Given today’s tight labor market, quality compensation packages are becoming more crucial to an

organization’s success. Strong employee benefits and perks keep workers happy and less likely to send
their resumes to your competition.

Employee benefits come in many forms. Some are required by law, while others are optional—either
way, your compensation package can be a valuable tool in attracting and retaining employees.

If you’re responsible for employee benefits in your company, it’s good to be familiar with the wide
variety of benefits that are out there.

In this blog, we’ll explain employee benefits, why they’re important, and how much they cost. We’ll also
go over the popular types of employee benefits and how to manage them effectively.

Download our guide for more strategies on retaining your best employees

What are employee benefits?

Employee benefits are any benefits provided to employees in addition to their base salaries and wages.
A complete employee benefits package may include health insurance, life insurance, paid time off (PTO),
profit sharing, retirement benefits, and more. Simply put, any non-wage benefit offered to an employee,
either mandatory or voluntary, can be classified as an employee benefit.

Some employee benefits are required by law. For example, employers must pay into their employees’
Social Security and Medicare. Additional benefits beyond the requirements are often called perks or
fringe benefits.

Each state’s benefit requirements are different, such as the rules regarding sick leave or covering remote
work expenses. However, there are standard benefit regulations all employers must follow.

Required employee benefits include:

Provide employees time off to vote, serve on jury duty, and perform military service

Comply with all workers’ compensation requirements

Pay state and federal taxes towards unemployment insurance

Contribute to state short-term disability insurance

Comply with the Family and Medical Leave Act (FMLA)

Employers aren’t required to provide the following benefits:

Health insurance

This is only required if you’re an applicable large employer (ALE) with 50 or more full-time equivalent
employees (FTEs), according to the Affordable Care Act

Retirement plans

Dental insurance or vision plans

Life insurance plans

Paid vacation and holiday leave

When considering an employee benefits package, think about the type of employees you want to
attract, what perks they would enjoy most, and what benefits your budget can allow. No matter what
you choose, benefit coverage is an impactful way to entice employees and create a positive workplace
culture.

Why are employee benefits important?

Offering employee benefits has several advantages for business owners of all sizes, and the numbers
prove it. Simply put, if you want to attract and retain top talent, show your organization’s worth, and
increase morale, you must offer an attractive benefits package.

Recruit and retain employees

Due to the Great Resignation, a generous benefits and perks package is crucial. According to research
from Zenefits, 63% of companies say retaining employees is harder than hiring them. If you’re struggling
with your retention rate, boosting your benefits package is an excellent place to start.

The Society of Human Resource Management (SHRM) also found that 92% of employees say their
benefits are important for their overall job satisfaction.

In a related article, 63% of job seekers surveyed say they pay attention to what benefits a company
offers. This means that offering benefits, and listing them in your job ads, is an integral part of successful
hiring efforts.
Highlight your organization’s values

Today’s successful companies know that to attract and retain employees, they must define and instill
great company values. Your employee benefits package can be a reflection of your company values and
entice top talent who share the same core values as you.

For example, you may launch a corporate responsibility initiative offering PTO to your employees so they
can volunteer in their community.

Ultimately, the benefits you offer send a message about your organization’s beliefs. A good benefits
package shows that you recognize your employees’ needs outside the workplace and want to support
their overall well-being.

Show employees you care

Coverage through benefits is an active way to make employees feel rewarded and appreciated, making
them more likely to stay at your company. Showing your employees that you care about their personal
needs can also improve employee morale leading to a better workplace environment.

For example, benefits that improve work-life balance, such as vacation time, flexible hours, and the
ability to work from home, can help lower employee stress and prevent burnout. Employees are likely to
be more productive at work with higher job satisfaction in return.

How much do employee benefits cost?

One of the most important things to figure out when building out your benefits package is the cost.
Examining the costs and gains for each employee benefit can help you decide what to include in your
plan.

According to a U.S. Bureau of Labor Statistics report, employee benefits make up 31% of total
compensation costs. Insurance benefits made up 8.3% of compensation costs, and legally required
benefits accounted for 7.1%.

What can seem pricey at first might save you money in the long run. For example, a UnitedHealthcare
survey found that 62% of participants in wellness programs say their productivity has improved and 56%
have had fewer sick days. These programs are known to boost morale, but they also help you avoid
indirect costs, like missed work due to illness and lower productivity.
Find out the cost of health insurance in your state with our comparison chart

What are popular types of employee benefits?

You may be asking yourself, “What employee benefits do people value the most?” The simple answer is
that employees value all benefits. But ultimately it depends on what type of employees you’re looking to
hire.

Finding the right combination of benefits that will have the most impact while not breaking the bank is
critical for your business’s success.

Popular benefits in the U.S. range depending on employee makeup, industry type, and other varying
factors. But checking out a list of common benefits offered by most companies is a good place to start.

When designing your employee benefits package, it never hurts to investigate what your employees
specifically want. Asking for employee feedback via an online survey can be a great way to poll for
customized benefit ideas.

Additionally, some employers create benefits packages according to the demographics of their
workforce. For example, employers may offer a student loan repayment benefit to attract and retain mil