A competitive employee benefits package is valuable for attracting and retaining top talent. It can make employees feel appreciated, increase retention, and boost overall job satisfaction. In fact, some employees prefer additional benefits to a pay increase.
There are two types of employee benefits: federally-mandated and voluntary.
Examples of federally mandated benefits include:
- Medicare and Social Security contributions
- Worker’s compensation insurance
- Unemployment insurance
- Health insurance
- Family and medical leave
Failure to be in compliance with federally mandated benefits may result in penalties imposed by the government. This is especially the case for companies located in the United States, and other developed countries likely follow similar standards.
Companies can choose to offer optional extra employee benefits at their discretion. These types of optional, voluntary employee benefits have a big impact on improving recruiting and retention efforts. Some important employee benefits you can offer your employees voluntarily include:
- Health insurance
- Retirement savings programs
- Childcare subsidies
- Time off during emergencies or sick days
- Flexible schedules
- Employee recognition programs
- Eldercare
- Transportation
- Pet care services
Employee benefits planning helps you decide what your company can afford to offer your employees. Read on to learn more about this topic! Click on the sections below to jump right to your specific question.
- What Is Employee Benefit Planning?
- What Are the Objectives of Employee Benefits?
- What Should Be a Key Factor in Designing an Employee Benefits Package?
- What Are the 5 Types of Employee Benefits We Can Offer?
- How Do I Create an Employee Benefits Plan?
What Is Employee Benefit Planning?
It’s easy to say “yes” when your employees ask for benefits. But it’s more challenging to know what those benefits should be and how much they will cost you in the long run.
Employee benefit planning is the process of designing, implementing, and managing employee benefits programs that meet the needs of employees.
What Are the Objectives of Employee Benefits?
Employee benefits are very important in today’s day and age. Here are some of the objectives that are meant to be achieved through a robust employee benefits program.
- To attract the best possible talent – Offering a competitive benefits package that meets or exceeds what the competition offers can make your company more attractive to potential hires and help you win the talent war. You will also be able to get the best performance out of your existing employees after you invest in their health and well-being through voluntary employee benefits.
- To reduce employee turnover – You can use employee benefits to retain valuable employees by making them feel valued and appreciated. Benefits can incentivize them to work harder or stay with the company longer.
- To improve organizational culture and engagement – The right package can enhance employee satisfaction, boosting job engagement and overall productivity. This can have a big impact irrespective of your existing office, or workplace culture.
- To provide financial security for families – Health insurance offers protection against illness and covers families who might otherwise need to work out-of-pocket for healthcare coverage. Savings plans such as 401(k)s and retirement planning do the same.
- Promoting good health – Wellness programs foster a healthy work-life balance, reduce stress and burnout, and increase employee productivity.
What Should Be a Key Factor in Designing an Employee Benefits Package?
- Eligibility – Who are you targeting? Is it a qualified or non-qualified plan? Qualified plans include benefits offered to a non-discriminatory group of employees, such as pension and funded retirement plans. A non-qualified plan includes benefits offered to a select group like company executives based on responsibilities and job titles.
- Workforce demographics – Employees in different age ranges have different needs. For example, millennials and Gen Z might prefer flexible schedules and hybrid work strategies (potentially even paid time off as a wellness incentive), while the older generation might want more autonomy and funded retirement benefits. It would be a good idea to get ahead of these trends, as future generations will also value this balance in their career. Reviewing each group’s needs will help you design a plan with more valuable benefits for everyone.
- Employee choice – Ask people what they want. Allowing employees to choose the benefits they want to see in their package next year will make them feel valued. Use an employee wellness survey, personal interviews, simplified questionnaires, or sophisticated research methods to identify what they want. Pick the top three benefits and let the majority decide which one gets prioritized.
- Company’s budget – The costs associated with developing your employee benefits plan will depend on how elaborate you want it to be. Working with a benefits broker can help you work around budgetary constraints. They will also be able to educate you, and your team about the various employee benefits options available in the market. Alternatively, if you feel like you need a robust employee benefits strategy, it may be better to speak with professional wellness benefits consultants. Dedicated consultants will be able to provide guidance to you in the planning process through their years of experience in dealing with clients of all sizes – also they will be able to help you execute on your employee benefits strategies in a practical way. Any one of these wellness benefit professional will be able to address any questions that your team may have about the employee benefits landscape, and the appropriate strategies for your firm.
- You may find this list of 7 Wellness Solution brokers helpful if you are looking to work with a professional.
- Location – While federal laws apply in all jurisdictions, each state has its own regulations on employee benefits. Reviewing the local rules can help you create a benefits plan that complies with the requirements in your area of operation.
- Competitiveness – Consider the industry standard in your specific industry and the benefits your competition offers for similar roles. Review the collecting bargaining agreements to get a feel for the industry’s needs and talk to others in your line of work. Understanding the market trends will help you design an attractive benefits plan that attracts top talent right from the hiring stage.
- Employee use – This applies only if you have an existing benefits plan. Review the benefits plan to identify the frequency of use of all offerings in your current package and how best to refine it. Incorporate benefits tracking technology in your workplace to simplify the process.
What Are the 5 Types of Employee Benefits We Can Offer?
There is no one-size-fits-all answer to this question. The importance of employee benefits varies depending on the individual. However, there are 5 key things that employees look for when deciding whether or not to join a company.
Health Insurance
COVID-19 changed the way people view their health. And with good reason: nearly everyone knows someone who has died from the virus or has lost a loved one to it. With this in mind, employers need to ensure they offer benefits that will keep employees healthy and happy while at work.
- In a recent study by the Harvard Business Review, better medical, dental, and vision insurance emerged as key considerations when choosing a new job for 88% of respondents.
- 34% said they would give it “some consideration” against 54% who would give it “heavy consideration.”
Flexibility and work-life balance
The workforce is changing, and the traditional 9-5 work day is no longer the norm. Today, flexibility and work-life balance are important to the millennial generation, who comprise the largest demographic in the US labor force.
Telecommuting has become increasingly popular for those who do not need a strict schedule or have family obligations that require them to be home during certain hours of the day.
- Research shows that 80% of employees would turn down a job without flexible hours.
- 85% of companies with flexible scheduling reported that their productivity has increased.
- 78% of employees with rigid schedules are considering finding another job.
Paid Time Off
Many people feel happier and more productive when they have enough time off work. This is especially true if they can take their vacation in advance rather than at the last minute. Research shows that paid leave can boost employees’ morale and productivity, increase employee retention, lower absenteeism, and foster teamwork.
Wellness Programs
Wellness programs are designed to help employees live healthier, more productive lives. These programs typically involve various activities to increase employees’ physical and mental health. They often include on-site fitness centers, free meals at designated times, discounted gym memberships, gym reimbursements, fitness subsidies, and other similar offerings. Fitness benefits are sometimes the sharpest tool in your overall benefits, and compensation package.
Employees who take advantage of these programs report improved happiness levels, reduced stress, lower presenteeism and absenteeism rates, and increased productivity at work. Many employers get started with wellness programs through a wellness challenge, or even a step challenge. But if you really want to implement a world-class wellness program, you are better off starting with an employee wellness survey to what kind of optional employee benefits they may be interested in, and you can even conduct that employee wellness survey through wellness events, or a wellness fair so that you can educate your employees about the different options that they can take advantage of.
Retirement savings programs
Employees may be more likely to stay with a company if they have access to a 401(k) plan that offers generous employer contributions yearly.
In a recent survey, Fidelity Investments found that:
- 79% of Americans prefer to save for retirement than a wedding or a similar big event.
- 62% of respondents would put $100 in a 401(k), while 38% would spend a similar amount on a feel-good purchase.
- 65% of Americans prefer to put their money in an emergency fund compared to 35% who would spend a similar amount on vacation.
Employees are also more likely to invest in their retirements if their employer contributes to the fund as well. So having your company contribute to your employee’s
retirement savings funds will be very well received by the team.
So what should you do if you want to start an employee benefit plan?
How Do I Create an Employee Benefits Plan?
Designing an effective employee benefits plan is a process. Here are the basic steps to help you develop an employee benefits plan that works for you.
Step 1: Define Your Companies’ Goals and Objectives
An effective employee benefits plan must align with your organizational goals and strategy. Understanding the overall business goals will help you identify the benefits to prioritize in line with the company policy.
Step 2: Perform a Needs Assessment
Performing a needs assessment will help you decide the best benefits to offer based on your employees’ specific needs. The goal is to identify the gaps in your current benefits plan and consider what your employees really need when deciding on a package.
Step 3: Create a Proposal that Outlines Your Benefit Plan Features and Benefits
Once you conclude employee participation, start formulating your benefits package in order of priority. The information, and insights you have collected so far can help you calculate the costs of your proposed benefit plan and determine its sustainability.
These insights, and information can help you identify underutilized benefits if you have an existing plan. You can then wholly change, add, or even eliminate some of the benefits.
Step 4: Present the Benefits Plans to Your Team
Proper communication with the employees is crucial to promote the adoption and ownership of the employee benefit plan. Let the employees know how you used their feedback and suggestions to design the benefits plan. This will make them feel seen and heard, promoting their buy-in.
Create awareness of the benefits package, ensure every stakeholder understands the plan, and welcome feedback and suggestions. Continue rollout until the program is fully implemented.
Step 5: Conduct Periodic Evaluations
Review the benefits periodically to determine if it’s aligned with the company’s goals and objectives. Variables like changing demographics in the workplace, the business landscape, and technological advancements can affect the effectiveness of your benefits package.
Consider adopting technology and digital tools for internal employee benefits management. A third-party benefits administrator can help larger organizations assess and evaluate the effectiveness of their plans. On that note, check out this guide on what is a benefits administration system.