Employee benefits form an integral part of their compensation, offering enticing perks like medical insurance and paid time off. These incentives play a huge role in employee retention and attracting top talent.
According to a 2020 LinkedIn report, companies that workers rated highly on benefits realized a 56% lower attrition rate. This is a short guide to help you build an attractive benefits package for both part-time and full-time employees.
What Are Employee Benefits, and Why They Are Necessary
Employee benefits are any non-wage tangible or intangible compensation employers offer their workers. These benefits may include gym membership, cell phone plans, stock options, and training opportunities.
HR professionals spend a lot of time crafting mouth-watering employee benefits packages for employee retention and talent attraction strategies. Research shows that a whopping 92% of employees consider employment benefits a significant part of their overall job satisfaction.
A third of the employees also cited employee benefits as a reason to leave or stay with an organization.
There are four major benefit categories that apply to companies worldwide; they include insurance benefits, retirement plans, additional compensation, time off, and health benefits:
1. Insurance Benefits
This type of benefit includes health insurance, disability insurance, and life insurance. A health plan is mandatory in many countries, and at the very least, employers provide some form of health benefits.
At the other end of the spectrum, employers opt for private insurance to offer better options for their employees.
Life insurance shows that a company cares about employees and their family members’ well-being. Should the employee die, the insurance provider will offer payment to cater to funeral expenses. In addition, they avail some money to cover living expenses for some time.
Disability insurance covers healthcare for short or long-term illnesses or disabilities. If an employee falls ill, one of the insurance benefits is receiving payments throughout their condition.
Some companies even go as far as paying the premiums for employees’ dental insurance. Others may use short-term policies to pay for a female employee’s maternity leave. Since most of these are deductible from workers’ salaries, employers can offer reimbursement.
2. Retirement Plans
Retirement benefits help an employee feel secure about their future after they retire. There are two main types of retirement plans–defined benefit and defined contribution plan.
With the 401(k) pension plan, both the employer and employee regularly contribute to the employee’s account. However, this plan does not guarantee any specific amount at retirement. Employees choose where they want to invest their money. Unfortunately, sometimes, investments fail, so an employee may end up losing all their money.
Employers may also contribute by matching a percentage of an employee’s contribution. Then after retirement, the employees receive the balance in their accounts. Alternatively, employees may opt for the defined retirement plan, which the employer fully funds. The employer then deposits a specific monthly amount towards the plan.
3. Time Off
For many countries, paid time off is mandatory, and the minimum threshold is 21 days. In countries like the US, paid leave is not a guarantee. And that’s why companies that offer paid leave as part of their benefits package are highly sought after.
Some employers even offer paid sick leave where employees receive payment when they’re unwell. However, this benefit is prevalent in the private sector. Employers can provide other types of leave, including parental leave, child care, maternity leave, and bereavement leave.
In some parts of the world, companies do not offer bereavement leave. That said, if your company does, you are likely to improve employee retention.
4. Additional Compensation
Additional compensation refers to any money employees receive aside from their regular paycheck. These may include gifts, awards, bonuses, commissions, profit-sharing, and stock options.
Companies offer these as part of incentive programs to reward employees for productivity and good performance. In addition, the compensation also helps boost morale. Businesses must provide equal chances at winning to avoid stirring resentment among colleagues.
Other incentives worth noting include wellness programs and gym memberships. While these may not necessarily have monetary value, they do impact overall health and professional development.
Finally, offer employee assistance programs (EAP) so workers can get anonymous counseling for personal issues that affect job performance. Human resources should roll out these initiatives to foster wellness among workers.
Also, make sure the eligibility criteria for these bonuses is transparent to all. To encourage this, display the company criteria for enrollment to different bonuses or incentive programs in accessible areas. Effective communication of employee benefits is key to amplified productivity.
Conclusion – Why You Need Employee Benefits
As an employer, you must offer an enticing benefits package. Not only will this have top talents striving to work for you, it will also boost morale and reduce turnover. The most common employee benefits include insurance, time off, fringe, and retirement benefits.