With high health care costs and a tight job market, it’s important to offer a competitive benefits package. But crafting a well-balanced bundle of benefits can be complicated.
Which Employee Benefits Should I Offer?
An effective benefits plan depends on a variety of factors, such as employee demographics, company size, and industry.
For instance, if you have a large millennial and Generation Z workforce, they may prefer flexible work hours and help with student loan repayment over a 401(k) plan. While health insurance and 401(k) plans continue to be the most sought-after benefits, it’s amazing how effective the “little” perks and benefits can be.
Offering benefits that employees can’t access on their own is a great way to hire and retain more employees to grow your business. The good news is that you don’t necessarily have to spend more money. You may just need to rethink your current employee benefits strategy.
If you want a cost-effective way to recruit and retain top talent, a custom benefits package can provide high value for employees at relatively low costs for the company.
Keep in mind that offering employee benefits involves a lot of legal and financial responsibility. By partnering with a Professional Employer Organization, such as Resourcing Edge, your custom benefits plan is both cost-effective and compliant.
What Are Employee Benefits?
Employee benefits include all compensation other than hourly wages or base salary. Benefits are the programs used to support the cash compensation employees receive.
Some benefits are required by law:
- Social Security – provides retirement income to employees
- Workers’ Compensation – compensates employees injured on the job
- Unemployment – protects employees’ wages from job loss
- Family Medical Leave Act (FMLA) – provides unpaid leave for medical needs (to employees in companies with more than 50 employees and who have worked 1,250 hours in the 12 months prior to the leave)
- Access to Health Insurance – only for companies with 50 or more full-time employees
Voluntary benefits, also known as discretionary benefits, are non-wage compensation that the employer chooses to offer employees.
Voluntary benefits primarily focus on health, wellness, welfare, wealth management, and retirement. Many of these benefits would be extremely expensive for employees if they had to purchase them outside the group plans provided by their employers.
Even if employees have to pay a portion of the cost, by banding customers together, you can get high-quality benefits and perks at lower costs. Speak with a Certified Professional Employer Organization (CPEO) like Resourcing Edge for access to better benefits using our group’s buying power.
Most Desirable Benefits According to Employees
If you want your benefits package to remain competitive, you’ll want to offer health insurance, some disability and life insurance, and probably a retirement plan, such as a 401(k).
You can also look at other similarly sized businesses in your industry to see what they are offering. This can help set a good benchmark to determine if you are offering the right benefits.
According to Bruce Elliott, a compensation and benefits manager at SHRM, the typical employee benefits package is valued between 25-40% of the employee’s base salary.
The most common benefits are paid time off (65%) and health insurance (62%), followed by retirement funding (53%), overtime pay (47%), paid medical/bereavement leave (46%) and disability/life insurance (44%) (Clutch 2018 Employee Benefits Survey).
According to Glassdoor’s Employment Confidence Survey, 4 out of 5 employees prefer benefits or perks to a pay raise. Younger employees aged 18-34 (89%) and 35-44 (84%) prefer benefits or perks to pay raises when compared to those aged 45-54 (70%) and 55-64 (66%).
The chart below shows the importance each generation places on various benefits. The workforce was asked to choose the top three benefits they believe would help them reach their financial goals.
|Gen X||Baby Boomers|
|Paid Time Off||33%||37%||33%||24%|
|Flexible Work Hours||21%||26%||15%||15%|
|Student Loan Forgiveness||15%||19%||13%||6%|
|Additional Skills Training||14%||19%||13%||6%|
Most Desirable Benefits According to Employers
When SHRM asked a random sample of its members which benefits were most important to a majority of employees, the responses came back with similar results. Again, health care benefits topped the list.
Respondents (738 HR professionals) said the following were the benefits most important to most employees:
- Health care benefits: 95%
- Retirement benefits: 71%
- Leave benefits: 50%
- Flexible working benefits: 29%
- Professional development benefits: 17%
- Wellness benefits: 11%
- Financial benefits: 6%
- Family-friendly benefits: 3%
Every organization is different. Instead of guessing which types of benefits are most valued by your employees, ask them directly via a survey.
It comes as no surprise that the number one most valued benefit by employees is health, dental, and vision insurance. Unfortunately, health insurance is also the most expensive benefit to offer, averaging around $6,435 per employee with individual coverage, and $18,142 for family coverage.
Since paying for health insurance out of pocket is extremely expensive, it makes sense that candidates are making career decisions based on medical insurance benefits.
There are many health care options to choose from, including:
- Health Maintenance Organization (HMO)
- Preferred Provider Organization (PPO)
- Health Savings Account (HSA)
- Accident Insurance
- Flexible Spending Accounts
- Dental/Vision Insurance
- Disability Insurance
- Life Insurance
Resourcing Edge provides access to Fortune-500 employee benefits plans from leading insurance carriers, such as UnitedHealthcare and MetLife. Contact us for benefits guidance and choose from a wide variety of fully-insured, ACA-compliant, national medical insurance plans.
Paid Time Off and Sick Time/Vacation Time
Paid time off (PTO) and vacation time are often used as synonyms, but PTO can technically be used for anything, including personal days and holidays. Instead of separate vacation, sick, and personal leave plans, a PTO plan simplifies things by bundling everything together.
No federal or state law requires employers to provide PTO. It is up to the employer to offer PTO to employees, which is why you will find a huge variety of policies, such as extra PTO for volunteer work.
If, however, an employer chooses to offer paid time off, it must comply with state law.
Speak with Resourcing Edge for help developing, updating, or checking the compliance of your current policy.
Learn how to find the best paid leave policy for your business.
For a younger demographic, you may want to consider offering tuition reimbursement programs and professional development opportunities over other benefits. But keep in mind that tuition reimbursement, training programs, and educational opportunities also appeal to older employees (AARP).
Tuition reimbursement has been shown to pay for itself by drastically reducing employee turnover. A study of CIGNA employees by the Lumina Foundation found that from 2012 to 2014 the “Education Reimbursement Program (ERP) resulted in 129% ROI as a result of avoided talent management costs. Employees who took advantage of ERP achieved 43% higher incremental wage gains.”
Wellness benefits, such as yoga, standing desks, and meditation, can lower health care costs, reduce absenteeism, and improve productivity and engagement.
Here are some of the more popular wellness programs:
- Fitness competitions/challenges
- CPR/first aid training
- Tobacco cessation programs
- Standing desks
- Stress reduction programs
- On-site medical care
- On-site fitness center
- Wellness stipends
- Changes to food, drink, work culture, and environment
What Makes Up a Quality Benefits Package?
What type of benefit plan do you need? And what can you afford to offer? What you’ll need is a customized solution based on your business, typically some combination of medical, dental, vision, disability, and retirement plans.
How Do You Get Started? Get Better Benefits with Resourcing Edge
Seek out a provider who can offer you guidance and expertise in every aspect of benefit plan design, implementation, and communication. A good firm will set you up with a plan that fits your needs and see you through every step of the way.
One way a Professional Employer Organization can get better benefits is by grouping all of our clients under one umbrella to increase our group’s buying power and leverage when negotiating things like medical, dental, and vision insurance.
By leveraging our buying power, expertise, and technology, we can offer small employers big business benefits at affordable rates.
When it’s time to update your employee benefits, work with a Certified Professional Employer Organization like Resourcing Edge. We help businesses grow by offering big-business benefits, automated payroll, compliance support, and easy-to-use HR software and tools.
For more information on choosing the right benefits package that will drive employee hiring and retention, contact Resourcing Edge