such as flexible working hours and extended holiday allowance, to improve their employees’ work-life balance.
Offering hybrid working arrangements can also help improve employees’ work-life balance. So, it’s no surprise that many companies are hopping onto the remote working bandwagon. According to Fortune, 78% of employers plan to offer hybrid working arrangements in 2023.
3. Bolsters Employee Engagement
Apart from attracting top talents and improving work-life balance, employee benefits are an effective tool for increasing employee engagement.
Medical health benefits, in particular, can go a long way in improving engagement. When employees believe their employer is concerned about their wellbeing, their morale and happiness increase. This satisfaction leads to increased engagement and productivity.
4. Increased Employee Retention
Studies show that acquiring new employees costs more than retaining existing ones. It can take up to six months for an organization to break even on its investment in a new hire.
Hiring new employees is even more expensive. Industry reports show that hiring a new employee costs between $4,000 and $20,000, depending on seniority. Offering attractive employee benefits, like health insurance and stock options, can help improve retention, saving the company all the costs associated with hiring.
Types of Employee Benefits
If you want to attract and retain top talents in your company, offering an attractive benefits package is non-negotiable. Here are the seven types of employee benefits your company should offer, in addition to the ones mandated by law (such as wage, overtime, and disability insurance).
1. Medical Benefits
The most important benefits employees care about are health-related benefits. Medical benefits, such as life and health insurance, show employees that the company values and cares about their wellbeing. The major types of medical benefits offered by employers include.
- Health benefits
- Life insurance
- Dental insurance
- Long-term care
- Occupational sick pay
- Eye care coverage
Health and dental coverage are the most important of all the other medical benefits and help employees get private rooms in the hospital when needed.
2. Pension and Retirement Benefits
Pension and retirement benefits help your employees save for retirement. The 401(k) is the most popular type of retirement benefit. With this plan, employees contribute a certain percentage of their salary to retirement savings. Other retirement plans include 403 (b), 457 plans, and pension.
There’s also a defined retirement plan which allows employees to contribute a certain amount of their earnings to their account. The employer may also contribute to the employee’s account.
3. Family Supporting Employee Benefits
Some of your employees likely have spouses and children, while others might need to care for their elderly parents.
Creating benefit plans focused on supporting employee and their families can increase the level of satisfaction among the employees. Common family-supporting employee benefits offered by employers include.
- Parental leave benefits (paid maternity, paternity, and adoption leave
- Dependent care benefits
- Family building reimbursements
- Elder care benefits/caregiver support
- Respite care
4. Financial Wellbeing Benefits
With the rising inflation, the cost of living has skyrocketed over the past few years. Many organizations are looking for innovative ways to ease their employee’s hardship, and that includes providing financial wellbeing benefits.
Financial wellbeing benefits can come in many forms, including:
- Discounted gift cards
- Employee cash-back card
- Employee discounts
5. Education and Training Benefits
Many companies provide education and training benefits to help their staff advance professionally. Workers highly value employers who provide growth and development opportunities through continuing education or any other learning program.
These benefits may come in many forms, including:
- Mentorship programs
- Tuition reimbursement
- Conferences and seminars
6. Transport and Relocation Benefits
Transport and relocation benefits can save the employee headache, particularly if they’re relocating overseas. These perks help employees make an efficient and painless transition from their current location to their new location.
These benefits usually cover reimbursement for using public transport as well as the cost of other transportation types.
7. At Work Perks
At-work perks are offered by companies to their employees while working. They may include things such as free lunch, unlimited snacks, no dress code, coffee service, nap rooms, on-site child care, and gym memberships.
Employee Benefits Best Practices
Employee benefits are beneficial to the workers and the company in many ways. But if not managed properly, they may negatively impact your bottom line. Here are a few things to keep in mind when designing your employees’ benefits package.
- Monitor employee wishes and needs – With five generations in the workforce, each with different needs, finding the right benefits that attract all generational cohorts can be difficult. Conducting an employee benefits survey can help you find the right benefits for different groups.
- Measure benefits and costs – While benefits are important for retention purposes, they can strain your budget and negatively impact your bottom line if they’re too expensive for the company to afford.
- Know the law – Make sure you’re offering benefits that are legally required in your state for the size of your business
- Communication is key – All employees should know the benefits available, including voluntary benefits, and how to take advantage
Employee benefits are non-wage payments offered by employers in addition to the basic salary. If designed and managed properly, employee benefits can attract top talent, reduce employee turnover, improve work-life balance, and increase employee engagement.
We hope this guide will help you design employee benefit plans that drive results. Feel free to comment and share!