Employers know it's all about executing effective attraction and retention strategies to stay competitive in talent acquisition and people management. And yet, over the last few years, employees' priorities and needs have continued to evolve rapidly, compelling employers to reevaluate their strategies – including a company's employee benefits package.
Rising employee expectations and new workplace dynamics demand that employee benefits evolve as they play a vital role in attraction, retention, and workplace satisfaction. Employees may seek significant income increases or benefits package improvements when looking for a new job, in addition to improvements in work-life balance and personal well-being.
Crafting robust and meaningful benefits packages for employees is critical to success in what some call a "boundaryless" workplace as traditional models fall away and another new generation joins the fold.
In this article, we'll explore some of the basics of employee benefits packages while diving into a nine-step process of creating competitive benefits offerings for your team.
Setting Up Benefits for Employees: Understanding the Basics of a Benefits Package for Employees
Today, employers must expand their view of employee benefits from more traditional offerings, such as retirement plans and health insurance, to flexibility, holistic well-being, financial education, upskilling and reskilling, and personalized benefits, to name a few.
But you'll first want to start by asking, "What is in a benefits package?"
By auditing your current benefit offerings and your employees' preferences, you can better craft a company benefits package that addresses employee expectations while aligning with organizational goals.
Why a Competitive Benefits Package is Crucial
So, why offer employee benefits?
Building a competitive benefits package is a win-win for both employees and employers. A robust and forward-thinking employee benefits offering may help to increase attraction, retention, and satisfaction and can directly contribute to the organization's overall business performance.
Employers recognize the importance of employee engagement, not just on general retention metrics but also on productivity, loyalty, belonging, and overall business success.
Which benefits do employees value the most? Here are some employee benefits most valued by employees in 2024:
- Improving healthcare affordability
- Total health and well-being
- Support for onsite, hybrid, and flex work environments
- Upskilling, reskilling, and professional development
- Personalized benefits
- Family-friendly benefits
- Retirement, debt payoff, and financial security benefits
- Diversity, equity, and inclusion
A comprehensive benefits package can meet your employees where they are, whether meeting their needs for flexible work arrangements, mental health support, career development, or recognition for their efforts. By meeting these various employee needs, you can optimize your workforce, increase team engagement, foster beneficial communication, and boost company culture.
Step-by-Step Guide to Creating Your Employee Benefits Package
Let's dive into some of the best practices you can adopt when creating (or reevaluating) your employee benefits.
Step 1: Define Your Employee Benefits Objectives
When developing your employee benefits strategy, you should align your benefits package with your employees' needs and the company's overall organizational goals. For example, if your employees prioritize work-life balance – as do most millennials and Gen Z – you may want to incorporate flexible working arrangements into your company benefits package.
Additionally, with topics like artificial intelligence dominating the newest industrial revolution, you may consider offering ongoing learning and development opportunities, helping your team stay on top of new technologies and trends.
Step 2: Calculate and Allocate Your Benefits Budget
Next, once you define your objectives, you'll need to create a budget for your standard benefits package. To do this, you'll need to perform a cost analysis, understanding how much your organization can contribute to each benefit while prioritizing your needs and goals.
For example, you'll want to keep in mind that more expensive benefits, such as retirement and health plans, will demand more of you financially than low-cost benefits, such as a quarterly employee appreciation award or a handwritten thank-you note for an employee's effort. Additionally, you should consider that benefits may increase in cost over time (such as your health plan premiums), as may your workforce.
Step 3: Select Appropriate and Valuable Benefits
Third, you'll want to select benefits that meet your employees' immediate and long-term needs while contributing to your organizational goals. However, when deciding which benefits to offer to employees, you don't want to forget to differentiate yourself – keeping your organization competitive in your market.
To do this, you can include unique and innovative benefits like wellness programs, healthy snacks, and holistic health benefits. Here are some examples of employee benefits that you may consider in addition to more traditional benefits, such as retirement, health, and life or disability insurance:
- Mental health benefits
- Financial wellness resources
- Diversity, equity, and inclusion initiatives
- Improved paid parental leave
- Family planning or infertility treatment benefits
- Customizable benefits, such as ID theft protection, pet insurance, or public transportation passes
Step 4: Ensure Compliance with Legal and Regulatory Requirements
Offering employee benefits requires more than a needs or cost analysis. You must ensure compliance with many legal and regulatory requirements.
Mandatory benefits include Social Security, Medicare, unemployment insurance, or worker's compensation benefits. You'll want to understand whether these benefits are required for your organization based on your company size and industry.
Other benefits are voluntary, such as retirement or wellness benefits. However, even if these benefits are not mandated by law, federal and state laws will apply if you offer them. Both the Internal Revenue Service and the U.S. Department of Labor provide resources that will help inform you of your compliance obligations.
Step 5: Engage Employees in the Benefits Selection Process
Fifth, you don't want to create your company benefits program in a vacuum. Be sure to ask your employees for input.
For example, if you have a current benefits program, you can survey your employees, asking their thoughts on what they like, what should be improved, and what's missing. If you're starting a program, you may ask your team what benefits they would most like to see or which benefits are the most important to them and their families.
Gathering this type of feedback helps you understand what your employees prioritize, and this data can better inform your decisions when implementing your employee benefits strategy.
Step 6: Finalize Your Benefits Plan
Next, after some strategic planning, consolidating employee feedback, and tweaking your budget, you'll be ready to finalize your benefits package strategy. Depending on your needs and your company's size, you may be able to discuss options directly with the benefit provider, such as a health or retirement plan provider.
However, because there are many choices, you may want to talk to benefits brokers, advisors, and consultants about which plans are best for your company. These professionals can help you narrow your choices based on your goals while providing a cost analysis of each option.
Step 7: Develop a Benefits Communication Plan
Seventh, you'll want to develop strategies for communicating the new benefits package to your employees before, during, and after roll-out.
To comprehend the value of your benefits package, employees must understand:
- Which benefits are offered
- How much they cost (including how much you pay towards these benefits)
- How they can elect each benefit for themselves and/or their family
- How (or when) they can make changes to their benefits
However, benefits education shouldn't stop at open enrollment (or upon the employee's hire). You should, instead, keep benefits education at the top of your mind, helping your employees navigate their benefits throughout the year while improving employee utilization and engagement.
Finally, communicating benefits resources to employees is critical so that they can consult on an ongoing basis, whether through an employee portal, quarterly lunch-n-learns, or a human resources email address or phone number, ensuring that employees can get their questions answered at any time.
Step 8: Implement and Administer the Benefits Plan
This step requires you to set up enrollment processes and benefits management systems – emphasizing efficient administration. For example, employee benefits administration services can automate your systems, including those for new hires, life events, employee leaves, or terminations, while giving you robust insight through an analytics dashboard.
Most importantly, automated employee benefits administration services do the heavy lifting for you while helping you stay legally compliant.
Step 9: Regularly Review and Update the Benefits Package
Finally, you should conduct ongoing assessments of your employee benefits package, ensuring that your benefits remain relevant, cost-efficient, and effective among your employees. One way to do this is to set up quarterly or bi-annual reviews with your benefits brokers, advisors, and consultants.
These reviews also keep you abreast of any regulatory changes while benchmarking your benefits against others in the industry.
Partnering with Employee Benefits Services
One thing to remember when implementing a benefits package for employees is that you're not alone. When you partner with an employee benefits service provider, you can take advantage of their benefits expertise and the top-tier support they provide in benefits management and administration.
Depending on your needs, you may also pair up with a professional employer organization (PEO) that offers additional services, such as payroll and HR technology services.
