September 25, 2023
What is a Mandatory Vacation Policy?
The concept of the mandatory vacation policy is a new and novel approach to paid time off. It goes against wh...
The right employee benefits package will not only make your current staff happy, but also attract the right type of people to your company in the future.
That’s why it’s important to know what kind of benefits people value the most, so you can allocate resources where they will be most effective.
In this article, we’ll cover the different types of employee benefits, why they are important, and which are the ones that are most valuable in the job market. We’ll also share how to decide which benefits might be right for your team.
Benefits promote employee happiness, boost morale, and reduce turnover costs.
An employee-employer relationship is a two-way street. You expect your staff to provide value, but they can only be expected to do so if they get something in return.
You can offer the bare minimum in benefits (paying staff at minimum wage). But a more attractive benefits package will motivate your team to work harder, and prevent your best workers from switching jobs.
If one of your best workers can get more time off, better health insurance, or free wellness programs working somewhere else, what is there to stop them leaving?
It’s not just about reducing turnover. Happy employees contribute to a workplace that is positive and vibrant. A team filled with happy employees is likely to be more productive than one that’s disgruntled.
People are all different. As such, there are a range of benefits you can offer which may hold more or less value for each person.
Choosing the right employee benefits key to getting the most out your team.
Here are some of the most common and highest valued employee benefits for you to choose from.
Paid time off (PTO) refers to the time when your employees are away from work, but they still get paid like usual.
Among the most desirable benefits in the job market, paid time off consistently ranks towards the top.
People today want to maintain a positive work/life balance. No one wants work to take over their life, to the point where they have no time for personal projects or to spend time with friends and family.
There are also life events or situations that arise that staff need time off to manage, without worrying about losing pay.
Let’s take a look at some common paid time off leave types:
Also known as vacation days, annual leave is when your employees take time away from work to go on vacation with their families or relax and rejuvenate after bouts of strenuous work periods.
In the USA, annual leave can be paid, unpaid, or a combination of both. But in other countries around the world, there could be labor laws that mandate a minimum number of paid vacation days.
For example, the EU member states require employers to provide a minimum of 4 weeks of paid vacation.
And while there may be minimum requirements, offering above average paid time off may help you pitch your workplace as a more attractive place for the best people to come and work.
As the name suggests, employees take sick leave to recover from an injury or illness. This is not only beneficial for staff, giving them the time they need to get better, but offering paid sick leave means unwell team members are less likely to spread their illness to colleagues.
Usually, there are also more regulations around sick leave days than regular vacation days.
In some states in the USA, local laws mandate a minimum number of sick days for employees for specific categories of businesses.
Parental leave could also apply when adopting a new child.
Being generous with parental leave is a great way to really show you care about your employees, and foster a family-like culture in your team.
An employee is on sabbatical leave when they do not report to work or perform their duties but is still employed by their company.
Sabbatical is an extended leave period when an employee pursues other interests or attends to personal commitments. The leave period can range anywhere from a month to a year long.
The reasons for a sabbatical leave may include continuing education, travel, family reasons, volunteering, recovery from burnout, etc.
In specific cases, employers choose to provide paid sabbaticals to reduce turnover costs, retain key team members, and succession planning.
Flexible work is another highly sought-after job benefit.
Employees have more control over when they work and where they get it done, unlike the traditional model of reporting to the office from 9 AM to 5 PM, Monday to Friday.
Concepts like remote work/work from home were already gaining steam over the last few years, ever since Tim Ferris wrote The 4-Hour Work Week, popularizing the digital nomad movement.
But since 2020, the number of people working remotely or from home has exploded, and the trend is most likely here to stay.
Today, offering staff the opportunity to choose their own hours or where they work from may give you a competitive advantage when it comes to retaining and attracting the best talent.
It’s no secret that everyone wants to be fairly compensated for their work, in order to build financial security for themselves and their families.
Competitive compensation is a time-tested way to attract employees that are highly driven and motivated by success.
In addition to base salary, people also want to know they have the opportunity to increase their earning potential, through raises and frequent bonuses.
When changing jobs, you may have noticed that health insurance is one of the first topics people bring up.
Employees want to ensure they can get access to quality care if something goes wrong with their health.
With the rising cost of medical care, offering employees complete coverage in the case of medical issues, accidents and more, is a powerful employee benefit.
It’s also in your best interest as an employer to keep your employees healthy, which will be a lot easier when they don’t need to bear the cost of healthcare.
Insurance benefits include:
What better way to motivate people to work for your company long-term than to offer financial security in retirement?
Many companies offer retirement plans for long-term workers, such as pension and contributions to retirement savings plans.
In the USA, you can offer a 401K retirement savings plan. It’s an employer-based savings plan named after a section in the IRS revenue code.
Each month, you take a portion of the employee’s paycheck and deposit it into an investment account for their retirement. As an employer, you can choose to match the contribution to the account, either in part or all of it.
The employee will choose what type of investment the contribution goes to, like a mutual fund for example.
Employee stock options (ESOs) are a type of equity benefit. Instead of directly giving your employees shares in the company, you give them the derivative options on the stock.
It can be a regular call option that allows the employee to buy the stock at a preferred price for a specific period of time.
The terms will be laid out in the employee’s ESO agreement.
Hopefully, your key team members have a vision for where they want to be in life in the next five to ten years.
Maybe they want to assume a leadership role within the company when your team grows. Or perhaps they have other challenges in mind after they spend a great few years with your company.
You can demonstrate that you value your employee’s ambitions by providing them education benefits.
You can pay for a new undergrad degree, an MBA, coding bootcamps or provide them with access to learning platforms like Udacity, Codecademy, etc.
If it’s a significant investment on your part, then you might want to consider an agreement that the employee will spend a few years with you after completion of their education.
Tech spend is an allowance for your team members to buy computers, upgrade their workspace, or other work-related tech equipment.
This is particularly important for remote teams. If you’re going to expect your employees to work from home, or a location other than a centralized office, you should provide them with the resources, equipment and software they need to be productive.
Almost everyone loves a trip. And company retreats, as well as offering something for those in your team with wanderlust, also provides a way for your team to bond and work better together.
You may want to arrange an annual or semi-annual trip as an employee benefit. This is particularly powerful for remote teams, who otherwise don’t have the opportunity to see each other in person (this is something we do for full-time employees at Flamingo).
Might seem trivial, but free coffee actually ranks as a desired benefit, according to employee benefits studies.
Free coffee is great, and it’s even better if you have an espresso machine. Of course, don’t forget the tea lovers either.
Besides providing coffee or tea in the office, consider buying lunch for your team every now and then, or take them out for a nice dinner every quarter or so.
Wellness perks like gym memberships, yoga classes, or others that promote a healthy body and mind are gaining in popularity.
In this day and age, more people recognize the value of health and wellbeing, and more companies are considering this in their employee benefit plans.
As well as providing a benefit that is highly valued by your employees, fringe benefits like this encourage your team to make health a priority, which should result in better performance at work.
Employee benefits help keep your team happy and productive, but they almost always come at a cost to your business. So it’s important for employers to offer benefits that get the most bang for their buck.
Let’s look at what some recent data is telling us about the most sought-after employee benefits.
According to Robert Half, a leading global HR consulting firm, their survey of more than 500 human resource managers revealed that 68% of employers offered health insurance benefits to their staff.
And for a good reason.
Fractl, a growth marketing agency, studied employee benefits and found that 88% of employees consider the quality of health insurance benefits when deciding to take a new job.
So, if you can offer insurance to your team (or access to high-quality care), the data suggests it will greatly help you attract and retain top talent.
The next one that always ranks among the top is flexible work. Employees are increasingly focused on things like wellness, mental health, and burnout.
So, it should come as no surprise that flexible work hours also came in at 88% in the Fractl study when asked about the most desired benefits.
It ranked second to health insurance because a slightly lower percentage of people take it into “heavy” consideration compared to healthcare.
The Robert Half survey of HR managers also found that flexible work hours are increasingly common, especially with the rise of remote work since 2020.
Paid time off (PTO) or similar benefits, such as annual leave, ranked right under healthcare and flexible work.
80% of respondents to the Fractl survey reported time off as a factor of consideration when accepting a new job, with a little less than half of them answered that they give heavy consideration to this.
The other top benefits that employees find most are the following.
The benefits that you offer your team should be tailor-made to what you think will be most desirable to them.
If you have a relatively smaller team, you’ll have a better idea of what each employee wants most, and you can create a benefits package based on that information.
If most of your employees are in a younger age bracket and tend to work for a short time, employee benefits such as life insurance, disability insurance or retirement benefits may not matter much.
Yet these same employee benefits may be heavily desired if your employees skew older.
If you run a large organization with multiple locations, it might be better to rely on data, like the surveys mentioned above.
When crafting the best possible benefits package for your employees, consider the following points.
What benefits would excite the heck out of your employees? Happy employees make for a great work environment, which in itself can become a major draw when you’re recruiting.
What type of employees do you want in the future? What kinds of benefits would they like most? Is it the chance to make a fortune, or do you think they’ll prioritize a more balanced approach? Is there a way you can offer both?
Finally, don’t forget to review what your direct competitors are offering.
If you offer one of the most competitive benefits packages in your space, then you’ll always have a leg up over them when it comes to attracting and retaining the best.
Flamingo makes managing your team’s paid time off a breeze.