October 12, 2019

All You Needed to Know About Employee Benefits

What are employee benefits? Various forms of indirect employee compensation that employers use to attract, recognize and retain workers”- (SHRM)

The success of any company, regardless of its size, depends entirely on the quality of its workforce. The company depends on its employees to use their talent, skills, and experience to contribute towards the growth and development of the company. And the talent that the employees bring to the organization needs to be not only maintained but also motivated over a long period of time in order to achieve the best possible results. According to a human resource consulting firm, Joe Lineberry, senior vice president at Aon Consulting "The research shows that when employees feel their benefits needs are satisfied, they're more productive."

But how do you achieve this? For the most part, the salary paid by the job itself serves as a motivator for your employees to continue showing up for work every day. Most employers are content providing salary-based compensation to their employees. However, many previous studies conducted over the past years have indicated that most employees of a company work with an expectation of non-financial rewards. "There are some benefits good employees feel they should have," says Ray Silverstein, President's Resource Organization, founder of PRO. These non-financial rewards are called employee benefits, and they can be of over a hundred different types.

Most common types of employee benefits are health insurance, paid maternity and paternity leave, minimum wage, overtime and compensated holidays. These benefits may be mandated by the law, such as in the case of minimum wage and paid maternity and paternity leave, or they may be offered by the employer out his or her own choice.

Types of employee benefits

The size of a company determines to a large extent, the type of employee benefits that can be offered to the workers. All companies are required by law, to offer the basic benefits, which include:

1. Consolidated Omnibus Budget Reconciliation Act -(COBRA):

Allowing ex-employees to maintain an identical level of insurance coverage from the previous employer while looking for a new job.

2. Disability benefits

Employees who are injured while at the job can receive workers compensation which is covered by the state workers compensation laws.

3. Family and Medical Leave Act (FMLA)

This federal law ensures that workers are allowed paid leave in case of family or health issues such as the birth of a child or sickness.

4. Minimum wage

The Fair Labor Standards Act (FLSA) set up a minimum wage that employers were required to pay hourly workers. While the minimum wage differed based on what kind of job, or which state you worked in, it helped ensure that employees were paid sufficiently to compensate for the work they do in order to financially support themselves.

5. Overtime

Workers are entitled to receive extra pay when they work additional hours apart from their regular work hours.

Apart from these state-mandated benefits, many companies choose to offer a variety of other common fringe benefits that can be tailored to the workers specific needs in order to create a more fulfilling job experience. These include:

  • Paid holidays
  • Dental care plans
  • Free food at the company
  • Services such as haircuts and spa treatments
  • Gym memberships
  • Sponsored car and home loans

Advantages of employee benefits

“A generous benefits package is essential for engaging and retaining your talent.”- Patrick Colvin, Strategic HR Business Partner at the USA Today Network

The decision to offer employee benefits to your workforce is not an easy one. There are many factors to consider before putting a benefits scheme in place, the most important issue of which is to consider how much the scheme will cost the company, versus the overall contribution it can make towards the company’s success. The advantages of offering employee benefits, however, are well documented and supported by years of industry research data.

Offering employee benefits as part of your worker benefits package to prospective employees ensures you create a competitive salary package which will attract the top talents in the field, as packages with moderate salaries but plenty of benefits are favored over higher salaries but lower benefits. Such schemes also help to reduce the number of employees that may leave your company to find work elsewhere, because of the high levels of satisfaction that they obtain from their job.

Subsidized gym memberships, dental care insurance, healthy food in the break room, pay raises, work breaks- all of these job perks help reinforce positive behaviour among employees through establishing a work ethic and team building that encourage a high-performance culture.

Companies adopting this method

Providing benefits can put you above 43 percent of competitors who don’t offer extra benefits.”-Business.org

The advantages of offering a range of employee benefits are apparent in the success of companies such as Netflix, Motus, Genentech, Adobe and Amazon.


This online streaming giant is well known for its liberal benefits plan. With a workplace attitude of “work smarter, not harder”, Netflix employees enjoy healthcare programs, excellent life insurance policies, paid time off and free food at the company.

The most generous benefit is paid maternity and paternity leave of up to one year that the employees can opt for in order to look after and spend time with their newborn children.


Motus offers its employees a range of benefit plans that include gym memberships, student loan reimbursements, and company day service. This offer has allowed them to hire and keep talented young professionals for whom student debts are a huge financial burden.


Genentech's workplace benefits include tuition assistance, paid sick days, on-site childcare support and great healthcare plans. Apart from this, on-site life at the company is made easier and efficient through services like car wash, haircuts, and spa services. Employees who have worked full time for the company for more than six years can also enjoy a six-week break along with full pay and benefits.

All of this has helped the company consistently make the Fortune’s variety of “best companies to work for” lists.


Amazon is a global online giant, with a workforce spanning continents all over the world. And the company knows how to keep its thousands of employees happy with their job by offering a selection of benefits to choose from. The most striking of this is its offer to allow their employees to share their paid leave with their partners who are not offered the same benefits at their company.


Adobe was listed among the “Glassdoor Employees’ Choice Best Places to Work” list for 2018. This is through their efforts to emphasize career development for their employees through various training and mentorships plans. These benefits are especially vital to the career of the employees given the highly technical field that they work in. they are also offered incredibly lucrative healthcare and retirement programs, as well as excellent educational and child day care plans.

What to include in your plan

“The fact of the matter is, after health insurance, the most required benefits and perks are those that bring flexibility while improving work-life balance.”-Patrick Colvin

When deciding to create and implement a new employee benefits plan for your company workers, there are a number of factors to consider.

The first of these is to understand the type of workers you employ and what kind of benefits they want and how this would actually help them engage better with their job.

1. Healthcare

One of the most common perks offered by most companies is health care benefits, which take off a huge burden off families who cannot afford highly expensive insurance plans. Paid time off as well as paid parental leave are also highly sought after, as they allow the workers to seamlessly balance professional and personal life without having to sacrifice either.

2. Pensions

Pensions and retirement plans are great perks to motivate employees to continue working for the company.

3. Wellness programs

Wellness programs can help companies ensure that their employees remain healthy and active.

4. Flexible schedules

Companies that offer flexible schedules retain far more employees than those that don’t, especially with today’s millennial workers' generation. “Encouraging employees to stay home, if possible, not only reduces the stress of their day but shows them that we value their safety. In return, we often see the employees ‘online’ or still producing work remotely.” — Robin Schwartz

5. Mentorship and training programs

These programs work especially well with technical companies where employees benefit greatly from onsite training courses. Not only does it enhance the skill set of an employee, but over time this also translates into a more productive workforce.

Last words on creating a benefits program

Once your company has decided to put a specific benefits plan in place, the next step is to strategize and implement it.

Step 1: The best first step is to begin by taking stock of your existing benefits-what are they? Are they being used extensively by the employees? How is their use contributing to overall company performance?

Step 2: While formulating a benefits program, make sure the benefits you offer align with the long term goals you have set for your company. Avoid wasting money on benefits nobody may use by educating your employees on the available benefits and encouraging their maximum use.

Step 3: The most successful benefit plans are employee specific. According to paymediahcm.com, 58% of employees want customized benefits options, and you can ensure widespread use by allowing employees to choose their own tailor-made plan.

Step 4: The most important aspect of any benefit plan is to show employee appreciation. To make sure the employees feel irreplaceable and not interchangeable.

As put by Nate Masterson: “No matter what you choose, it’s important to make employees feel like people that have something to offer, not just numbers or placeholders.”

Xoxoday Team

Xoxoday is a SaaS commerce company with products for employee and channel management.

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