Employee benefits are non-wage forms of compensation offered to employees in addition to their standard wages or salaries.
These benefits are a vital part of an employee's total compensation package and are pivotal in attracting and retaining top talent. They can range from health insurance coverage and supplemental retirement contributions to paid time off and professional development opportunities.
Employee benefits serve multiple purposes for both employers and employees. For employees, such perks provide additional value beyond their base salary, contributing to their overall well-being and financial security. For employers, offering competitive benefits boosts employee morale and plays a significant role in establishing a positive work environment.
The benefits can vary widely depending on company size, industry, and location. Some benefits are mandated by law, while employers voluntarily provide others to remain competitive in the job market. As organizations scale globally, it's essential to understand the varying benefit expectations and requirements across different countries and cultures.
Importance of employee benefits
A comprehensive benefits package is a crucial component of total compensation and often offers more value than initially apparent.
Take into consideration one of the most in-demand benefits: health insurance. This perk helps employees stay healthy with regular check-ups, preventive care, and access to specialists when needed. Many packages also extend coverage to support family members, providing peace of mind that loved ones are protected, too.
Benefits packages can significantly impact an employee's financial future. Retirement savings plans, which may be mandatory or voluntary depending on the country, help build long-term financial security. In some regions, employers may offer matching contributions to these plans.
Additionally, life insurance and disability coverage, when included in benefits packages, provide crucial financial protection against unexpected events. The specific components of benefits packages vary widely across countries and organizations, reflecting local regulations and cultural norms.
The value of an employee’s benefits goes beyond just health and finances. Paid time off, flexible work arrangements, and professional development opportunities can greatly improve work-life balance and career growth. These perks reflect how much an employer values its people for who they are beyond employees, and unique employee benefits can play a crucial role in attracting global talent.
Types of employee benefits
When designing an employee benefits package, organizations have a wide array of options to consider. Beyond mandated employment benefits, which can vary by country, here’s a breakdown of the main types that typically comprise a well-rounded benefits package.
Health insurance
Health insurance is often the foundation of any benefits package. It typically includes:
- Medical coverage. This primary health insurance covers doctor visits, hospital stays, and prescription medications.
- Dental insurance. This covers regular check-ups, cleanings, and procedures like fillings or root canals. Dental insurance may be included in national health systems or offered as a supplemental benefit.
- Vision insurance. This insurance helps cover the costs of eye exams, glasses, and contact lenses.
Retirement plans
Helping employees save for the future is crucial to any benefits package. While many countries have mandatory retirement savings systems, employers often offer supplemental plans:
- Defined contribution plans. These allow employees to save for retirement, often with employer contributions.
- Pension plans. While less common now, some companies still offer traditional pension plans that provide a guaranteed income in retirement.
Paid time off (PTO)
Time away from work is essential for maintaining a healthy work-life balance. While minimum PTO is mandated in many countries, employers often offer additional leave. PTO typically includes:
- Vacation days. Annual leave for personal use, often in addition to national holidays.
- Sick leave. Time off for illness or medical appointments. In some countries, this is separate from personal time.
- Personal days. Flexible days for various personal needs.
Other employee benefits
Beyond these core offerings, there's a wide array of additional benefits organizations may consider:
- Life insurance. This provides financial protection for an employee's family in case of their death.
- Disability insurance. This covers a portion of an employee's income if they're unable to work due to illness or injury.
- Wellness programs. These might include gym memberships, health coaching, or incentives for healthy behaviors.
- Flexible work arrangements. Options like remote work or flexible hours can be highly valued by employees seeking a better work-life balance.
Emerging benefits
As workplace needs evolve, new types of benefits are gaining popularity:
- Mental health support. This might include counseling services, stress management programs, or meditation apps.
- Education assistance. This may include support for ongoing education or repayment of existing student loans.
- Professional development opportunities. Offering training, conference attendance, or tuition reimbursement shows an organization is invested in employees' growth.
To make the most of a benefits package, organizations should align offerings with employee needs and local norms. Regularly collecting input through surveys or other feedback mechanisms can help in refining and improving the benefits offered.
Employee benefits package example
To put the vast array of potential benefits into perspective, here's an example of a company's employee benefits package, broken down into key categories and what they entail:
- Health and wellness. Comprehensive health insurance covering medical, dental, and vision care. Mental health support through counseling services and stress management programs. Wellness initiatives, including gym membership reimbursements and annual health screenings.
- Financial security. A retirement plan with a generous company match. Life insurance to protect employees' families. Short-term and long-term disability insurance for income protection during illness or injury.
- Work-life balance. Generous paid time off for vacation, personal days, and sick leave. Flexible work arrangements, including remote work options and flexible hours. Paid parental leave for both primary and secondary caregivers.
- Professional development. Tuition reimbursement for job-related courses or degrees. Annual budget for attending industry conferences or obtaining certifications. In-house mentorship program to support career growth and skill development.
- Additional perks. Commuter benefits to offset transportation costs. Employee discounts on company products or services. Pet insurance to help care for furry family members. Adoption assistance for employees looking to grow their families.
For HR professionals, the attractiveness of a benefits package hinges on knowing its team and what perks are most relevant to their needs and lifestyles. Some companies also have limited resources and capital to provide a full scope of benefits, which can further shape the design of a package.
Trends in employee benefits
As the workplace continues to evolve, so do employee benefits. Here are some compelling trends shaping the landscape:
Focus on mental health and well-being
There's a growing emphasis on comprehensive mental health support. About two-thirds (68%) of employers have added or enhanced support like employee assistance programs and classes, or access to apps to promote mental health.
But there's ample room for improvement. Research from McKinsey & Company indicates that 65% of employers report that employee mental health is supported well or very well, while only 51% of employees agree.
Personalized and flexible benefits
Companies are increasingly offering more personalized benefit options to cater to diverse workforce needs. According to Mercer's 2024 Global Talent Trends study, only 15% of employers currently offer "hyper-personalized" benefits that utilize data and employee listening—a key trend that’s expected to grow.
Support for flexible work environments
Employers are adapting their benefits with the rise of remote and hybrid work. According to the 2024 SHRM Employee Benefits Survey, flexible work benefits remain a top priority for employers, with 70% surveyed recognizing flexible work arrangements as "very important" or "extremely important."
Financial wellness initiatives
Employers are recognizing the importance of financial health for overall employee well-being. MetLife’s annual benefits report found that 88% of employees who understand and use their benefits are significantly more likely to feel cared for.
Total health approach
Companies are moving beyond traditional health insurance to offer a more holistic approach to employee health. Based on a poll from the National Alliance on Mental Health, 58% of American employees with employer-sponsored mental health care coverage say it is adequate, though 29% are unsure.
See more employee benefit statistics for further insights.
Managing employee benefits on a global scale
Navigating employee benefits across multiple countries can be challenging in today’s global business environment. At Velocity Global, we simplify this process by offering comprehensive benefits administration services in over 185 countries. Our expertise ensures benefits packages comply with local regulations and exceed the basics to attract and retain top talent in each market.
Our Global Benefits solution streamlines customized benefits packages tailored to each market’s needs. This includes everything from selecting the right benefits to managing ongoing administration and employee support.
By partnering with us, organizations can effectively navigate the administration of global employee benefits. This allows companies to focus on their core business while we ensure their global teams receive competitive, compliant, and appealing benefits packages. Our approach supports talent acquisition and retention efforts, helping businesses thrive in the global marketplace.
Learn more about our Global Benefits solution and how we help businesses attract and retain top talent around the globe with the total rewards talent wants.
