According to research from Aflac’s WorkForces Report, 78% of employees believe their workers are highly satisfied with their benefits, but only 59% of employees actually feel that way. Why is there a discrepancy? More importantly, what can employers do to fix it?
This article cuts through the noise regarding which benefits are valuable to employees, which offer no value to either party, and how to prepare a benefits package that improves the employer-employee relationship.
Why Truly Valuable Benefits Matter
Employee benefits are a key component of the employee compensation package. For top talent, benefits can be a deciding factor when candidates are evaluating multiple job offers. To that end, more CEOs at large employers are turning to human resources leaders to find measurable return on investment with their benefits packages, ensuring that the cost of benefits and the utilization rate are successful.
Beyond recruitment, benefits are a crucial part of employee productivity, engagement, and retention. According to the International Foundation of Employee Benefit Plans, employers that offer benefits like healthcare, retirement, paid leave, and wellness plans have a higher level of employee productivity and engagement compared to those that don’t.
On the employer side, virtually every aspect of business is centered around maximizing return on investment. Every resource needs to pay off, either in the short- or long term, and benefits are no different. There’s no point in wasting time and money on perks that don’t offer “bang for your buck.”
However, you have to identify the less-appealing benefits first. Then, you can cut them from your package and reinvest your budget in benefits that will attract talent.
Benefits That Offer No Real Value
Here are the benefits that are more gimmicky than meaningful:
Wellness Without Engagement
Well-designed and well-executed workplace wellness programs can have positive health outcomes. Employees with access to wellness programs can have greater productivity, higher morale, and fewer long-term health problems.
According to studies on workplace wellness, more than two-thirds of 1,132 U.S. workers with access to an employer-sponsored mental health program had a reduction in depression and anxiety over a three-year period.
However, these findings were questioned because they were self-reported. In truth, there's no verifiable way to tell if wellness programs translated to truly better health outcomes or employees.
In addition, wellness programs are not a small undertaking for employers. They can be time-consuming and expensive to implement and manage, and if employees don’t enroll, they’re going to waste.
If you want to implement a wellness program with returns, it’s crucial to encourage employees to engage with it. Give them the tools and resources to make smart, cost-effective decisions related to improving their health, such as gamified wellness programs and gym memberships.
Unlimited Vacation Time
Unlimited vacation time (also known as unlimited PTO) has become a more popular benefit option for U.S. workers. While it’s common for the rest of the developed world to take month-long holidays during the year, U.S. employees get about seven sick days and 11 vacation days each year, according to the Bureau of Labor Statistics (BLS).
In the past, unlimited paid time off or unlimited vacation time was a benefit associated with game-changing tech companies and “out-of-the-box” startups. Now, it’s making its way into the most traditional of corporate environments, especially after the COVID-19 pandemic.
The main attraction of unlimited PTO is unstructured freedom. However, it’s not really “unlimited.” Most companies that offer unlimited time off have an unofficial cap at three to six weeks. It’s more than the standard, but not truly unlimited.
It’s been oddly counterproductive as well. According to a report by the Society of Human Resource Management (SHRM), employees are surprisingly less likely to take time off when there’s no official limit.
There are several possible reasons:
- Employees may feel pressured to work and avoid taking too much time off for fear of retaliation or resentment within the team.
- Replacing traditional earned vacation time with discretionary PTO removes the objectivity, leaving employers to reject requests based on presentations, urgent projects, and more.
- Without a formal policy, unlimited time off can become unequal if managers approve or deny requests based on individual employee performance or sentiment.
- After a shift to unlimited PTO, legacy employees may have built up a lot of time for severance bonuses or an extended vacation, making all of that go to waste.
Still, some employees are seeking unlimited – or at least flexible – time off. The key to success is creating a formal leave policy with various types of PTO that encourages employee wellness and that provides transparent parameters to ensure that it’s fair for everyone.
Employee Discount Programs
Employee discount programs seem like a nice perk at first, but they’re not usually effective.
Instead of being employee-centric – as benefits should be – employee discount programs are designed with the intent to generate income for companies through partnerships.
If a program doesn’t meet employees’ needs, it wastes money without giving anyone a benefit. Discounts on things employees don’t want or need is a financial downside for your employee. For example, 20% of a specialty store’s goods that your employee isn’t interested in only forces them to either forgo their discount or make a frivolous purchase.
Many employers who implement an employee discount program have strict policies as well, which can put off employees. For example, most policies aren’t centered around the best deals, but the purchases that would make the company the most money.
One-Size-Fit-All Packages
Traditional benefits packages tend to be a one-size-fits-all approach. Though comprehensive, employees may end up unsatisfied with a lot of benefits they don’t want or need – especially if said benefits cost them out of pocket.
When they’re not satisfied with their benefits and the support they receive from their employer, they may become unhappy, disengaged, and likely to seek employment elsewhere.
Both employers and employees want to save money on their benefits, so unused benefits are merely a waste. More companies are moving toward more flexible packages that give employees the power of choice.
Though health insurance providers have been offering customizable plans for a while, personalized benefits go far beyond healthcare costs. People at different stages of life may have different priorities.
For example, employees just starting out may be interested in tuition reimbursement or childcare. Those nearing retirement may not be looking for further education, but the opportunity to take advantage of more retirement benefits or additional financial safeguarding like short- and long-term disability.
Allowing employees to create their own benefits package by selecting what’s more valuable to them – such as wellness, medical, dental, time off, childcare, and other options – is the most modern approach and saves you money.
The administrative component of personalized benefits may put employers off offering this type of flexibility. However, modern benefits administration platforms make offering personalized benefits enrollment pretty easy.
Benefits Everyone Wants
There’s little value in offering benefits for employees who don’t care about them. Employees have come to expect certain benefits, including legally mandated benefits like unemployment insurance, overtime pay, family medical leave of absence (FMLA), and Consolidated Omnibus Budget Reconciliation Act (COBRA), but here are some optional benefits that are desirable across the board:
Comprehensive Health Insurance
Most employees expect health insurance as a core benefit in their job search. However, basic coverage may not be enough. Employees are looking for more choice in their health coverage, such as:
- Dental and vision benefits
- Mental health coverage
- Prescription plans
- Telemedicine/telehealth
- Fertility benefits
Employee Assistance Program
An employee assistance program (EAP) is a benefit that offers confidential counseling and support for employees struggling with personal or work-related problems. These programs offer counseling for a wide range of issues, including relationships, substance abuse, financial stress, or mental health concerns.
These programs often have phone hotlines, online resources, and face-to-face meetings with trained professionals for counseling and support in the format that is more comfortable for an employee.
Paid Time Off
Whether unlimited, capped, or split into sick days, personal days, and vacation days, PTO is an important benefit for employees.
While many states have laws requiring employees to provide certain types of paid leave, such as sick leave, ensuring your employees have options to get a break from work is important for maintaining work-life balance.
Childcare and Dependent Care
Not every employee will need childcare or dependent care, but it’s a highly valuable benefit for those who do. This can be offered as part of a group health plan or as a separate employee benefit, ensuring that employees have help with the cost of daycare or childcare expenses, home health, or other expenses.
Life Insurance
Life insurance is an important part of financial protection and attractive to many employees.
Younger employees may not opt in immediately, but offering life insurance to cover final expenses as part of a group employer life insurance plan offers savings and peace of mind for employees.
Disability Insurance
Like life insurance, disability insurance may not be on the radar of younger employees – but it should be. This type of insurance pays a percentage of the employee’s paychecks to help them stay financially stable until they can return to work.
Some states require short-term disability by law, but you can include more options for employees to choose the level of short- or long-term coverage that are most valuable to them.
How to Improve Your Benefits Package
The right combination of benefits can significantly improve employee productivity and attract and retain top talent. However, it’s not about following the lead of big companies. You have to tailor your benefits to your industry, budget, and employees.
Keep Benefits Relevant
You don’t want to offer tuition reimbursement when most of your employees are older or have high salaries in long-term careers. These employees may appreciate more health benefits, more vacation time, or more retirement options.
Get Employee Feedback
You can guess the best benefits for your team all day, but the best way to know what they value is to simply ask. Use surveys, polls, and one-on-one meetings – combined with benefits usage data – to determine what your employees really want.
Teach Employees About Benefits
Benefits have become more complex over the years. Younger generations just entering the workforce or new to employment with major employers may not have an idea of what benefits are valuable or how to use them effectively.
Educating your employees about their benefits should be a priority that works with improving your benefits package. This should start during onboarding, then continue throughout the year with meetings, an online portal, and employee benefits resources on a benefits technology platform.
Make Your Employee Benefits Work for You
Some employee benefits are more “window dressing” than true value for employees – and they notice. Instead of an overinflated package of mostly useless benefits, shift your benefits package to desirable options that drive employee satisfaction, engagement, and retention.
