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Understanding employee benefits for businesses
What exactly is ‘employee benefit’ and what does it constitute?
This is question that we get from many business owners and startup founders who are not exactly sure what it is.
The problem is not that they do not know per se, it’s just that it means so many different things that it seems to not mean anything in particular, so let’s attempt a definition and explanation.
DEFINING EMPLOYEE BENEFITS
Firstly, like the name implies, employee benefits, perks, or rewards are, unsurprisingly, benefits for employees.
The most succinct definition is from Wikipedia, and it says that “Employee benefits and benefits in kind, also called fringe benefits, perquisites, or perks, include various types of non-wage compensation provided to employees in addition to their normal wages or salaries.”
In essence, any compensation given to people in active employ of any sorts that is different from their wages can be termed employee benefits, perks, or rewards.
The scope of employee benefits is extensive, covering multiple facets of the employee experience.
Some of the most popular ones that you may be familiar with are grouped under the umbrellas of health and wellness, financial incentives, retirement plans, and professional development. Collectively, these offerings contribute to fostering a sense of support and appreciation beyond the transactional nature of employment.
Now, let us elaborate on the aforementioned umbrellas a bit and get an even deeper understanding of what they entail.
HEALTH AND WELLNESS
There is a popular Latin saying we are all familiar with, “mens sana in corpore sano” which translates to “a healthy body can sustain a healthy mind”, or as we popularly know it, “a healthy mind is a healthy body.”
This means that health and wellness are understandably the most crucial of all the employee benefit segmentations that exist. Benefits in this category are typically comprehensive insurance coverages for medical, dental, and vision.
Additionally, wellness programs go beyond traditional healthcare, incorporating initiatives such as fitness programs, mental health resources, and preventive health measures. Mental wellness programs have become even more popular with the increase in mental health conditions, which the World Health Organisation(WHO) has increased by 25% since the pandemic.
Employee benefits extend into the financial realm, providing a sense of security and stability. The financial part of benefits are usually the most popular and easiest as there are usually no complications with them.
Retirement plans, like 401(k), pension schemes, and retirement savings, and the different names they are known by across the world, offer employees opportunities to plan for their financial future.
Employee Stock Options (ESO) or equity participation are financial plans that align employees with the overall performance of the organisation and have become very popular over the last few years, especially with startups. These financial benefits not only support individual well-being but also cultivate a sense of commitment and loyalty to the organisation.
In line with bolstering mental health and ensuring work does not become too much drudgery, a lot of initiatives now exist to accommodate a harmonious work-life balance, employee benefits often include provisions for flexible work arrangements like hybrid or fully remote work options.
Paid time off (PTO) allows employees to take vacations, holidays, and personal days are also quite popular in this category. Generally, they accommodate the diverse lifestyles and responsibilities of employees.
Investing in the continuous learning and development of the workforce is a crucial aspect of employee benefits. Like the earlier mentioned health and wellness options, professional development can tie in directly to the business’ bottomline.
Training and development programs, encompassing workshops, seminars, online courses, and mentorship initiatives, contribute to the enhancement of employees' professional skills. Online learning platforms like Udemy, Coursera, Pluralsight, among others are a staple in this category.
These opportunities not only support individual career growth but also ensure that the organisation remains productive through its workforce.
Recognizing the significance of family life, employee benefits may include family-friendly provisions. Family leave, whether for parental or caregiver responsibilities, ensures that employees can navigate significant life events without compromising their professional standing. Child Care assistance, including support for childcare expenses or on-site facilities, alleviates the challenges faced by working parents.
Whether you call them employee benefits, perks, or rewards, we have established that they have different meanings in different contexts. Apart from the aforementioned, there are a ton of things that can qualify as benefits; lunch, massage, acupuncture, etc.
The next question is, now that we know what they are, what is a strategic and thoughtful approach to guide implementing benefits?
Again, like the definition, there is no straightforward answer, but here’s a framework to think about it;
Alignment with Organisational Goals
A clear understanding, identification, and articulation of an organisation's overarching goals and values can help with figuring out what perks or employee benefits to employ. An organisation that values and promotes work-life balance would focus more on benefits in that category.
Acknowledge the diversity within the workforce and tailor benefit packages accordingly. Providing a range of benefits allows employees to select options that resonate with their individual needs and preferences.
A lot of employee benefits and perk platforms come as a package deal and do not allow customization. Flance Business is one that allows employers to choose individual benefits tailored to different users.
Benefits are useless if and when they are not used, so transparent and regular communication about available benefits is imperative. This is especially true for organisations that are just starting a culture of added benefits and incentives.
Employees should be well-informed about the full spectrum of offerings through channels such as emails, company intranet, and informational sessions.
What is acceptable in your region?
There are countries where certain employee benefits are mandatory and employers can not afford to hold back on them.
Stay informed about local, state, and federal regulations governing employee benefits in your region. This legal requirement ensures compliance, mitigates risks, and upholds the trust of employees.
Regular Evaluation and Adaptation
While it’s good to keep employees motivated with these benefits, there are a lot of things that do not produce desired results for a myriad of reasons and the major one being that employee needs and preferences evolve over time.
Regularly assess the effectiveness of benefits programs and be open to adapting them to align with changing circumstances and industry trends.
Engagement and Feedback
During evaluation sessions, feedback should be actively sought from employees regarding their satisfaction with existing benefits and any suggestions for improvement. This engagement not only ensures benefits remain relevant but also fosters a culture of transparency and collaboration.
Finally, while we now agree that the definition and naming of employee benefits are contextually different, if you have come this far, you more likely have a framework to strategically implement benefits in your organisation.
Navigating the complexities and competitiveness of the modern workforce can be quite daunting at times.
By recognizing the intrinsic link between employee well-being and organisational success, employers can leverage benefits as a strategic tool, ultimately fostering innovation, productivity, and a positive corporate culture. In the ever-evolving landscape of the modern workplace, a clear understanding of employee benefits positions organisations to cultivate environments that attract, retain, and nurture top talent.
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