In today’s tight labor market, companies need to look beyond salary in order to attract and retain employees. Companies must also understand what employees really want from their jobs and be purposeful and creative with the benefits packages they offer.

The importance of benefits is clear: In a 2018 Aflac WorkForces Report of 2,000 employees, 55% indicated they would likely accept a job with lower compensation but better benefits options, while 34% said an improved benefits package would help keep them in their current job.¹  

Designing such comprehensive, competitive benefits packages means looking beyond the old standards—health insurance, retirement, paid time off (PTO)—and embracing forward-thinking options like non-traditional and voluntary benefits, and improvements to a company’s work environment and culture.

Different employees, different priorities

As of 2016, Millennials made up 35% of the U.S. workforce—compared to just 25% for Baby Boomers and 33% for Generation X—and the percentage of these younger workers continues to grow.² While employees across all generations might share common goals and challenges, priorities will vary depending on where they are in their lives and careers.

For example, research shows the goal of aligning employer and employee values is particularly important to Millennials. As reported by CNBC.com, a LinkedIn poll on workplace culture found that nearly 90% of Millennials would consider a pay cut to work for a company whose values align with their own, compared to just 9% of Baby Boomers.³  

Workers who responded to PwC’s annual Employee Financial Wellness Survey for 2019 cited financial issues as by far their top source of stress.⁴ For some employees, financial security could mean paying off their student loan debt or being able to afford their first home. For other employees, it could mean taking care of aging parents or putting enough money away for their retirement years.

As with financial security, flexibility is also an important goal for everyone. How that looks could vary significantly, from telecommuting and remote work to phased retirement options. Employers who take into account such differences in priorities are more likely to create an inclusive benefits environment that meets the needs of all their employees.

Looking beyond the standard benefits

According to a 2019 MetLife study, 76% of those surveyed said that employers have a responsibility for their employees’ health and well-being, both inside and outside of the workplace, a jump from 68% in 2015.⁵ The study also found that as employees’ expectations increase, their satisfaction with their benefits packages is declining, suggesting that employers have ground to make up when it comes to providing the benefits their workers are seeking.

Standard benefits like a competitive salary, health insurance, retirement savings plan, and paid time off can fall short of what’s attractive to be competitive in a tight labor market. Within an existing benefit structure, designing a smart compensation strategy can help employers offer the salary and benefits packages necessary to attract top talent. They can add benefit enhancements such as 401(k) match programs, phased retirement options, and expanded PTO policies that allow for parental and dependent care leave, sabbaticals, and volunteer opportunities.

Amid rising healthcare costs, many employers are choosing to expand their health-related benefits, adding options like flexible spending accounts, wellness programs, and telemedicine. A survey by the Society for Human Resources Management (SHRM) found that the percentage of employers offering telemedicine services has increased by 49 points since 2016, indicating the growing popularity of this benefit enhancement.⁶

Adding value with voluntary benefits, perks, and incentives

Voluntary benefits enable employers to offer a spectrum of options to their employees outside the standard benefits package, often with very little outlay to the employer beyond administrative costs. In a 2018 survey by Willis Towers Watson, 95% of the companies polled said they planned to use voluntary benefits as a key part of their total rewards strategy in the next three years, compared to only 59% in 2013.⁷  

With pass-through voluntary benefits, employers serve as facilitators, vetting programs and vendors and offering an array of options during open enrollment. Employees choose which supplementary benefits they want—such as critical illness or accident insurance, legal advice, or newer options like pet insurance or identity theft protection—with the advantage of knowing providers are pre-screened, and payments can be conveniently deducted directly by their employer from their paycheck.

Other perks and incentive-based benefits may cost employers more but can be just as important when it comes to attracting and retaining top-notch employees. For example, with total U.S. student loan debt topping $1.4 trillion,⁸ it’s no surprise that student loan consolidation, refinancing, and other debt management programs are among the most desired benefits, especially for younger workers.⁹  

Employer-sponsored tuition reimbursement, child care subsidies, transportation benefits (such as parking/commuter subsidies and bike parking), and financial education and planning can go a long way toward creating a company culture where workers thrive. The same can be said for wellness-related incentives, such as reimbursing employees for gym memberships or offering perks like standing desks or wearable fitness devices.

Creating a positive work environment and company culture

Other tools that can be deployed by employers to improve the work environment are even lower in cost but can make a big difference. These include flexible work schedules or telecommuting opportunities that aid in employee work-life balance, casual dress, and mentorship programs. Also important is volunteerism based on a clear philosophy of corporate social responsibility that reflects employee values.

The same MetLife study cited earlier found that among the top drivers of happiness at work is “a workplace where co-workers feel like family or friends.” To that end, simply putting the structures in place to recognize and appreciate workers can go a long way, from holiday parties and other social events to regular birthday celebrations among colleagues.

There’s no “one size fits all”

When it comes to benefits, just as with culture and work environment, no one solution will work for all companies. To determine the best fit and to reach the workers they want to attract and retain, employers must call on their employee base through research (surveys, interviews, focus groups) and find out what matters most to them. Benchmarking can be a useful tool in determining the overall level of benefits. But “best fit” benefits can only be understood by asking the consumers—that is, the employees.

Such employee surveys, combined with clear communication between management and employees, help ensure that benefits packages and work environments are as customized and personal as possible. With an open-minded, creative approach to benefits and total compensation, employers can not only take care of the employees they have—they can also attract more of the talent they want. Clear communication can help to manage and clarify employee expectations about the role of employer and employee in benefits.