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How to Design an Employee Benefits Program [Complete Guide]

Employee benefits is an integral part of running an organization. Companies offer different employee benefits program and it can depend on the type of job, where the company is situated and other factors.

Companies have been offering competitive employee benefits program because of its potential in attracting, retaining and empowering employees. In fact, a lot of individuals value benefits over money.

A study by Zenefits has shown that over 60% of workers are willing to accept a job with lower pay but with better employee benefits. With millennials now dominating the workforce, benefits inclined to work/life balance has become a trend.

This is because a lot of millennials value work/life balance. According to Inc, “millennials value work-life balance than all job characteristics. Here are the reasons why work/life balance is important for them:

  1. To them, it defines success.
  2. They can work remote because of access to technology.
  3. They are moving up – according to a study by EY’s Global Generation Research, about one-third of millennials said managing work, family and personal responsibilities have become harder in the past 5 years. 
  4. They are dual income

According to the Pew Research Center, 75% of the global workforce will be millennials. This is why it’s important to talk about the millennials when it comes to employee benefits program.

If you don’t offer what most of the workforce are looking for, your organization can become irrelevant. In running a business, being able to adapt to changes and innovation is crucial. To design an employee benefits program, it’s important to know the needs of the individuals who the programs will be for.

Here’s what you need to know in designing your employee benefits program:

The Basic Benefit Laws

As mentioned earlier, the employee benefits program can be different depending on factors such as location and type of work. However, regardless of these factors, employers are to follow basic benefit laws that require them to provide certain benefits.

According to Virgin Pulse, these are some of the required benefits employers must provide:

  1. Provide time for employees to vote, perform military service and serve a jury.
  2. Comply with all workers’ compensation requirements
  3. Pay federal and state unemployment taxes
  4. Contribute to state short-term disability programs in states where such programs are implemented.
  5. Comply with the Federal Family and Medical Leave (FFML)

Here are examples of benefits employers are not required to provide but are offered by most companies:

  • Paid vacation and sick leave
  • Retirement plans
  • Life insurance plans
  • Vision or dental plans

Knowing this helps you design an employee benefits program that abides by the basic benefit laws. 

Figure Out What Employees Need

There are a lot of factors to determine what benefits matter to your employees. For example, each generation values different things. According to Olympia Benefits, “millennials share very different values than baby boomers.”

As we’ve mentioned earlier, millennials look for work/life balance. This includes flexible work schedules and wellness. This doesn’t apply to all millennials but is a general trend among them. 

One other way to go about this is to look at what your competitors or other companies are offering. A good example is IKEA’s employee benefits. IKEA employee benefits include:

  • Health Insurance
  • Dental Insurance
  • Vision Insurance
  • Flexible Spending Account (FSA)
  • Pet Insurance
  • 401(k) Plan
  • Retirement Plan
  • Maternity & Paternity Leave
  • Adoption Insurance
  • Reduced or Flexible Hours
  • Vacation & Paid Time-Off
  • Sick Days
  • Employee Discount
  • Employee Assistance Program
  • Company Social Event
  • Tuition Assistance

According to Future Fuel, “IKEA is considered one of the best places to work at by its employees since their employee benefits are better than what’s generally available in the US.”

More than need, you also need to figure out what employees want. One good example of this is rewarding your employees for exemplary performance. According to Financial Management, these are the reward preferences of Americans:

Age 20-39:

  • Larger pay increase
  • More generous retirement benefits
  • Great bonus opportunity
  • More paid time off per year
  • More generous health benefits

Age 40 and above:

  • Larger pay increase
  • More generous retirement benefits
  • More generous health benefits
  • Better bonus opportunity

By knowing and providing what employees need and want, your organization has a more competitive edge in attracting and keeping employees. Another excellent example is Sutter Health’s employee benefits. Here’s what they offer:

  • Health Insurance
  • Dental Insurance
  • Dependent Care
  • Life Insurance
  • 401(k) Plan
  • Military Leave
  • Maternity & Paternity Leave
  • Employee Assistance Program
  • Family Medical Leave
  • Professional Development Plan
  • Work from Home
  • Tuition Assistance
  • Vacation & Paid Time-Off
  • Mobile Phone Discounts
  • Employee Discount
  • Retirement Plan

Sutter Health employee benefits include a lot of perks for financial wellness and security. They even include being able to work from home. 

Determine Your Budget

While being generous to your workforce is ideal, you need to lay out a well thought out and budgeted employee benefits program. Having a well-defined budget helps your organization to become efficient with costs.

According to Olympia, these are but some of the factors employers need to look at when setting an amount for benefits plan:

  1. Which employees will be covered?
  2. How much can you offer to each of your employees?
  3. Should there be different benefits based on roles of the workers?
  4. What’s the overall total budget allocated for employee benefits?

If you already employee benefits but wish to learn more on how to update it, here’s how you can update your company employee benefits program according to Samantha White and Jack Hagel of Financial Management:

  1. Align benefit strategies with the company’s business objectives.
  2. Aim for global consistency and local relevancy.
  3. Provide core security and more benefit options.
  4. Have employees educated about the employee benefits program.
  5. Offer quality benefits based on research and use technology for cost-effective ways of delivering the programme. 

With designing an employee benefits program, don’t just decide based on what you believe you should offer. Do research and know what the needs and wants of employees are for benefits.

From there, see what you can formulate based on your budget. You can look at what other organizations are offering and have some ideas based on theirs. 

Your goal is to have a competitive employee benefits program that is cost-efficient and is oriented towards the overall wellness of your workforce.