Most employers offer a variety of employee perks, which are bundled into employee benefit packages. Employee benefits show how much a company or business cares and appreciates its workforce.
Employees that feel well taken care of and appreciated will give back the love through productivity in their roles. Superior benefits packages always leave a more motivated workforce and productivity in the particular industry.
According to experts, a company that offers employee benefits packages will always attract talented employees. Having employee benefits is like having a fish rod with the biggest bait, the fish will come running.
Employee benefits are crucial for the success of a company. It offers job satisfaction, better work-life balance, healthy work culture and improved teamwork. To a job seeker, a company offering benefits shows stability financially. As a company, it shows you have no qualms about your workforce, you invest in them and you believe in your company.
Benefits also help with minimising employee turnaround- when employees have benefits, they feel secure and stable at your company. That means they will stay and money will be saved on trying to find new work when some quit working. employee satisfaction is the key to productivity.
A solid employee benefits package will have an impact on employee morale because they feel more appreciated and valued. This will eventually lead to employee productivity and loyalty to the company.
Most employee benefits plans are prepared o present favourable situations for both parties. So, are there any disadvantages to employee benefits? Well, when the planning and execution process isn’t carried out properly, employee benefits could affect the company. Here are a few disadvantages of employee benefits:
Benefits plans that cost too much are a big disadvantage to employees. Some companies find themselves spending more than 30% of the compensation part of employee benefits plans, and this is a huge load for a company.
There are several benefit plans offered to companies, as a result, most employers have to make estimates of the benefits required by their employees. Since in some states employee benefits are a requirement, employees also have to make sure the benefits suit the demands of the states, as a result, they spend much time and money doing research.
In the research and overall process, errors may occur and this could mean a waste of money, energy and resources.
The process of coming up with an employee benefits program involves a lot of paperwork and documentation, this requires effort and money. Again, if any changes in the plans occur due to changes in policies, extra costs and effort will be required.
Employee benefits can be categorized into six groups. These groups have some benefits that are required by law, some that are expected of the industry, and some that are unique and can be used as an extra attraction for highly qualified workers. The most common types of benefits are:
Let’s take a look at each of these benefits in detail below:
Health benefits are the most common type of employee benefits, however, the difference comes in insurance specifications. What one company offers is not what its competitor would. Under medical insurance are some specific policy types and these are vision, healthcare and dental.
Vision is everything that relates to eyesight. Under this policy, you will find the cost of annual eye tests, and necessary eye surgeries i.e. LASIK, new contact lenses or glasses. Most employees will be curious as to the scope of lens and glasses coverage and if there are specific vendors to go to or any vendor who can provide the lens and glasses.
The benefit covers yearly physicals, ambulance fees, prescriptions, doctor’s fees, laboratory services, hospital accommodations, pregnancy and maternal care, resetting and casting broken limbs, ear infections, strep throat antibiotics et cetera.
The most considered benefit of them all is prescriptions coverage which differs according to the age of the employees. Most employees are curious if the coverage is only for specific deliveries or is open to any kind according to preference.
Similar to fringe benefits, this covers the employee’s health. Under this benefit, there is long-term disability insurance. This is when the employee has been disabled and can no longer manage to work permanently. It can cover an employee for 5 years to as long as 20 years.
While short-term disability insurance covers the employee’s injuries or illness that doesn’t allow them to work for a short time. It can be from 3 to 6 months.
Life insurance is another common benefit for employees. Life insurance covers a couple of insurance policies such as:
Split-dollar life insurance: Here the employer and employee split the costs of death benefits, cash value and the premium payments from the life insurance policy.
Business travel accident insurance: This is where the employer offers coverage for paralysis, death, and various types of injuries obtained by their employee at work in the offices or fieldwork.
Group accidental dismemberment and death: On this policy, there are specifications, especially on certain types of dismemberment and death. It is very similar to the last policy in this category.
Group term life insurance: This insurance policy is for multiple persons who die certain deaths. It covers a lot of people at once and it’s said to be cheaper than individual life insurance.
Fringe benefits are the extra benefits a company can give out as part of attracting highly qualified professionals. These benefits are solely designed to set apart a company from its other competitors. These benefits may include :
Wellness programs: For instance, work-provided meals and snacks, gym memberships, yoga classes, meditation classes, exercise facilities et cetera. These are benefits that focus on the body of the employer.
Paid Time Off (PTO): Under PTO, there are sick days, service or volunteering days, personal leave, and vacation days. Most companies now offer these benefits on an unlimited basis. And some stopped distinguishing between them to allow employees to use their days off as they see fit.
Stock options: Large corporations are notorious for giving out this type of benefit. Stock options mean that the company offers an employee the chance to buy its stocks at a fixed price. In most cases, this benefit is available for those who worked for the particular company for a certain period, commonly a year. This option is often offered to employees before turning it to the general public.
Tech companies are the ones who offer this benefit, mostly. When the company does well that year, the stock price goes up, and vice versa. That means if employees buy stock, they’re determined to work hard just so they can come out of their investment with an ample-sized cheque.
Education costs: Here employers offer to pay back your student loans. Some even offer to reimburse the employee for some of their tuition fees.
Housing and relocation benefits: This is ideal for workers that will have to move from their home towns to where your company is based. For that, employers give benefits that will help the worker transition and settle.
Childcare: Sometimes employees can’t find daycare to suit their child’s needs. For this, some companies have childcare facilities within their offices so the parents can be within reach while some companies offer to contribute towards the childcare.
Companies contribute to the retirement of an employee. The common plan available is the matching 401k, where the employer and the employee make matching contributions to the retirement account. The employer chooses to match the contributions partially or fully. Pensions are mostly for those that have worked for the company for a long time.
Even for such a straightforward benefit as this, employers have about three different ways to go about it. Most dental plan services offer half of the basic services and procedures like surgery but will cover 100% of preventative dental costs. Dental insurance usually covers tooth extraction, gum disease treatment, retainers and braces plus routine exams.
Different countries are governed by different employment laws. In some countries, some benefits are a requirement for every company in their respective industries. In the United States, some of the benefits in this category are:
Unemployment insurance: If you are cut off from work involuntarily, there is an amount set aside as your income replacement.
Workers compensation insurance: When you are hurt or sick at your workplace, your employer has to take care of medical bills, replacement income and rehabilitation costs if necessary.
Most employers look at the benefits package and start thinking of not affording it. The best way to go about it is to design a package that will not only benefit the employees but you as an employer too.
Todd Taylor, oversees most of the marketing and client administration for the agency with help of an incredible team.
Todd is a seasoned benefits insurance broker with over 35 years of industry experience. As the Founder and CEO of Taylor Benefits Insurance Agency, Inc., He provides strategic consultations and high-quality support to ensure his clients’ competitive position in the market.
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