In the US, the year 2022 was dubbed “The Great Resignation,” with more than 50 million workers voluntarily quitting their jobs in search of greener pastures. Of the workers who joined this corporate exodus, approximately 40% cited the importance of employee benefits and the desire for better and different benefits packages as a pivotal factor in their decision.1
Put simply, in the competitive hiring arena, global employee benefits aren't just an employee perk—they're an essential incentive leading companies use to retain talented employees around the world. Consequently, companies are under increased pressure to assemble an attractive and comprehensive benefits package, one that balances employee satisfaction and desires with the company's budgeted spending account.
So, what constitutes a modern employee benefits package? And what types of employee benefits are imperative for your organization to be viewed as a desirable employee-centric workplace in this evolving global market?
What Is a Competitive Benefits Package?
Aside from salary, employee benefits form the complementary half of a comprehensive compensation package. These are the nonwage forms of compensation, the additional perks, advantages, and incentives—both tangible and intangible—that employers use to enhance the overall employment proposition.
Virtually every modern organization provides employees with some type of employee benefits package; however, the specific composition of this package varies widely, depending on factors like the country of operation, industry norms, company size and resources, and employee expectations.
Additionally, the packages must also comply with local employment laws and union agreements, which might dictate minimum requirements for various benefits, such as overtime pay or healthcare.
Companies that take the time to meticulously design an attractive employee benefits plan can create a competitive advantage, enabling them to:
- Attract and retain talented employees – A comprehensive benefits package is a magnet for industry-leading professionals and a tether that keeps them anchored to the company, reducing the lure of rival firms.
- Keep employees engaged and fulfilled – Competitive employee benefits should cater to both the professional development and personal growth of employees, ensuring they remain enthusiastic and committed to their roles while paving the way for career advancement within the company.
- Reduce turnover costs – Lower employee retention means fewer resources spent on recruiting, hiring, and training replacements, thus ensuring a stable and experienced workforce.
- Strengthen the company’s reputation – Companies renowned for their robust benefits are viewed as employee-centric, attracting positive attention and fostering trust within the industry.
- Improve employee satisfaction and motivation – A well-rounded benefits package acknowledges employees' values, leading to heightened employee morale, drive, and a greater willingness to go above and beyond in their duties.
- Healthier employees – A successful employee benefits plan often includes healthcare as well as wellness programs, leading to a more fit, focused, and resilient workforce. This can reduce absenteeism and lower your overall healthcare costs.
- Enhance employee work-life balance – Through offerings like flexible hours, remote work options, and extended leave policies, various benefits can help employees strike a better work-life balance. This can result in reduced stress levels, improved well-being, and decreased instances of burnout.
What Does a Comprehensive Employee Benefits Package Look Like?
A truly comprehensive employee benefits package is a mix of statutory benefits, supplementary benefits and voluntary perks tailored to meet the workforce’s needs.
At the foundation of any benefits package are the statutory benefits. These serve as an economic safety net that employers are legally required to provide to their full-time employees.
The landscape of statutory benefits can be quite intricate, as some are nationally mandated and apply across the board, regardless of where the business operates. Meanwhile, others are specific to individual localized cities, states, or communities, presenting additional layers of compliance. Examples of mandatory benefits may include2:
- Minimum wage – Minimum wage is the lowest hourly pay that employers can legally offer their workers. Canada employee benefits, for example, have recently instituted a federal minimum wage of $16.65 an hour. In the US, the minimum wage isn’t dictated by one body—the federal rate is $7.25 per hour, but individual states might set different rates. Employers are mandated to pay whichever rate is higher, state or federal, with non-compliance potentially leading to legal repercussions.
- Workers’ Compensation – Designed to address the challenges stemming from on-the-job injuries or illnesses, workers' compensation can help cover medical expenses and compensate employees for lost income during recovery periods. It guarantees that workers have both medical and financial support following workplace accidents. In Germany, for example, this financial compensation amounts to 80% of gross wages for up to 78 weeks.3
- Social Security – In the US, Social Security was created to ensure retirees and disabled workers had a form of income stream when they weren’t working or when regular income was disrupted. The Federal Insurance Contributions Act (FICA) compels employers and employees to contribute to social security through taxes.
- Unemployment insurance – This employee benefit offers temporary financial support to individuals who've lost their jobs. It acts as a bridge, helping unemployed workers maintain some level of financial stability until they secure new employment.
- Family and medical leave (FMLA) protections – Eligible employees are granted a certain amount of unpaid leave annually for various personal and family reasons, such as the birth of a child or tending to a family member with a serious health condition. During this leave, the employee's job position is protected, and the employer must maintain their health benefits.
- Overtime – Overtime compensation is awarded when employees work beyond the standard set of weekly hours. The regulations around overtime may be compensation-based or contractual-based. For example, in the UK, you may only work overtime if your contract says so—and even then, employees may have to sign a written document to complete this work.4
Beyond salary and the mandated statutory offerings, fringe benefits are the non-compulsory, insurances, programs, and advantages that companies provide to sweeten the employment offer.
Regarding the benefits package, these are often the decisive factors that sway a potential employee to join an organization or, conversely, seek opportunities elsewhere. They can improve worker quality of life while also demonstrating the business’ commitment to their employees.
Let's delve into some of the most pivotal supplementary benefits that employees today prioritize:
- Employer-covered healthcare – Of all the benefits offered by employers, health insurance is far and away the most important to employees.5 Offering health insurance—which may encompass medical, dental, vision, and mental health services—showcases an employer's investment in the overall health and well-being of its workforce.
- Retirement plans – These are structured savings programs to support employees post-retirement. Providing a retirement plan not only helps employees secure their future but signals a company’s long-term commitment to its staff, aiding in employee retention.
- Employee development and continued education – This encompasses training programs, workshops, courses, and other learning opportunities provided by employers, which empower employees to grow as individuals and within the company.
- Paid time off (PTO) – PTO typically includes vacation days, personal leave, holidays, and sick leave. Time off is paramount for employees as it allows them to rest, recharge, and tend to personal matters. A generous time off policy can significantly improve job satisfaction, mental health, and overall productivity as employees return to work rejuvenated and more focused.
- Flexible work schedules or remote work opportunities – Addressing the needs of the modern workforce, especially regarding work-life balance, enhances job satisfaction, reduces burnout, and can even attract a wider talent pool who value such autonomy, especially younger generations of workers.6
- Tuition reimbursement – By covering or subsidizing education costs, companies demonstrate an investment in their employees' growth and expertise. This not only leads to a more skilled workforce but also enhances loyalty as employees feel valued.
Voluntary perks can go one step further in making employment with you attractive and may include options for employees to purchase benefits themselves via salary deductions (usually at a reduced price), meaning that there is no employee tax or access to retail and other discounts.
How to Build a Comprehensive Employee Benefits Package
Crafting a comprehensive employee benefits package is not just an administrative task—it's an investment in attracting and retaining the right talent. To ensure your package aligns with both your company's goals and the needs of your employees, crafting a global benefits strategy is imperative. Follow these steps:
- Consider your workforce demographics – Tailoring your benefits to the unique needs of your workforce is pivotal. Younger employees might prioritize flexible work schedules or continued education opportunities, while older demographics might emphasize healthcare or retirement planning.
- Engage stakeholders – Initiate exploratory conversations with HR, finance teams, legal, employees, and other key stakeholders. Feedback from these groups provides a foundational roadmap for designing an attractive yet sustainable package.
- Set goals – Before diving deep into crafting a benefits package, outline clear objectives for your employee benefits package. Establishing these goals upfront will guide subsequent decisions, ensuring the package aligns with both company aspirations and employee needs.
- Understand legal requirements – Internal experts on your team should carefully review national and local employment laws so that you fully understand what benefits your employees are entitled to. Keep in mind that full-time, part-time, and freelance employees all have different rights.
- Leverage benefits technology – Consider implementing and managing employee benefits using employee benefits or HR software can help streamline the onboarding process and sign them up for different benefits packages. It also provides employees with an easy way to access and understand their benefits.
- Provide choices – The best employee benefits packages aren’t one-size-fits-all. Instead, they provide some flexibility that grants employees some ability to personalize their package to meet their own needs and goals.
- Review benefit utilization – Regularly review which benefits your employees are using the most and which are being underutilized. This data-driven approach not only ensures your offerings remain relevant but also helps in optimizing costs and reallocating resources to the most impactful benefits.