Gone are the days when companies would entice employees by adding healthcare and a few vacation days to their base compensation packages. Modern-day workers have mounting issues in their personal and professional lives — and they expect their employers to support them.
Workers want to know: Which company will ship their breast milk when nursing moms need to travel to a conference? Which employers offer telehealth services for quick medical advice on a Saturday night? And who will provide parental leave if they adopt a child into their growing family?
Developing a robust employee benefits strategy is the best way to accommodate your workforce’s complex and evolving needs. Our guide delivers expert-backed best practices in creating your strategy, including the types of benefits you might offer.
What does an employee benefits strategy include?
A well-designed employee benefits strategy is a blueprint that supports your recruitment and employee retention initiatives. It proves you’re an employer that cares about its people and is in tune with their personal and professional growth.
Your strategy will encompass benefit costs, design, communication, delivery, contributions, and compliance responsibilities. You’ll also need to keep a keen eye on employee trends in the broader marketplace to offer a truly competitive benefits package.
Why are employee benefits strategies critical to business success?
Companies willing to invest in employee benefits programs will enjoy tangible results, such as the following:
Attracting top talent
Thanks to the Great Resignation, Quiet Quitting, and widespread layoffs in the tech industry, a whopping 87% of the workforce is open to seeking a new position. Including a competitive benefits package in your job postings can enhance your employer brand and set you apart from other companies hiring in your industry.
Retaining your people
30% of workers admit they’ve left a job because the benefits package didn’t meet their needs. Hang on to your best employees, and avoid the cost of recruitment by providing perks your workforce can actually use.
Kathie Patterson, Chief Human Resources Officer at Ally Financial, states:
“Your total rewards package sends a significant signal to your existing employee base that you value them. It’s a key lever in terms of how to attract, engage, and retain your employee base.”
Reinforcing a positive company culture
A MetLife Employee Benefits Trends study highlights that “employee care has emerged as a particularly powerful force in a time of talent shortfalls and widespread macroeconomic uncertainty.”
No one wants to work for a soulless corporation. But thoughtful benefits show you offer a culture where you value the well-being of your people, care about their future, and prioritize their safety.
5 types of employee benefits to include in your strategy
The term “employee benefits” covers a vast array of rewards, from healthcare and PTO to wellness stipends and family planning. Every company packages its benefits differently, but there are five main categories to be aware of:
1. Mandatory benefits
Depending on your business location, you may be required to provide some core benefits for your employees. Be aware that some of the following are state-specific in the U.S.:
- Social Security
- Workers’ compensation, including wage replacement benefits, medical treatment, vocational rehabilitation, and other benefits
- Unemployment insurance
- Continuation of Health Insurance (COBRA)
- Disability-related leave, including the Family and Medical Leave Act
- Sick leave
Supporting your employees’ physical and mental health is essential. But how companies approach this has changed radically over the years. Kathie Patterson explains:
“Healthcare was preventative; it was about your deductible, what hospitals you have access to. Now you’re seeing more specificity around the coverage you’re offering, enhancing your hearing aid coverage, improving your orthodontic treatment coverage, etc.”
In the current landscape, this could look like:
- Medical coverage
- Vision and dental coverage
- Flexible Spending Accounts (Employees receive an allowance to spend as they need.)
- Healthcare Savings Accounts (Employees can set aside pre-tax dollars for healthcare spending.)
- Health Reimbursement Arrangements (Employees receive tax-free funds to pay for eligible healthcare expenses that fit their unique needs.)
- Counseling services
The cost of living is on everyone’s minds, no matter where you sit on the pay scale. MetLife reveals that the percentage of employees whose financial concerns negatively impact their mental health has increased from 31% in 2022 to 48% in 2023.
Current benefits packages support their employees by offering financial security in the form of:
- 401K (Company-sponsored retirement plan where employees and employers make contributions)
- Life insurance
- Equity compensation (A type of compensation where employees receive a stake in the company)
- Stock purchase plans (A form of equity compensation where employees purchase and own stocks)
- Bonus programs
- Rewards and recognition programs (Programs that connect career milestones, achievements, birthdays, and anniversaries to monetary rewards)
- Financial planning
The number of employees who feel their company benefits meet their personal and household needs is on a downward trend, from 63% in 2022 to 61% in 2023, according to MetLife.
Attractive employee benefit plan strategies take a holistic approach to employee well-being by offering incentives that are enjoyed beyond the working day. Your package could include some of the following lifestyle options:
- Wellness programs (Employees choose a combination of physical and mental health incentives to match their individual requirements.)
- Fitness stipends (Money toward gym memberships, online classes, equipment, etc.)
- Lifestyle spending accounts (Flexible employee-led benefits)
- Food benefits (Employees receive money towards groceries, deliveries, or takeout.)
- Family and childcare benefits (Employees gain support with family formation and childcare costs.)
- Paid time off (This could include company-wide vacations where the whole workforce is out of the office in tandem.)
5. Work-related benefits
Make it easy for your workers to do their job by offering benefits that support their professional lives. These might include:
- Commuter benefits (A modern solution for the hybrid workplace)
- WFH benefits (Including an office setup allowance to equip remote workers)
- Cell phone and internet stipend (Provides money toward monthly cell and internet fees)
- Professional development benefits (Encourages employee growth with money toward training)
Luciano Colos, Founder and CEO of PitchGrade, points out:
“If your company places a strong emphasis on career development and training, offer benefits that support these values, such as tuition assistance or learning/growth opportunities. Ensure that you're offering benefits that truly align with your company’s ethos and support the well-being of your employees.”
How to design an employee benefits strategy in 11 easy steps
The foundations of an effective strategy begin with plenty of prep work. Follow these 11 steps to success.
1. Define your benefits goals
Begin by writing down the overall purpose of your benefits strategy and ensure it aligns with your business goals. For example, you may want to:
- Increase employee engagement
- Attract and recruit new talent
- Reduce absenteeism
- Improve the uptake of your benefits program
Not sure where to start? Use the SMART system to define goals that are Specific, Measurable, Attainable, Relevant, and Time-Based.
2. Establish your budget
The amount of money on the table will dictate your employee benefits offerings. Bear in mind that benefits account for a third of the average employee compensation package, and your budget should reflect this.
When adding everything up, don’t forget to factor in additional costs like:
- Implementation fees
- Foreign exchange fees
- Administrative costs
- Potential for price increases
It’s also worth understanding whether your benefits are reimbursable if your employees don’t use their entire allowance. If your employee only uses $80 of a $100 commuter allowance, does the company receive $20 back, or is the money lost? Always check the details with your benefits provider to maximize your benefits budget.
3. Research competitor benefits
To stand out against competitors, you’ll need to know what they’re offering. Do your research and conduct benchmarking to understand the current landscape.
Check out the Benepass Benefits Benchmarking Guide for a deep dive into how companies of different sizes and industries approach employee rewards.
4. Separate your nice-to-haves from your must-haves
Unless you have a bottomless budget, divide your list into must-haves, nice-to-haves, and rejected benefits to refine your choice.
- Must-haves should be mandatory offerings, such as employee health and safety or legal obligations.
- Nice-to-haves are benefits that will sweeten the deal for your team and match your pre-defined goals, such as increasing employee satisfaction.
- Rejected benefits are those you can’t afford or don’t think will add value to the package.
4. Consider your entire workforce demographic
Plan your benefits with your employee population in mind rather than a specific persona. There’s no point designing a package that will only appeal to “Daniel, a single male aged 23 from New York,” when your team also includes “Jeannie, a grandmother aged 59 from California.”
Every individual in your team will have entirely different personal and professional needs, so build your package to appeal to employees from any generation. Some considerations include:
- A quarter of the U.S. workforce will be aged 55+ by 2024, so they could benefit from rewards focused on retirement, financial planning, and medical coverage.
- 68% of younger adults would be willing to change jobs to receive fertility support, so ensure you include family planning benefits that reflect this.
- In the “squeezed middle,” you may have employees responsible for both childcare and elder care who crave greater support with their work-life balance.
6. Provide flexibility in your benefits package
Move away from the one-size-fits-all approach, and give your employees the flexibility to choose from a range of benefits that reflect their individual needs and lifestyle. This could include flexible working, medical coverage, or a selection of creative perks that are unique to the company.
In an HR Happy Hour podcast, Director of Customer Advocacy Misty Guinn explains:
"Employers no longer get a gold star for saying that they offer health insurance.” Workers want to know, “What type of health insurance, what options are you offering me, what supplemental voluntary benefits are you putting in there?”
7. Communicate the value of your benefits
When companies invest in benefits, the ideal scenario is for their employees to use them to support their health, well-being, and growth. If you notice a lack of uptake in your rewards program, it’s worth planning how you communicate the value of your benefits to your workers. Steven Cardwell, VP of Benefits, Well-Being, and Retirement at Premise Health, agrees:
“You could have the very best, most innovative benefits programs that are out of this world, out-of-the-box, but they’re going to create absolutely no value or sustained engagement if employees aren’t aware of them, don’t know where to find them and even worse, how to use them.”
Craft an employee benefits communication strategy that clarifies exactly what your company offers. This should include where to enroll in your program, any required contributions or tax implications, and how specific benefits can improve your employees’ work and personal lives.
8. Check in with your employees
Never assume your strategy is complete. Over the last few years, we’ve seen how quickly the employee experience changes — and your benefits offerings must evolve with the landscape.
Saikat Ghosh, Associate Director of HR and Business at Technource advises gathering employee feedback to get a feel for what they need. He told us:
“If you are having difficulty deciding which employee benefits would be the best and benefit the most employees, conduct a survey and ask employees questions related to work, company culture, and work-life balance. We prioritize one type of benefit over others with the help of assessment, analysis, and feedback.”
Example: As an employer, you may not be aware that a large number of your staff have taken on the responsibility of a pet. (Some 78% of current pet owners acquired new pets during the pandemic.) Employee surveys are a good opportunity to understand the needs of your workforce and adjust your benefits accordingly, for example, by offering pet insurance or pawternity leave.
9. Ensure compliance
Review your strategy regularly and consider the legal requirements you must adhere to, including any post-employment support you must provide. Ensure you understand your local and national labor laws to protect your business from unnecessary risk.
Example: In states offering Paid Family Leave, employers must abide by the legal requirement to communicate the program and provide eligible employees with their statutory benefits.
10. Measure employee benefits strategy results
Data insights are essential if you need to present the results of your benefits plan to the C-suite to demonstrate if it’s been a hit.
Select relevant metrics to track, such as:
- Employee satisfaction
- Turnover rates
- Prevalence of burnout
11. Review your benefits delivery
Employees must be able to access their benefits to participate fully and engage in the program. Steven Cardwell elaborates:
“If I’ve got all these great benefits, but they’re scattered throughout, and I have to go to different portals or different websites, or if I have to find it on the intranet site under a different tab, my chances of being engaged in those programs are drastically reduced. It gets to a point where if I have to go 2-3 clicks to find something, and I’m limited to an intranet site or a hard copy guide that was given to me at annual enrollment time, you’ve already lost me because it’s not getting me when I need it and how I need it.”
Not all benefits platforms are created equal. Choose a provider like Benepass that prioritizes accessibility and flexibility, so your employees and HR teams can stay up to speed with current benefits usage.
Redesign your employee benefits strategy with Benepass
Benepass partners with companies like Wix, Muck Rack, and Mindbody to distribute meaningful benefits to employees. We make it easy to empower your people with choices in their personal and professional lives — but we eliminate the administrative burden of handling multiple vendors.
Ready to deliver a personalized benefits experience your employees will never want to leave behind? Request a demo of Benepass today or contact our sales team at email@example.com for more details.