Originally published in Matchr August 15, 2024
Today’s job market is very different than in previous years. Various industries are constantly struggling to find qualified talent to support businesses and who are willing to commit long-term to a single organization.
As businesses continue to look for ways to attract a wider talent pool while keeping their total compensation packages increasingly competitive, many turn to create a comprehensive benefits offering.
But for employers that have never created employee benefits packages, the process can seem like a never-ending list of decisions and questions regarding optimal formats and affordability. While employers can create a unique benefits package for their employees, there are certain foundational elements that most will contain.
What’s typically included in an employee benefits package?
Below are some of the most common core benefits that most employers will prioritize when designing a complete compensation package for their employees:
Health insurance
When most employees consider a new employer based on the benefits they provide, they most often want to know about their health insurance coverage.
Health insurance is the most common inclusion in modern benefits packages. The level of coverage offered and the amount of premiums that employees will need to contribute will vary considerably.
Typical health insurance benefits will include a mixture of coverage for medical, dental, and vision expenses throughout the year. Depending on the state the business operates in, there may be a variety of inclusions to these plans, including HMOs (Health Maintenance Organizations) and PPOs (Preferred Provider Organizations) that will have their levels of coverage flexibility or cost-sharing models.
While some companies may choose to cover a significant amount of the expenses involved in offering certain health insurance benefits, most organizations will have employees contribute to a portion of the premium costs month to month.
Retirement plans
One of the biggest challenges HR teams face when sourcing new job candidates is finding individuals in it for the long haul. While many individuals might just be looking for a quick and temporary job transition, most businesses are looking for investable employees who want to make a positive impact in the organization long-term.
Retirement plans are an attractive incentive for potential employees who are looking to take root in an organization while saving for their future. Some of the most common retirement plans businesses can offer are 401(k) and (403(b) plans used by private and nonprofit companies.
Retirement plans work by allowing employees to contribute a portion of their pre-tax earnings toward retirement savings. Employers will then match a percentage of those contributions, helping the employee to build a significant tax-deferred savings amount over time.
Life and disability insurance
Employment is a necessity that most people will always have. But if something catastrophic happens that impacts an individual’s ability to receive a regular paycheck, it can be life-altering to the person and their family.
Employers can offer varying levels of life and disability insurance for their employees for added peace of mind regarding their financial future. Life insurance is designed to provide a lump sum payment to specific beneficiaries in the event of an employee’s unfortunate death.
Disability insurance is usually provided as an extension of life insurance policies and helps to replace a portion of an individual’s income if they’re unable to work due to the nature of their job and the injuries they have.
Both of these forms of insurance can provide an important peace of mind for employees, knowing the organization is providing options to protect their financial stability in the event of unforeseen circumstances.
Additional employee benefits offerings employers can consider
Although benefits packages have had certain foundational elements associated with them for many years, many modern organizations are looking at supplemental benefits to either replace or complement traditional offerings.
Below are some additional benefits options that can add even more value to an employee’s total compensation package:
Paid time off (PTO)
In addition to core benefits offerings, employers can evaluate their policies when it comes to paid time off (PTO). PTO isn’t just limited to compensating employees when they need to take off work due to illness or vacation. There are a number of different ways PTO can be configured in an organization.
Some employers allow employees to earn an unlimited number of vacations over time. Vacation accrual can be a great way to incentivize employees to work longer with an employer, as their benefits continue to increase the longer they stay with the company.
While some companies may choose to max out the number of vacation days that can be earned before they must be taken, this added flexibility can be a major attractant for new job candidates.
Wellness programs
In recent years, mental health has been a common topic of discussion for the latest generation of workers. More light has been cast on the impact of having an imbalance in work and professional life, and employers can give employees additional support in this effort.
Wellness programs that promote healthy living and stress management can be a great way to include various initiatives, such as gym memberships, mental health counseling, or stress management courses, to help employees create a more balanced work/life situation.
While wellness programs are beneficial on their own for employees, they also bring much more value to the organization as well. When employees feel like their mental health is a priority for their employers, they often feel much more valued in the organization and are more engaged and productive in their work.
Flexible work arrangements
Employee expectations for their working environments have shifted over the years, with more and more individuals looking for employment with organizations that support more flexible working arrangements.
Providing employees the ability to work fully remotely or in hybrid office settings can be another great benefit for employees and employers. Employees who can work from home can save on the costs of commuting to the office while also being able to work in a more comfortable setting.
Employers can also benefit from more flexible working arrangements for their employees, which allows them to reduce their spending on large office spaces or source employees only from local talent pools.
Why employee benefits are important to offer
If you’re still undecided on whether or not it’s worth creating an employee benefits offering for your business, there are some important advantages to this structure that you should keep in mind.
Attracting top talent
Considering how competitive it can be in various industries to find qualified talent and lead them through the recruitment process successfully, organizations should consider how impactful having a benefits package can be to this process.
Because most job candidates won’t be certain if the employers they’re considering are the right fit for them, advertising that you offer comprehensive benefits gives them additional peace of mind when deciding.
Knowing that the employer is willing to invest in supporting them financially while helping them to improve their healthcare coverage will often make them more willing to take a chance with the organization.
Employee retention
Equally important to attracting new talent to your business is successfully retaining them. Offering a comprehensive benefits package is one way businesses can achieve this.
If an employee feels valued throughout the course of their tenure with an organization, there is less chance that they’ll be actively seeking employment elsewhere.
Although not all employees may value their benefits the same way, businesses can help to have their total compensation packages appeal to everyone by including a variety of supplemental benefits such as flexible working arrangements and additional paid time off.
Morale and productivity
Employee benefits can contribute significantly to the overall morale of a workplace and the productivity levels that employees have. When employees know their employer cares about their well-being and offers benefits that improve their lives, they are more likely to be motivated and engaged in the work they’re hired to do.
A positive workplace culture often contributes to lower absenteeism and a more positive work environment overall. This not only supports the happiness of current employees but can also be another attractive factor for new job candidates looking to find a working culture that avoids toxic attitudes and has the same values they have.
Healthier workforce
Offering a benefits package with a variety of healthcare options can help to encourage employees to regularly use their coverage for preventative care and to address any lingering health issues more quickly. This helps them to reduce the need for more expensive medical procedures in the future and improves their overall well-being.
Having a healthier workforce translates to lower absenteeism, reduced healthcare costs, and increased productivity. Employees who feel physically and mentally well are more likely to be engaged in their work, contribute to a positive workplace environment, and perform at their best.
How to choose the right employee benefits
With so many options available when designing an employee benefits package, there are some important tips to keep in mind that will help you make the right decisions:
Understand employee needs
It’s important to understand what your employees value in order to create an effective benefits package. Many times, businesses can conduct surveys with their current employees to discover which benefits are worth the investment.
Balance cost and value
While a comprehensive benefits package can be attractive for employees, it’s important to balance the cost of providing benefits with the value they bring to both employees and the company.
Before implementing a benefits program, complete a thorough cost-benefit analysis to determine which benefits are most valued by your workforce and align with your budget. Consider implementing cost-sharing measures, such as employee contributions to premiums, to help manage expenses.
Offer flexible options
Most employees will have different needs and preferences when it comes to their benefits coverage, and a one-size-fits-all approach to benefits may not be the most effective. More flexible options allow employees to choose the benefits or coverage levels that best suit their circumstances.
This could include options for different health insurance plans or multiple levels of retirement programs and life insurance policies to choose from.
Keep your employee benefits package in compliance with legal requirements
When designing and implementing your employee benefits package, it’s important to adhere to all relevant legal requirements.
Federal laws such as the Affordable Care Act (ACA), the Employee Retirement Income Security Act (ERISA), and the Consolidated Omnibus Budget Reconciliation Act (COBRA) mandate certain provisions for health insurance, retirement plans, and continued coverage options.
COBRA, for example, allows employees and their families to continue their health insurance coverage for a limited time after a qualifying event, such as job loss or a reduction in work hours.
Create an optimal employee benefits program for your employees
Employee benefits packages can be an important part of building a successful business that attracts and retains top talent.
Understand the available options and maintain a competitive benefits package to foster a positive company culture that boosts employee engagement and productivity.
