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What Are Employee Benefits?
Benefits are considered any additional perk of working for your company. Benefits normally include paid time off, medical insurance and company parties, among other things.
The Importance of Offering Great Benefits to Your Employees
Offering great benefits can be the difference in attracting and retaining top talent. With competitive salaries on the rise, potential employees no longer consider salary alone when deliberating on their next job.
- Attract top talent. When salaries are similar, it’s important to make sure that your benefit package is also attractive.
- Create engaged employees. By offering benefits that employees actually care about (see below for a list), you are more likely to drive overall employee engagement up.
- Take care of your teams. By offering a great comprehensive benefit package to your team, you are taking care of them as you expect them to take care of your customers and clients.
How to Design a Benefits Package That Will Attract and Retain the Best Employees
Companies often stress about how to design a benefits package that is attractive to prospective and current employees. However, the process doesn’t have to be stressful or complicated. If you follow these three simple steps, you can eliminate the stress and worry from your benefit design process.
Step 1: Determine What Your Employees Need
If you don’t know what your employees need, you will never be able to design a complete and attractive benefits package. Start with the basics. Employees need health insurance, dental insurance, and some sort of paid time off. If you aren’t offering these three basic things, you need to overhaul your benefits immediately.
Step 2: Determine What Your Employees Want
Needs must come before wants, but wants are more important in building an attractive benefit package. Common desires are life insurance, unlimited paid time off, sabbatical leave, tuition reimbursement, and even pet insurance. Don’t assume you know what your employees want. Ask them.
Step 3: Determine Your Overall Budget for Benefits
Now that you know what your employees need and want, it’s up to you to decide what the company can afford to offer. Get a budget in place to ensure that you aren’t breaking the bank by offering some of these benefits. If you still want to offer a benefit that you can’t afford, feel free to do so; just make it 100% employee paid (this is common with pet insurance).
Three Popular Benefit Categories to Consider
Below you will find three categories of benefits that we think are at the top of mind for your current and prospective employees.
Category 1: Time Off
PTO (Paid Time Off) is essential for the mental, emotional, and physical well-being of your employees. Give them time to recharge, and they will give you amazing results.
- Accrued time off. Accrued time off is still the standard. This is where an employee banks a set amount of time off every pay period.
- Open PTO. This is still an up-and-coming idea, but it’s quickly gaining credibility amongst employees and leaders. In an open PTO policy, managers essentially trust their employees to get their work completed on time. Employees are free to take as much time off as needed as long as they accomplish their tasks.
- Unlimited PTO. An unlimited PTO policy generally functions more like an accrued time off policy: managers still approve time-off requests and track it, but it doesn’t accrue, and employees have an “unlimited” amount of time off pending manager approval.
Category 2: Health
Health insurance can be extremely expensive for a quality plan, but it’s one of the most important benefits you can offer to your employees (and you may be required to offer it under the ACA). The most common options include:
- Traditional health plans. This is the plan we are all most familiar with. You go to the doctor and pay a copay to receive treatment.
- High-deductible health plan. The biggest difference between a high-deductible health plan and a traditional plan is in the name. With a high deductible plan, you have a higher deductible, but you also get another major perk: an HSA.
- Health Savings Accounts. An HSA is a savings account that allows users to save money tax-free against medical expenses.You must be enrolled in a high-deductible health plan to be eligible for an HSA. Companies can contribute to an employee’s HSA, and once an HSA hits a certain dollar amount, employees can invest it and essentially treat it like a retirement account.
Category 3: Ancillary Benefits
Ancillary benefits are all of the additional benefits that a company offers. There are too many possibilities to list here, so we have created a list of some of the ones that we feel are most popular.
- Pet insurance. To some people, their pets are just like their kids. They want to be sure they are financially able to take care of their pets’ health-care needs.
- Dental insurance. While this often gets grouped with medical or health benefits, it technically belongs under ancillary benefits. It’s an added perk that most employees expect to receive.
- Vision insurance. This may also be a non-negotiable benefit for some employees who have major eye issues or have multiple family members who need glasses or contacts.
- Sabbatical leave. A sabbatical is a period of paid leave granted for study or travel. You often see this as a reward for employees who have been with the company for a certain period of time—usually five years. It is a great show of recognition for the hard work and dedication that they have given the company.
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Nick is a certified HR professional holding an SPHR and SHRM-CP. Nick has built HR teams from the ground up as well as worked for big corporations. Nick enjoys consulting and training those who are just getting started in HR. When not working, he enjoys spending time with his family.
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