Attracting top talent is at the top of every HR manager’s agenda. One way of doing this is by building an appealing employee compensation package. This will help attract top-quality workers, as well as generate and maintain a happy and healthy workforce. Whereas employers are looking to get the best out of employees, employees are now looking to get more out of employers. As a result, employee benefits and rewards programs are becoming increasingly common. They are now a useful bargaining tool when attracting and retaining new hires.
In this post, we’re going to look at the main benefits and rewards employers offer their workforce today.
- Benefits to offer your employees
- Compensation plans
- Discounts for employees
- Wellness programs
- Flexibility benefits
- Government vs. Employer offered benefits
- Companies with the best benefits
- Compensations & Human resources benefits
You might be wondering, “What are employee benefits?” Benefits are non-salary compensation, also known as perks or fringe benefits. They are provided to employees outside of salaries and wages. Perks and benefits for employees may include medical insurance and profit sharing, as examples. Businesses offer these with the aim of creating a more alluring work package for their employees.
List of employee benefits & employee rewards programs
So, what are the 4 major types of employee benefits? The four main types of benefits are medical, life, disability, and retirement. Let’s take a closer look at these. Once you’ve reviewed the types of benefits available, compare these 17 tools for employee recognition.
What are the 4 major types of Employee Benefits?
Rises in the cost of healthcare have meant that medical coverage is a must-have employee benefit an employer can offer. For example, this can include:
- Medical Insurance – Typically, this coverage includes hospital visits, attendance at doctor’s surgeries and prescriptions.
- Dental Insurance – This may cover annual exams, cleanings and X-rays.
- Vision Insurance – Increasingly common, this insurance usually covers routine eye exams, prescription glasses, and contact lenses.
Employers typically pay all, or at least a part, of these insurance premiums for employees. It must be noted that employers are legally required to provide healthcare to employees who work 30 or more hours per week.
Also common are Life and Accidental Death & Dismemberment (AD&D) Insurances.
- Life Insurance – If an employee passes away, this insurance provides a payment to the family of the deceased. This is typically for funeral costs and assistance with ongoing living expenses. The amount is usually equal to the employee’s annual salary.
- AD&D Insurance – This benefit provides money to the employee or their family if the death or dismemberment was due to an accident.
Employers can offer short-term or long-term disability insurance to their employees. These types of benefits are particularly helpful to workers who have been injured or fallen seriously ill and are unable to work as a result.
- Disability Insurance – This covers expenses up to a certain amount during the time workers are unable to work.
- Accident Insurance – This helps employees with payment regarding any medical costs resulting from accidental injury. It typically includes treatment, hospital stays, and medical exams.
Retirement benefits are funds that are put aside for employees to use as an income or pension when they finish work.
- 401(k) Retirement Plan – An attractive benefit to any employee, this retirement savings account permits workers to put aside a portion of their salary into long-term investments. In many cases, employers contribute an amount to their employees’ retirement plans too.
Now we’ll look at common employee rewards programs, also known as employee recognition programs, usually given to acknowledge top performers.
Employees reward employee accomplishments and high-performance reviews with bonuses. Recently, it has been more common for businesses to not only reward individuals but group efforts with monetary bonuses. They reward contributions made to corporate performance at a group, departmental or company-wide level.
Employee stock option plans were previously offered to upper management of large companies. Now, they are more common with a much wider range of employees. These programs offer employees the ability to buy a number of the company’s shares at a fixed price for a specific time period, typically around 10 years. Therefore, they are a good motivator and generally keep employees loyal to the company for longer periods of time.
Profit sharing plans, similar to retirement plans, offer an employee a share in company profits. Also known as a deferred profit-sharing plan (DPSP), it allows the worker to receive a portion of the company’s profits, usually equal to a percentage of the employee’s salary. This is handed out annually and gives employees a sense of ownership in the business.
Aside from these common employee benefits packages, there are other perks employers can offer.
Putting a worker’s salary into a Nonqualified Deferred Compensation (NQDC) plan is increasingly offered as employee compensation and a great tool in recruitment. It allows the employee to receive wages, bonuses or other compensation at a later time. Similar to a retirement plan, these earnings are often deferred until retirement. Doing this provides the worker with more income in the future, usually when they have entered a lower tax bracket than before. This means that the tax they pay whilst working is at a reduced rate.
There are some important requirements to take note of here. US tax law requires that the NQDC plan is in writing. This means that the document specifies the amount to be paid in the future, the payment schedule and the event that will result in payment.
Events of this nature include:
- a fixed date
- separation from service (e.g., retirement)
- a change in ownership or control of the company
- an unforeseen emergency
Furthermore, workers must make an irrevocable choice to defer compensation before the year in which the compensation is earned. The tax benefits that can be received from NQDC will only be realized once these requirements have been met.
With the ever-increasing cost of living, many workers today are experiencing financial stress. Employers recognize this and have found ways to offer certain benefits to employees to help relieve this stress. One of these ways is to offer staff benefits in the form of employee discount programs. Although companies provide the 4 main types of benefits, the majority of regular workers are unlikely to need them. Many people may never have an accident or dismemberment during their lifetime, so what good are these benefits to them? Discount programs, however, offer workers access to a variety of consumer products and services at a discounted price every day. If, as an HR manager, you find yourself asking the question “What benefits do employees want?”, this may be part of the answer.
Some of the best employee discounts offer workers reductions on everyday items such as groceries, clothing and electronics. Bigger discounts can also include hotels and vacations, movie tickets, sporting event tickets, cars, cable services, beauty and spa treatments, and financial services.
These benefits are particularly attractive to employees as the majority are likely to actually use them. This can be a powerful recruitment and retention tool for any employer. So, if you’re looking to add benefits to your company, you might want to think about starting with discounts.
One of the most common employee benefits in USA is employee wellness packages. These are typically non financial rewards that employers. Non financial benefits are also referred to as “emotional salary”, as it refers to emotional gains rather than monetary benefits. Their ultimate aim is to increase employee happiness, motivation and loyalty. So what are some examples of wellness programs?
On-site fitness centers
Companies like to show their workforce that they care about their well-being. For this, they have installed fully-equipped on-site gyms for workers to use. It helps keep workers fit and healthy.
To keep workers active and engaged with the team, many companies organize wellness adventures and activities. This can include golf lessons or laser tag. Generally speaking, the types of activities included in this are kept broad to appeal to a wide range of people. The primary focus is on having fun but they have hidden team-building benefits.
Lunch and healthy snacks
It is now common for companies to offer longer lunches than before. Whereas in the past, it was typical to only offer 30 mins for a speedy lunch, many businesses are now offering up to 90 minutes. This is so employees can have more time for a relaxed lunch, and if the employees wish, time to do sport. What’s more, companies are now offering free healthy snacks, such as fruit, in their offices. This is an attempt to keep employees happy and healthy.
One of the newest company perks is to offer spa or health treatments to workers. These range from massages and facials, to acupuncture and therapy. Nowadays, these non monetary rewards are growing in popularity among businesses. Furthermore, keeping employees happy, healthy and relaxed is key to increasing their productivity and motivation.
This is another typical employee benefits plan is gaining more momentum. More employers are offering their workers a flexible benefits plan as part of their benefits package. This allows employees to work a flexible schedule to suit their needs. An attractive benefit, many HR managers are presenting potential recruits with this perk as part of their job offer.
So why offer a flexible working schedule to employees as a benefit? There are a number of reasons.
Employees relish flexibility at work as it helps them maintain a good work-life balance. They can meet family needs and personal obligations if they have the flexibility to do so from their job. Workers can choose the hours they work. Not everyone is an early bird, some people work better at night. Therefore, this flexibility presents workers with the option to work whenever it suits them. Flexible working hours mean a worker can attend their yoga class, pick up their kids from school or go to a midday doctor’s appointment. All of this, without the hassle of organizing it around a rigid work schedule.
Employee childcare costs
Flexibility is also one of the best employee benefits, as many workers have children and need to tailor their working hours to their childcare obligations. Childcare is expensive, but so are living costs. This makes life with a family very expensive. Yet, if workers have flexibility with their hours, they may be able to manage a timetable where reduced childcare time or no childcare time at all is needed. The result is two full-time incomes with little or no childcare costs.
Flexible work and the chance to work from home a number of days a week is particularly attractive. It provides employees with a sense of personal control over their life and environment. This leaves workers feeling empowered and building commitment to the company. Great for employees, great for employers.
Whereas health insurance, flexible working hours, discounts and wellness programs are employer-provided benefits, there are also some benefits available from the government. Let’s take a look at some of these now.
Federal Employees Health Benefits Program (FEHB)
Through this program, federal employees, retirees, and their families have access to a variety of health insurance plans. More than 200 plans participate in the program. This way, employees are able to select the plan that best fits their individual healthcare needs.
Disability and workers compensation
These benefits ensure that a sick or injured employee can continue receiving their salary until they can go back to work. This is typically a proportion of their normal pay. Every state has its own requirements for employers. So you’ll need to check with your state government to see what the exact requirements for you are.
Consolidated Omni-Budget Reconciliation Act (COBRA)
Under COBRA, the federal government requires that companies extend medical benefits to former employees and their families. This law applies to companies with 20 or more employees and involves a coverage period of up to 18 months after the termination of contract of an employee.
Family and Medical Leave Act (FMLA)
This Family Medical Leave Act requires employers to provide maternity, paternity and adoption leave. Yet, according to the labor regulations, an employer isn’t required to pay this leave.
Although in the past this benefit was employer provided, it is increasingly mandated by jurisdictions, both state and local, that employers provide sick time. With that said, it is becoming commonplace for employers across the country to have a paid time off (PTO) policy to support workers.
So what is the difference between government and employer provided perks? Whereas government perks are mandated by law, those provided by employers are not. Employer benefits are not mandatory and are subject to changes. They are personalized to and by each company and therefore vary depending on each organization.
You might be wondering which companies offer the best corporate perks at work? Well, let’s take a look at some of the best examples.
Starbucks employee benefits packages are plentiful. They have a PTO policy, offer health coverage and parental leave, among others. One of their most attractive benefits, in addition to their PTO allowances, is the Starbucks partner discount. This provides partners with a 30% discount on purchases of beverages, merchandise and food at company outlets.
Chipotle, the Mexican grill restaurant chain, offers a Chipotle tuition reimbursement benefit. This employee benefit allows eligible workers reimbursement up to $5,250 a year in tuition. Employees are eligible for the program after 120 days of employment. Indeed, this benefit is extremely attractive to the chain’s workers, two-thirds of which are first-generation college students.
Fedex has a number of perks, but it’s most attractive benefit to employees are its discounts. The company’s employee discounts include vacations, electronics, cell phones, movie tickets, and new and used cars among others. These are particularly helpful in attracting and securing top talent.
So are employee benefits really necessary? For employers and HR managers alike, company perks are a fantastic recruitment and retention tool, if used correctly. Not only do employee benefit programs help attract top talent, but they also help to secure employees within the company and keep them loyal. Furthermore, it shows workers that you, as their employer, share an investment in their overall health and their future.
What’s more, by actively encouraging your workers to get involved in perks, such as wellness programs, employees can improve their health and wellbeing. This could result in reduced healthcare costs for your organization. Workers with fewer health risks mean fewer sick days, fewer trips to the doctor, and more time spent at work. With employee compensation, everyone, from employer to HR manager to employee is a winner!
Written by Charlotte Stace