How to Design a Competitive Employee Benefits Package
Making a job offering attractive to today's workers means more than just giving them a suitable salary. Benefits are incredibly important and encompass myriad aspects of employees’ lives outside the workplace. So if a job candidate asks whether you offer a competitive employee benefits package, how do you know that you actually do?
We'll take a look at some of the most notable perks provided by businesses today. But why does it matter?
Advantages of a comprehensive employee benefits package
Your average cost per hire may vary, but it’s common knowledge that retaining good employees costs much less than onboarding new ones. That's why it's important to listen to your workers when they tell you the benefits they want. Studies show that 69% of employees need a wide range of benefits to increase their loyalty to a company, and we know that loyalty is essential for reducing turnover and preserving company culture.
This is even more important with younger workers, who admit that they would move on to a new job based on benefits alone. As noted by Business Wire, 65% of Gen Z workers and 57% of millennial workers said they would leave a job for more robust offerings.
Keeping employees isn’t the only reason to update your benefits offerings. Employee engagement, which is credited for up to a 17% increase in productivity and a 41% decrease in absenteeism, is linked to better benefits – especially those that free up resources and reduce worker stress.
Basic benefits an employer can offer
These are the things that most employees look for when searching for a "job with benefits." The perks will vary, of course, based on the job status (full-time or part-time) and the size of the company.
Here’s what’s happening in the job market when it comes to insurance, and why you may want to consider boosting your coverage plans.
Health insurance can be the difference for many families between affording essential medical treatments and going without. In March 2020, 89% of public sector workers (state and local government) had access to these perks. Private sector workers varied, with 94% of those in high-paying jobs having access and just 27% of those in the lowest-paying jobs receiving medical insurance.
Dental and eye care coverage
Even with the 2020 Medicaid expansion giving more dental benefits to those who previously went without, there's still a disparity. Currently, 59% of adults under 64 have private dental benefits but there’s a range of coverage available, from robust plans to discount programs that only pay for a portion of expensive treatments.
Interestingly, only 64.9% of adults visited their dentist in the past year, and 31.6% of adults have untreated dental issues. Offering this benefit, as well as eye care plans, could help cover a significant gap in care for many.
Life insurance is a surprisingly affordable benefit when purchased at a young age, even without the help of an employer. Since many people don't consider its relevance until later in life (when it costs significantly more), they often welcome the chance to get locked-in benefits at a reasonable rate from their workplace.
This is another overlooked type of insurance that workers may not know they need until it's too late. You can help raise your status as a more inclusive company by offering disability coverage, both for permanent and temporary conditions. Women, in particular, are likely to seek out jobs that provide temporary disability perks, since it often covers pregnancy. This benefit provides an opportunity for them to collect a portion of their salary while recovering from childbirth.
Paid time off, or "PTO," has gone from a nice-to-have perk to something employees expect. The law may even demand it, especially for full-time workers and those in certain industries. Few federal mandates exist, but companies need to stay on top of state and municipal laws regarding PTO.
While it’s not technically PTO, this is still one of the most asked-for benefits for workers, especially those with families or those attending college. With flextime, a worker is allowed to adjust their hours according to their own needs. As long as the employee completes their set number of hours, the “when” is largely up to them while you (the employer) work out the terms.
This is the most fluid PTO benefit, and it lets employees use their accrued hours as they see fit.
Providing PTO for health-related concerns is not just compassionate; it can make the workplace better, too. If employees have paid time to recuperate from contagious diseases, like the flu, they’re less likely to spread that illness to coworkers.
Maternity and paternity leave
New dads need time off, too, and offering this benefit to everyone involved makes sense. Also known as “paid family leave,” just 21% of civilian workers receive this benefit. Unpaid leave, however, is generally available to almost 90% of this worker group.
Paid vacation is still popular among workers, even if they’re not using it. In 2018 alone, 768 million days went unused, with 236 million of those lost forever. If you provide paid vacation time, prompt your employees to make it count.
3. Retirement savings
While the retirement age has changed over the years – and many of us won’t see a pension – there are some nifty retirement perks to enjoy. Here are the most common options.
401(k) or 403(b)
Whether you match some or all of an employee’s contribution, this retirement booster is one of the most sought-after perks. Employees who take advantage of 401(k) contributions consider it “free money” and value it above many of the other benefits.
While startups may dangle stock options as a desirable perk, be sure you can back it up with something tangible. Make it easy for employees to convert them to cash or something else of value, or they may not see it as a real benefit.
4. Savings vehicles
Only 46% of Americans say they can cover a $400 emergency with cash or savings on hand. This is an opportunity for employers to help boost those savings through one (or more) of the following savings tools:
Health savings account (HSA)
This sets aside pre-tax money for qualified healthcare expenses.
Flexible spending account (FSA)
This offers similar perks to the HSA, but employees must spend it every year.
Access to a credit union
This often provides higher interest rates on account balances.
Benefits above and beyond the basics
You can consider anything aside from a paycheck as a benefit, and some companies are rather creative with their perks. Any of these may make sense for you, too, provided your employees actually want it (and it’s not just a fad).
5. Child-related expenses
- Adoption benefits and IVF support
- Childcare reimbursements or stipend
- Onsite daycare
6. Career enhancements
- Tuition reimbursement and student loan repayment
- Continuing education programs
- Free college credit courses
- Professional development opportunities
7. Self-care and work-life balance
- Paid sabbatical
- Gym, massage, or spa services
- Onsite medical professional or access to quick-clinic services (including vaccinations)
- Freebies, such as prize catalogs earned through “gamification” programs
- Company discount and discounts from partner vendors
- Legal assistance
- Free food and drinks, weekly catered meals, and discounted meal delivery plans
- Pet health insurance
- Annual events for employees and their families, such as picnics, movie nights, discount event tickets
How to pick the right benefits
Offering the most competitive wages and benefits package isn’t always the easiest decision. Some perks aren’t relevant to your particular workforce, or they’re just too costly to maintain. And one of the worst things you can do as an employer is to offer great perks and then walk them back because you can’t afford them.
Ask yourself these questions to help you prioritize what’s right for your workers and your company.
- What are we legally required to offer? How does state or local law differ from federal regulations? Does our industry have a moral duty to boost benefits beyond what’s mandated?
- What benefits are my employees asking for? If there are only a few people asking for a particularly costly benefit, is there a way to give them a higher salary or another perk to help fill the gap?
- Which benefits have the biggest ROI? You can measure this in a number of ways, including absenteeism, engagement, overall employee satisfaction, and retention.
- What can be paid in full vs. discounted? For benefits you can only afford to subsidize (not cover in full), is it still affordable enough for the bulk of your workforce to find value in it?
Sometimes, it’s helpful to work with a third-party benefits administration firm well-versed in the benefits of your industry and employee demographic. For what you pay in administration fees, you may realize reduced waste and a better fit for the type of employee you want to keep around for a long time.