Studies show that a competitive employee benefits package can significantly affect a company’s success in attracting and retaining employees. About 60% of people report that benefits and perks are a significant factor in considering whether to accept a job offer. Also, 80% of employees would choose additional benefits over a pay raise.
Companies that use benefits as a tool for recruiting and retaining talent reported better overall company performance and above-average effectiveness in recruitment and retention than companies that do not.
What are employee benefits?
Employee benefits, also called fringe benefits, perquisites, or perks, include various types of non-wage compensation provided to employees in addition to their regular wages or salaries. Instances where an employee exchanges (cash) wages for some other form of benefit are generally referred to as a “salary packaging” or “salary exchange” arrangement.
In most countries, most kinds of employee benefits are taxable to at least some degree. Examples of these benefits include housing (employer-provided or employer-paid) furnished or not, with or without free utilities; group insurance (health, dental, life, etc.); disability income protection; retirement benefits; daycare; tuition reimbursement; sick leave; vacation (paid and unpaid); social security; profit sharing; employer student loan contributions; conveyancing; long service leave; domestic help (servants); and other specialized benefits.
The purpose of employee benefits is to increase the economic security of staff members, and in doing so, improve worker retention across the organization. As such, it is one component of reward management.
In addition, “perks” are those benefits of a more discretionary nature. Often, perks are given to employees who are doing notably well or have seniority. Common perks are take-home vehicles, hotel stays, free refreshments, leisure activities on work time (golf, etc.), stationery, allowances for lunch, and first choice of such things as job assignments and vacation scheduling.
Importance of Employee Benefits
The advantages that come along with incorporating these benefits helps create an environment that will allow your employees to function at their best.
Attracting and retaining the best talent
Offering a competitive benefits package can significantly improve your company’s success in both attracting top talent and retaining your existing employees.
There are no universal, one-size-fits-all benefits programs. The secret of success is to customize your benefits package and tailor it to your employees’ needs. Once you’ve created an effective benefits program, you need to promote it among your employees and candidates.
All your existing employees, as well as potential employees (job candidates and even just curious job seekers), need to know that benefits at your company are something special.
How crucial are employee benefits to every business?
Offering benefits to your employees is important because it shows them you are invested in not only their health but their future. A solid employee benefits package can help to attract and retain talent. Benefits can help you differentiate your business from competitors.
Mandated Benefits and Optional Benefits
The most common (and often most essential) type of benefits employers can offer is medical coverage. The costs of health insurance, doctors and hospital visits, dental work, vision care, and prescriptions are rapidly increasing, and employees are finding it more and more difficult to deal.
Another common employee benefit is retirement like the 401(k) plan. This allows employees to deduct a certain percentage of each paycheck to put towards retirement savings. Some businesses choose to match the employee’s deduction or up to a certain percentage.
Paid time off (PTO) is a benefit that provides a bank of hours in which the employer pools sick days, vacation days, and personal days that allow employees to use as the need or desire arises. This policy pertains mainly to the United States, where there are no federal legal requirements for a minimum number of paid vacation days.
Many employees decide to stay in companies when they offer performance bonuses. This is a form of additional compensation paid to an employee or department as a reward for achieving specific goals or hitting predetermined targets.
Other unconventional but interesting benefits are cycling classes during lunch, ping-pong tables at the office, yoga classes, gym passes, free food, and snacks.
Encourage Business Culture Among your Employees
Businesses with an organizational culture tend to be more successful than less structured companies because they have systems in place that promote employee performance, productivity, and engagement. Having a strong company culture motivates everyone to do their best work.
A work environment is driven by purpose and clear expectations. This motivates and inspires employees to be more engaged in their work duties and interactions with others. It also leads to high levels of workforce engagement, which drives productivity. Having a strong connection to an organization and its people creates an atmosphere of positivity that is hard to ignore.
People who feel valued and respected at a company are less likely to leave it. That’s why it’s essential for brands and companies to foster a winning organizational culture that supports their core values and mission statement. Happy employees mean less turnover, which saves companies time and money in the hiring process. Companies that achieve a strong culture must take steps to maintain and improve it.
Companies and brands might think that trying to cultivate a positive workplace as an elusive, time-consuming waste of important resources, but studies show that the opposite is true. Creating a positive company culture begins with fostering happy employees.
The definition of employee benefits is straightforward: additional compensation paid to employees on top of regular salary and wages. Some employee benefits are required by law; others are optional and serve as an important part of the overall compensation package used to attract and keep employees. There are also different ways to structure and offer benefits.
Happy employees are 85% more efficient, experience a 60% drop in absenteeism and stay twice as long in their jobs as their less happy colleagues, creating a measurable impact on engagement, retention, safety, wellness, employer brand and even cost control goals.