Employee Benefits
Employee benefits are monetary or non-monetary compensation provided to employees to improve job performance and employee satisfaction.
What are employee benefits?
Employee benefits are perks provided to employees in addition to their regular wages or salary. Frequently referred to as “benefits,” employee benefits can be tangible or intangible. Oftentimes, they are provided at the employer’s discretion. However, there are some that are mandatory.
Tangible
Tangible benefits can be assigned a monetary value, meaning you can quantify and measure their financial worth. They are given directly to employees to incentivize performance. They include:
- 401(k) contribution match
- Cash bonuses
- Free merchandise
- Gift cards
- Gym membership
- Health insurance
- Life insurance
- Paid time off
- Pay raises
- Profit sharing plans
Intangible
These are benefits that do not have a quantifiable or measurable value. Intangibles appeal to an employee’s emotional and psychological needs, thereby increasing employee fulfillment and job satisfaction. They include:
- A healthy work environment
- Autonomy
- Career advancement
- Flexible work options
- Praise or thanks
- Recognition awards
- Training and development
- Work-life balance
Voluntary
These are resources that an employer chooses to offer its employees. Voluntary benefits include:
- Commuting/travel reimbursements or allowances
- Dental insurance
- Disability insurance
- Education assistance
- Flexible spending accounts
- Life insurance
- Medical insurance
- Mental health benefits
- Paid time off
- Retirement plans
- Student loan repayment assistance
- Vision insurance
- Wellness programs
Mandatory
The federal, state, or local government requires the employer to provide these benefits. Which ones the employer must offer depends on various factors, including business location, employees’ geographic work location, employer industry, and number of employees. Mandatories may include:
- Bereavement leave
- Continuing health insurance
- Family and medical leave
- Paid sick leave
- Parental leave
- State-sponsored retirement plans
- Time off to vote
- Workers’ compensation
Why employee benefits are important to small businesses
Employee benefits play a vital role in a candidate’s decision to accept a job. Similarly, they significantly influence whether an employee will stay with their employer or leave. In fact, some employees prefer benefits over extra pay. Employee benefits can help your small business:
- Attract qualified candidates
- Become an employer of choice
- Enhance your public image
- Improve productivity
- Increase employee engagement
- Reduce turnover
- Remain competitive in your industry
- Strengthen employee satisfaction
The history of employee benefits
Employee benefits trace back to the BCE era, when Caesar Augustus offered retiring legionnaires a strong pension to ward off potential rebellions. Additional milestones include:
- 1739: The Bank of England rolled out a pioneering pension plan.
- 1875: American Express Company provided its employees the first US corporate pension plan.
- 1912: The Montgomery Ward Company (in Chicago) offered its employees an employer-sponsored life insurance plan.
- 1919: The International Labor Organization called for job protections for pregnant and nursing mothers, including paid maternity leave plus free prenatal and natal care.
- 1920: The US federal government developed a pension plan for its employees.
- 1932: The National Labor Relations Act (NLRA) was enacted. It later included health benefits as a mandatory collective bargaining issue.
- 1930s–1940s: US surgeon Sidney Garfield and industrialist Henry Kaiser established the Permanente Health Plan — the leading HMO today.
- 1980s to the present: Many US benefits legislations have been enacted, including ERISA, COBRA, FMLA, and the Affordable Care Act (ACA).
Summary
Employee benefits are monetary or non-monetary compensation provided to employees to improve job performance and employee satisfaction. They can be voluntary and provided at the employer’s discretion, or mandatory, meaning a governmental body requires the employer to offer them. By providing these resources, small businesses can:
- Attract talented people
- Boost engagement and productivity
- Decrease employee turnover
- Edge out the competition during recruitment and after hiring
- Elevate the business’ reputation
