Top Employee Benefits

In this article we're going to talk about some of the benefits that employees value most.  These are the on and off-the-job perks that seem to grab the attention of employees and make them want to stay a little bit longer.  Whether you're looking for a job and wondering what is offered in the marketplace or an employer trying to figure out what employees want this article can help.

In this publication we're first going to provide an overview of employee benefits programs and why it makes sense to offer these benefits to employees.  Next up we're going to talk about mandated versus optional benefits programs.  Then we're going to finish up by providing you with a variety of statistics including the most common benefits offered today as well as those benefits employees value the most.

Overview of Employee Benefits Programs

To make sure we're all on the same page, it's worth the time to review or help define exactly what is meant by an employee benefits plan.  The objective of a good employee benefits program is to help protect both employees and their families from the possibility of economic hardships caused by illness, disability, loss of life or unemployment.

A good employee benefits program will also provide retirement income for the employee and their family as well as suitable assistance such as time off from work.

Benefits Offered by Employers

Many employers consider benefits plans an integral part of the total compensation package offered to its employees.  And while these benefits programs are typically administered by employers, many times employees are asked to contribute small premiums to enjoy coverage.

Employers typically offer their employees benefits for one or more of the following reasons:

• Attracting and retaining talented employees.
• Aligning benefits packages with those offered in the marketplace.
• Promoting higher levels of morale among employees.
• Providing opportunities for promotion or advancement as workers resign, retire, or move to other positions within the organization.

Keep in mind that no individual benefit will provide for all employee needs, it is usually a combination of benefits that is most effective in meeting the employer's objectives.  That being said, there are two broad categories of benefits offered by employers in today's work environment:

• Mandated Benefits
• Optional Benefits

Mandated Employee Benefits

Mandated benefits are those that are required by law.  Typically such benefits include federal or state sponsored programs that aim to provide for the most essential needs of employees and / or their families.  Examples of three very important, and mandated, benefits include:

• Social Security
• Unemployment Insurance
• Workers Compensation

Social Security provides for the needs of both individuals and their families.  This program protects the aged and disabled against expenses that might otherwise exhaust their entire savings.  And while unemployment provides benefits for those that lose their jobs, workers compensation programs provide benefits to those workers disabled by occupational illness or injury.

Optional Benefits Programs

As the name implies optional employee benefits are those benefits that many employers choose to offer their employees that are not mandatory.  Such benefits include:

• Health Care Insurance
• Disability Insurance
• Life Insurance
• Retirement / Pension Plans
• Flexible Compensation
• Paid Leave

Undoubtedly this list can go on forever, for example there are some companies that even pay for the food employee consume while at work.  Later in this publication we're going provide a list of the most common benefits offered to employees today so you can get a better feel for what most employers have to offer.

Employee Benefits Statistics

In 2006, the U.S. Bureau of Labor Statistics and the U.S. Department of Labor released a report on employee benefits as part of their National Compensation Study.   Major findings from that study include:

• Paid leave was the most commonly provided benefit to employees including paid holidays which were made available to 76% of employees and a paid vacation time benefit which was available to 77% of employees.
• Medical care plans were made available to 71% of workers in the private sector while only 52% of workers participated in such plans.
• Employees with families contributed an average of $296.88 per month to their medical care premiums while single employees contributed an average of $76.05 per month towards this benefit.
• Employers paid an average of $617.18 per month per participant for family medical coverage and $266.50 per month towards medical care premiums for single employees.
• While 60% of employees had access to retirement plans, only 51% of employees participated in retirement plans with 20% of employees participating in a defined benefit program (such as a pension program) while 43% of employees participated in contribution plans such as a 401k or a 403b plan.

Paid Holiday and Vacation Time

Perhaps one of the most valued of all employee benefits includes the paid time away from the job which is often spent with family and friends - holiday pay and vacation time.  Nationally the average number of paid holidays is eight.

Paid vacation time is normally a function of tenure or length of service.  The table below shows the national average number of paid vacation days as a function of the time spent with a company:

Source:  2006 National Compensation Study

Benefits Valued by Employees

A very interesting study of benefits was conducted in 2004 by the United States Office of Personnel Management or OPM.  The OPM is an Executive Branch agency charged with the responsibility for setting policy for the Federal Government's employees.

The survey results were based on the responses of 856 employees, including current and new employees (those with less than three years of service) and the margin of error for the survey was +/- 3%.  The survey focused on the following ten benefits programs:

• Employee Health Benefits
• Retirement Annuities
• Thrift Savings Plan
• Retiree Health Benefits
• Life Insurance
• Long Term Care Insurance
• Flexible Spending Accounts
• Tele-Work / Telecommuting
• Child Care Subsidy
• Health And Wellness Programs

The survey asked the respondents several questions about the above programs - for example comparing their benefits to those offered non-Federal employees.  However, there was one very important question they asked that fits nicely with this topic:

Which of the Currently Available Benefits is Important to You to Remain in or Accept Federal Employment?

The answer to this question helps us to better understand exactly which benefits employees value the most.  The following table contains the percentage of respondents indicating a particular benefit was "very important or important."

Much of this information seems intuitive.  For example, many employees value a retirement plan because this is something that everyone expects to benefit from in the future.  On the other hand Child Care Subsidies can only be enjoyed by a sub-segment of the employee population since not everyone will have children or children requiring child care services.

Most Common Employee Benefits Offered Today

We're going to finish up with a few more interesting statistics - whether you're looking for a job or just looking for some benchmark information on what's being offered in the marketplace today.  By examining this list you can get a better idea if your existing employer or a potential employer is offering you a competitive array of benefits.

According to the National Compensation Study conducted by the Bureau of Labor Statistics in March 2006, the following is a list of the most common benefits offered in the workplace today.

Please Note:  Life insurance is that which does not include employee contributions.  Non-production bonuses include payments for attendance, safety, employee recognition, hiring, incentive compensation, retention bonuses among others.

Once again, it's not surprising that the benefits fulfilling essential financial and social needs of employees top this list such as life insurance and paid leave; while we see more "luxurious" benefits such as stock options and employer-supplied personal computers are offered to less than 10% of workers.

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