Employees get to choose between different employers – not the other way around. As a result, it has become all the more important for companies to offer talented individuals something beyond the scope and responsibilities of their jobs that is attractive enough to make them want to join their company.
This article explains which employee benefits are most attractive to employees, and what HR needs to consider before they are offered.
What Exactly Do We Mean by Employee Benefits?
Employee (or staff) benefits include fringe benefits and other advantages employers provide to their employees. These can be offered in lieu of salary increases, for example, or generally in order to improve employee satisfaction and promote the employer brand.
We also recommend reading our article on ‘Employee Retention Strategies: How Companies Hold on to Their Top Performers.’
Employee benefits should be just as individual as corporate cultures are. The HR department plays a decisive role in defining these benefits, based on employee input. HR should examine closely which benefits best promote the employer brand, are a good fit with the company and its employees, and support positive differentiation from competitors, if possible. After all, everybody offers some sort of benefits these days to compete for the best talent.
How Companies Profit From Employee Benefits
Imagine you have an offer for a job with exciting responsibilities from a company in your town. But you also have another offer from a different local company with responsibilities that are just as intriguing. One of the employers is willing to provide you with a yearly pass for your local public transit system, plus a lunch allowance, while the other will not. Which offer would you accept?
From this comparison, it should be clear that additional benefits can significantly improve the image of an employer and persuade an applicant to accept a position with you rather than a competitor.
Good for Recruitment
Around Forty-three percent of mainly younger employees say that they wouldn’t mind reducing their salaries for better employee benefits.
For you in HR, this means that you need to offer different benefits, depending on your company’s socio-demographic structure: Do your employees tend to be young, do they have families, do they live in regional or urban areas, etc.
A family man who is looking for child care is also taking care of his parents and will have different needs than a young single guy who has just moved to the city and wants to get his career off to a fast start. Take note of this when incorporating benefits into your recruitment strategy.
Good for Employer Branding
A company associated with values such as modesty and thrift might want to avoid offering over-indulgent benefits. If you do not know exactly what your employees want, then ask them. This could be done using a questionnaire, or in a more direct, informal way.
Around sixty-three percent of applicants take benefits into account when researching an employer.
That means you need to be talking about them. And not just on your own career website; you can also showcase the benefits you offer on employer rating platforms such as kununu or Glassdoor. After all, this is where applicants go to find out more about potential employers.
Employees Like to Keep it Simple
Financial bonuses are always attractive, but one thing employees tend to expect from 21st-century employers is straightforward processes – including from HR, as this allows them to focus on their productive work. Personio helps you to simplify HR processes.
What Employers Need to Watch Out For With Additional Benefits
In principle, additional benefits benefit all employees, meaning that no one should be excluded. Of course, you can restrict individual benefits to particular groups. This actually makes a lot of sense because not everyone can use a fuel voucher or would be happy to receive a day care subsidy.
In most countries, it is important to document benefits precisely: What does the benefit consist of, what is it worth, etc. If you offer courses, e.g. on health and well-being, then you need to work out the cost per participant. Private use of company cell phones or laptops, in contrast, does not need to be recorded separately.
If you issue fuel vouchers, you will need to be able to show that they cannot be exchanged for cash. If you subsidize day care costs, you will need to collect receipts for care provided; and if you provide health workshops, attendance certificates will be mandatory.
Tax Benefits for Employers
A relevant advantage of benefits over a salary increase (or vacation and Christmas bonuses, apart from tax-exempt allowances) is that non-cash benefits often incur little or no additional tax. But be careful not to emphasize tax savings, as the reason you selected a particular benefit could come across negatively.
Make sure you always have a good overview of all perks offered, as not all employees receive or access the same benefits. Digital documentation makes this process easy.
If you use HR management software, you can upload receipts and certificates to the system and check at a glance which invoices may still be missing. But responsibility for accurate documentation lies with both HR and the employees themselves, and an Employee Self-Service allows staff to upload documents to their personal profiles, for example.
The Most Popular Employee Benefits/Perks
From massage seats to free beverages – companies are making an effort to attract and retain young talent. But surveys show that what really counts in the end are the down-to-earth, rather unspectacular offerings that, above all, offer more freedom or security.
These include flexible working hours, which are ranked highest by 75% of employees, along with the option to work from home, and private internet use.
Benefits Versus Salary
According to a PwC Millenials study, it is not all about the money.
Which employee benefits do you value most highly?
- Professional development (22%)
- Flexible working hours (19%)
- Money/bonuses (14%)
Just as important are health, well-being, and transportation. Employers who offer gym memberships or yoga classes, or bicycle or car leasing, make themselves more attractive to applicants.
Companies located in major cities, where there is intensive competition, highlight “hard” benefits such as paid leave because studies have shown that applicants also value this type of benefit. Prospective employers who do not offer such basic benefits find it (more) difficult to recruit talented individuals.
Best Practices for Employee Benefits
A startup will attract different applicants than a large corporation. Accordingly, the corporate cultures, and most likely the benefits, will also differ. Here are a few examples of either original or simply inspiring benefits offered by companies of different sizes from various industries.
Examples of Employee Benefits in Startups
Personio is still young and is growing fast. The company offers a wide range of benefits to its employees, including not only flexible working hours and the option to work from home, but also fresh fruit, cereals and beverages, a fitness allowance, and electric scooters or public transport allowances. Regular team events and shared dinners are also offered, as are annual professional development budgets.
SoundCloud came up with the New Friends Relocation Program, a great idea for all those who move from other places to join the company. This program provides a framework for employees supporting new colleagues after relocation, for example by helping with bureaucratic matters, or by exploring the city’s nightlife together. Ideally, the program also helps foster new friendships.
Spotify offers its employees options for exploring their artistic or playful sides: The company has gaming consoles, a karaoke room, a workshop, and a theater on the premises. Also, each employee is free to decide when they want to take which public holidays, as the team is very international, with Spotify’s employees coming from 90 different countries.
AirBnB does not have business plans, an HR department, or attendance requirements. The company subscribes to the motto “treat your employees as adults, and they will behave like adults,” and therefore does not require anybody to account for their working hours. Managers are elected based on employee surveys, and employees set salaries in keeping with the company’s profits.
Examples of Employee Benefits in Small and Medium-Sized Companies
Teambank, a Nuremberg-based credit provider, sends two employees and a manager on a research trip once a year. They are able to travel for up to 14 days and spend up to €10,000. Anybody can apply, as long as they have a convincing plan for what they want to research, and employees vote on who will be allowed to go.
Vaude has built a child care center on the premises to make it easier for parents to balance work and family commitments. The company employs a lot of parents with working spouses, making this a particularly attractive perk.
Examples of Employee Benefits in Large Corporations
PricewaterhouseCoopers (PwC) offers its young employees all over the world benefits of up to US$1,200 per year to allow graduates to pay back their university debts more quickly.
Microsoft grants parents six weeks of special, fully-paid leave when they have or adopt a child. This leave is available to all fathers and adoptive parents of children under the age of 16. There is also a birth premium for the first few weeks after delivery, which bridges the difference between the parent’s salary and parental allowance after maternity protection it expires. If a family member needs care or falls severely ill, employees who look after them can have up to four weeks’ paid leave per year.
Do We Need a Chief Happiness Officer?
Startups in particular use this as a selling point: We have someone whose job it is to care for the happiness of our employees. That person provides fresh fruit to snack on, makes sure there are plants in the conference room, and above all ensures that the atmosphere stays positive. Because it is often not a very well-defined role, more and more companies are starting to eliminate this position. However, it is still justified and important, according to an employee of Opinary, a Berlin startup:
Every company should have somebody who works together with the management to ensure stable teams and a sustainable corporate culture.
So, if you are thinking about hiring a chief happiness officer, give some thought to the role they would fulfill. It could also be carried out by an HR employee or someone from a specialist department.
Employee Benefits at a Glance
Personio allows you to document benefits clearly: Store all perks used by employees in their digital personnel files, and the relevant information is automatically transferred to payroll.