Employee benefits aren’t identical everywhere you go. In fact, there are many employee benefits you might never have heard of. What qualifies as a desirable benefit depends on several factors, including laws that affect employment conditions. In the United States, for example, paid parental leave can be a very attractive benefit.
On the other hand, there are many countries where parental leave is enshrined in law – more than 120, in fact.
Luckily for U.S. employers, there isn’t much political will to expand legally required benefits. In fact, some benefits have been receding from the employment scene for decades. Defined benefits pension plans are now virtually unknown among Fortune 100 employers, declining from a high of 90% offering them in 1998 to just 30% by 2011.
When building an employee benefits strategy, it’s a wise idea to start at the beginning.
What Are The Main Types Of Employee Benefits?
Employee benefits can be thought of as any compensation provided to employees beyond their base salary. This can include both tangible and intangible perks. In many cases, a robust selection of benefits can be more compelling for new employees than a raise. However, not all benefits are made equal!
The basic categories of benefits include:
- Retirement Plans
- Time Off
- Compensation Opportunities
Let’s take a closer look:
Health insurance has dominated the conversation around employee benefits in recent years, especially during the Trump Administration. While the Affordable Care Act added complexity to many businesses, it did make some aspects of health insurance benefits more predictable. This has been thrown into doubt since 2016.
In addition to standard healthcare, insurance can include expanded benefits like vision and dental care. These become more valuable to employees with age. Private group and individual insurance can broaden the options available to staff.
Life insurance is popular in the public sector, but not one of the common employee benefits for small or mid-sized businesses. Life insurance protects an employee’s family in the event of death by accident or illness. This can give the aggrieved family the financial resources to safely downsize, retrain, and keep the bills paid.
Disability insurance covers long- and short-term disability or illness not resulting in death. The amount of the benefit is usually tied to the employee’s salary. Short-term disability policies can also be used for funding maternity leave beginning shortly before a child is born.
As an employee ages and develops greater skill, retirement benefits are a strong factor in reducing churn. Many team members want to avoid risking the value of their policy or working at another company that might not offer the same contribution level. Although retirement benefits are in decline, the 401(k) remains one of the most common plans. One advantage is that it is relatively easy to understand.
401(k) and IRA plans have been supplanting defined benefits plans for some time. In a defined benefits scheme, retirement is entirely funded by the employer. Benefits increase on the basis of retirement year and company tenure. On the other hand, a 401(k) plan can lose value if the underlying stocks, bonds, or other securities lose value.
Time off is another area where U.S. employers have more opportunities than those abroad. Employee benefits in the EU include lavish paid time off, with all member states providing a minimum of four weeks. Austria, Portugal, and Germany – those notoriously efficient and conscientious hard workers – are among the countries offering more than 30 days a year.
In the United States, no federal or state laws require employee benefits to include vacation time, whether paid or unpaid. If an employer chooses to offer vacation time, then certain state laws may structure the requirements for how much pay must be offered. For example, in California, earned vacation time is treated as wages earned.
One very popular approach to vacation time in the startup world is the concept of “unlimited vacation.”
Unlimited vacation is not truly unlimited, but has fewer requirements for reporting and taking advantage of vacation. The basic concept is that employees should be free to spend their time as they wish so long as they are meeting the targets of their job role. In practice, though, these plans can be quite limited.
One thing to remember about time off within employee benefits is that it’s useless if no one takes advantage of it.
If you have a corporate culture that leaves personnel worried that they’ll be immediately replaced when they take a week off, virtually none of your workforce will use accrued vacation time to the fullest. That means the benefit effectively has no impact on morale. In fact, it might even encourage turnover as employees feel they have been promised something that will not be delivered. Encouragement to use time off should flow from the highest levels of the organization.
Additional compensation can come in the form of sales commissions, performance bonuses, and gifts or cash awards.
The Biggest And Best Employee Benefits Worldwide
Some places have employee benefits that only “make sense” there. For example, if you work an expatriate job in Australia, you might find that your employer is willing to take on the contract for any vehicle you need to rent. This is called “novated leasing,” and is basically unknown outside The Land Down Under.
Beyond these edge cases, though, some clear trends exist in employee benefits.
The top employee benefits around the globe include:
Private Health Care Plans
Private healthcare is looked at as one of the essential employee benefits in the United States. For plan options to feel “complete,” vision and dental should also be included. A dental emergency can take an employee off the roster for a week!
Retirement & Pension
A 401(k) has become one of the signature employee benefits that separate serious, sustainable businesses from others.
Training & Development
Investing in talent development through on-site programs and, in some cases, tuition reimbursement, shows that you view your personnel as your most valuable asset. This is one of the best opportunities to forge a long-lasting sense of loyalty.
Stock options help employees see the connection between their work and the company’s overall fortunes more clearly. When the firm succeeds, they succeed – which can be highly motivational in its own right.
Work From Home
Previously looked at as a luxury, many companies are now being judged on whether they can pivot and integrate working from home into their employee benefits stack. WFH can also help you pinpoint areas to improve your business’s efficiency.
Extended Leave (Vacation, Sick)
Vacation and sick time fall under the umbrella of “extended leave.” They give employees the chance to protect themselves and others by staying home when unwell, and prevent burnout with additional annual time off to recharge their batteries.
Health insurance continues to be the barometer by which many professionals judge a company’s employee benefits. To learn more about how you can expand your health insurance options with ACA marketplace alternatives, contact us today.