Perks, benefits, and employee rewards. These tools are the shiniest in your belt when it comes to attracting and retaining top talent. Revisiting your company culture? Interviewing an exciting new hire? Let’s take a minute to break down what each of these categories means. And, how to unlock their power to transform employee experience, engagement, and your hiring strategy. Read on, or jump directly to:
| What are benefits? | What are perks? | What are rewards? |
| 6 examples of benefits | 6 examples of perks | 3 examples of rewards |
| Why benefits matter | Why perks matter | Why rewards matter |
What are employee benefits?
The U.S. Dept of Labor provides this definition: Benefits are non-wage compensation offered to employees. Additionally, benefits:- Fall into two groups: voluntary benefits and legally required benefits.
- Are more likely than perks or rewards to appear in a contract.
- Include financial staples like health insurance that the employee would likely fund on their own if not provided by the employer.
- Are offered to all full-time employees and may be adjusted based on role or tenure, but are not tied to performance.
Examples of employee benefits
Paid Time Off (PTO): This falls into the paid leave category. It may include vacation, sick time, and maternity leave. And though it seems counterintuitive, offering generous PTO gives your company a huge boost in productivity. Studies show links between PTO and greater employee morale and retention. Stock options: These fall into the supplementary pay category. That's because stock options have favorable tax implications for employees. As a plus, they also align your employees’ interests with the company’s success. 401(k) plan: Providing 401(k) plans, especially those that match, to help your employees secure their futures. Plus, this offering increases retention. 40% of employees working at companies that don’t offer 401(k) plans say they’d jump ship for one that did. Health insurance: Health insurance is essentially a form of compensation. If you didn’t provide it, your workers would have to pay for it themselves. But health benefits also give your company a leg up. That's because healthy employees are more likely to have higher job performance and take fewer sick days. Workers’ compensation: This falls under the category of legally required benefits. So items in this category, which protect basic workers’ rights, are affected by state and federal laws. Others include Social Security, Medicare, unemployment benefits, and overtime. Pre-tax transit assistance: Metro passes and paid parking are fantastic benefits to offer your workers. Because your company can provide them at relatively low cost, and reap the rewards of helping employees get to work on time.Why are employee benefits important?
Because now more than ever, companies are weighing their budgets with care. And employee replacement is costly. According to SHRM, replacing an employee can cost 6 to 9 months of their annual salary in recruiting, onboarding, lost productivity, and more. So it literally pays to keep employees happy. According to the U.S. Chamber of Commerce, 56% of Millennials agree that a quality benefits package impacts their choice of employers. And 63% indicate that great benefits are a reason to stay with an organization. A strong benefits package is the bare minimum for your company to attract and retain talent. And great benefits go beyond hiring. 70% of American workers are stressed about health, jobs, and finances. And more than 20% spend 5+ hours each week thinking about that stress at work. So think of the benefits you offer as an investment in focused, happy employees, and your company’s success.Looking for more HR ideas? Check out: 10 Ideas for Effective Employee Incentive Programs
What are employee perks?
Perks (from “perquisites,” for our fellow word nerds) are offerings from the employer that go above and beyond the salary and benefits package. Think of it this way: Benefits cover “need-to-haves.” So perks are “nice-to-have” bonuses, like paid gym memberships or free in-office lunches. Additionally, perks:- Are less likely than benefits to appear in a contract.
- Cover expenses that employees might not fund on their own.
- Highlight company culture and values.
- Are offered to all full-time employees, and maybe some contractors; they do not scale based on tenure or performance.
Examples of employee perks
⏰ Flexible hours or remote work. 41% of employees with this perk rank it as the most important one they receive. Plus, it benefits you. When employees are less stressed about getting to work, productivity increases. As a result, scheduling flexibility promotes lower absenteeism. Free lunches, snacks, and coffee. The benefits of providing healthy meals and snacks are huge. Increased collaboration? Decreased employee turnover? Up to 150% higher employee productivity? Yes, please! Working remote? No problem. Just send your employees coupon codes for ordering in. Gym memberships: Health-oriented perks are a fantastic supplement to employee health insurance. That's because healthy employees are more productive than their unhealthy colleagues. Those coworkers cost employers $73.1 billion per year. And they file twice as many compensation claims. ⛺️ Employee retreats: These bonding opportunities help your employees connect with their teammates. Which pays off big in productivity. It's a 20-25% increase, according to the McKinsey Institute. Childcare: This perk teeters on the brink of the “benefits” category. But no matter how you group it, the benefits your company gets from offering childcare are undeniable. When WorkTango a popular fashion retailer began providing on-site childcare to employees, it recouped $500k in taxes. Plus, 30% of costs in employee turnover, and 11% in employee engagement. Tuition assistance: Tuition assistance or reimbursement is a win-win for employees and companies. That's because it promotes professional growth and increases retention. Plus, it lets companies deduct $5,250 per employee per year in taxes.Why employee perks are important
Perks can be a huge advantage in the hiring process. But they also reflect your company culture and values to current employees. 53% of employees whose companies offer perks? State that those perks give them a better quality of life, and make them feel valued. So the nominal costs of these programs and offerings are far outweighed by the benefits of having happy, engaged employees.See the difference a human resources program can make:
Why Your Company Needs a Recognition & Rewards Program
What are employee rewards?
Unlike benefits and perks, rewards are directly tied to performance. If benefits are “need-to-haves” and perks are “nice-to-haves,” think of rewards as “inspiring-to-gets.” Rewards:- Are unlikely to appear in a contract (bonuses may be an exception).
- May include financial rewards, recognition, or other honors.
- Can be tied to performance and contribution, or role and tenure.
- Highlight and promote employee engagement and company culture.
Examples of employee rewards
Milestone rewards: These include financial bonuses, honorary ceremonies, shared meals, and more. They honor work anniversaries. Milestones are a fantastic way to demonstrate appreciation for your workers’ continued loyalty. Performance-based bonuses: Reward your employees for meeting goals, exhibiting professional growth, and outperforming their peers. Why? Because these bonuses generate friendly competition between teams. Plus, they encourage collaboration within teams. And, they motivate workers to perform better. Employee reward catalog: Celebrate employee achievement company-wide with a points-based rewards marketplace. Because this allows employees to cash in kudos for gifts, swag, and experiences. Meaningful employee rewards, like those offered by WorkTango’s Recognition and Rewards platform, have a positive impact on company culture. And they can garner up to a 50% reduction in turnover.If they dream it, you can offer it as a custom reward with WorkTango. WorkTango's Recognition & Rewards
