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Apr 13, 2017

The Value of an Employee Benefits Program

By Jarrod Upton

When a prospective employee evaluates a company to determine whether or not to accept a position with a new employer, there are many factors to consider. Of course, salary is a major consideration, along with work-place environment, corporate culture and opportunities for career advancement.

In addition, another essential consideration is the quality and extent of the benefits package that is offered to employees.

Benefits that Matter Most

According to a recent survey conducted by Monster.com, job seekers were asked to rank which benefits are most important to them when considering a new position.

The results from the survey are listed below:

  • Healthcare Plan: 32%
  • Vacation Time: 25%
  • Pay Raise: 15%
  • Performance Bonus: 9%
  • Retirement Plan: 8%

Naturally, people are most concerned about healthcare plans, for themselves and their families. Typically, employer-sponsored healthcare plans provide a range of options, including Health Maintenance Organizations (HMOs), or Preferred Provider Organizations (PPOs), as well as additional coverage such as dental, vision, life, short-term disability and long-term disability insurance.

As for vacation, most employees expect to receive at least one or two weeks of paid vacation per year, in addition to sick days and paid public holidays.

Though this policy is generally the standard, some companies have recently instituted extravagant and generous vacation policies, from unlimited amounts of vacation time, to mandatory paid sabbaticals, to impromptu, employer-sponsored week-end getaways.

All of this is being driven by the goal to recruit and retain the best employees possible, and to create a healthy work/life balance for them, so employees will be more productive and have a greater sense of loyalty toward their company.

Retirement Planning

Though only 8% of participants in the Monster survey mentioned retirement benefits as a critical factor in making their employment decision, it is a very important component in an overall benefits package, especially for older workers.

Most companies offer their employees a 401k plan. Essentially, a 401k plan allows an employee to choose between taking compensation in cash, or deferring a percentage of it to a 401k account. The amount that is deferred is generally not taxable to the employee until it is withdrawn or distributed from the account.

Typically, employee contributions are invested in a portfolio of mutual funds, but other investment vehicles such as stocks and bonds can be included as well.

Employers are not obligated to make contributions to a 401k plan; however, many employers choose to match their employees' contributions up to a certain percentage. Because that percentage can vary from employer-to-employer, it’s important to know what their matching percentage is, and even more important to take advantage of it by making regular contributions to a 401k plan.

Other Benefits, Perks and Rewards

In addition to the major elements that comprise most employer-sponsored benefit packages, there are all kinds of other benefits, perks and rewards that some companies make available to their employees.

These additional benefits do not necessarily have to be expensive for the company to provide. Sometimes it’s the small, thoughtful, personal reward or perk that means the most to an employee.

Here are some additional benefits that some companies are offering:

  • Floating holidays
  • Flex-time
  • Telecommuting
  • Employee-of-the Month parking space
  • Health club/gym memberships
  • Free coffee/snacks/weekly meals
  • Adoption assistance
  • Maternity and/or paternity leave according to the Family Medical Leave Act
  • Tuition reimbursement for employees pursuing advanced education
  • College assistance (scholarships) to employees’ college-age children

The goal of a well-designed benefits package is to make employees feel secure and valued. However, even after implementing an attractive benefits program, not all companies do a good job of communicating to their employees what is available to them.

Companies should hold enrollment meetings which describe in detail all the company benefits as outlined in their employee handbook. Employees have a right to know what their total compensation package consists of.

In this regard, both the employer and employee are aware of how an attractive employee benefits program can enhance their mutual working relationship.

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