Companies must make their workplaces attractive to be able to entice high-quality workers to apply for open positions. When you’re looking for a job, certain employee benefits may draw you to one company versus the other.
In addition to monetary compensation that makes someone feel valued, employees are also looking for a comprehensive benefits package. The elements of the ideal benefits package have shifted a bit due to COVID.
The Society for Human Resource Management reports that benefits packages are changing to accommodate the new reality. This includes an expansion of virtual and telehealth programs and enhancing mental health support.
Why do companies offer employee benefits? It allows them to make their workers happy without having to offer frequent raises. Believe it or not, a lot of workers are fine with that, especially if the benefits show enough value-add.
If we take a look at millennials, CNBC reports they’re open to accepting a job for less pay if they get certain perks in return.
Don’t get too excited. We’re not talking about a day spa in your cubicle but I wouldn’t be surprised if it indeed did exist.
Here are the basic benefits you’ll typically see employers present to their employees. Yes, basic is boring and no one’s painting your nails while you’re on a sales call, but basic is also very important.
Workers often feel that health, dental, and vision insurance are the most important benefits an employer can offer. A Harvard Business Review study found more than half of respondents would give “heavy consideration” to medical insurance when deciding between jobs. Not having coverage or gaining coverage on your own is not cheap.
In traditional medical coverage plans, employees pick their providers, and insurance companies either reimburse workers for medical services or pay the provider themselves.
Managed care is another option that employers can provide. Under this type of agreement, the company works with health maintenance organizations (HMOs) or preferred provider organizations (PPOs), and employees must pick their physicians from a list of approved doctors.
Some businesses, especially those with fewer than 50 employees, offer health savings accounts (HSAs). These are tax-free accounts that can be used by employees to save money for certain medical expenses.
Businesses may offer employees other kinds of insurance as well. Life insurance covers an employee in the event of their death, providing funds for family members of the deceased. They may also offer insurance for short or long-term disability or illness. Nearly all employers are required to provide workers’ compensation insurance for work-related injuries.
The most common retirement benefit that employers offer is a 401(k) plan. This is a savings account into which employees can channel part of their paychecks to save for their golden retirement years. Employers may match their employees’ monthly 401(k) contributions up to certain limits. Earnings in a 401(k) plan typically come from investments, like company stock shares, index funds, mutual funds, or other equity strategies.
Contributions to a standard 401(k) plan are tax-free. Once you retire, you can withdraw the funds to live off of, but when you do, they’ll be taxable. An alternative option is the Roth 401(k), which is essentially the opposite. Your contributions to a Roth 401(k) plan are taxed, but your withdrawals after retirement are not. Unfortunately, though, employers can’t make matching contributions to a Roth 401(k).
A few employers offer their own retirement plans, entirely separate from the 401(k) structure. Benefits are usually calculated according to how long you’ve worked at the company and the age at which you retire.
Some companies may offer equity and investment services as benefits. Companies that are publicly owned, and therefore sell shares on the stock exchange, may offer their employees stock options. A stock option is not quite the same as purchasing shares in the company. Instead, they’re options for employees to buy shares as soon as they hit a certain price point before a certain date.
If the company grows and rakes in more profits, its share prices will likely increase. Employees who decide to execute on their stock options get a little extra income. They can cash in and reap the profits or hold on to the shares if they think more profitable times are ahead.
Along with stock options, some companies may grant discounted banking or financial planning services, such as tuition reimbursement or help to pay down student loan debt.
Paid Time Off
Vacation time is another benefit that many employees desire. In some countries, it’s legally required for companies to provide paid time off to their workers. Although the United States isn’t one of those countries, it’s in the best interests of American companies to offer paid vacation leave. We all need a break!
Some companies also offer paid time off for sickness, maternity, paternity, or bereavement, and “personal days” that employees can use for any reason. Some even offer the chance to take a sabbatical after employees have worked for a company for a certain length of time.
Many companies pay employees monetary bonuses on top of their salaries if they excel at their jobs. These payouts can be in the form of commissions, bonuses, awards, or even gifts. They can also include stock options or profit-sharing plans.
Incentives can be folded into a benefits program. In some businesses, especially small companies with sales objectives to be met, they can be less formal. A supervisor could present you with a two percent raise in commission if sales are increased by five percent. Large companies almost always have to lay out their incentive programs in their documentation.
Innovative companies offer unusual benefits that seriously sweeten the pot. Tech companies in particular have taken office perks to a whole new level.
At one point, pre-COVID, Google offered their employees free meals on campus. Most companies that make or sell products offer employee discounts on their merchandise. Larger companies may even extend discounts to employees on third-party partner products and services.
Flexible schedules and the chance to work from home used to be fairly unique office perks. During COVID, these kinds of perks are much more common and for some, the new norm. Some industry experts believe that working from home may become permanent in some companies, even after the pandemic subsides. Makes sense.
Strictly speaking, businesses don’t usually have to offer most kinds of benefits to their employees. Retirement plans, life insurance, and paid time off aren’t benefits that are required by law. As Ariana Grande sings, “Thank U, Next”.
Some benefits, however, are mandatory. The law requires companies to offer time off for jury duty, military service, and voting. They must also be in full compliance with the Federal Family and Medical Leave Act and workers’ compensation regulations. They need to pay unemployment taxes and contribute to short-term disability programs if their state requires them to do so.
Your employer, or prospective employer, may offer even more benefits that I haven’t mentioned. That’s the benefit of well, benefits. Each company will have something unique to stand out from the crowd to attract the best employees. It could even be that day spa.
Here’s to the Wellness of Your Wallet!