Employee benefits guide: How to provide the best employee benefits in 2023

Providing great employee benefits for your team isn’t just good practice nowadays - it’s essential to running a successful business. 

In the war for talent, you need a strong benefits package if you’re going to compete with other businesses as an attractive employer to work for. 

But creating the kind of benefits package that caters to your team’s needs while being good for business is a delicate balancing act. 

In this guide, we’ll take a look at everything you need to know about employee benefits to help you decide what benefits package is right for your business and how to get the most out of the benefits you offer.

But first - what exactly are employee benefits?

What are employee benefits?

In a nutshell, employee benefits are any tangible or intangible compensations that you offer your staff on top of their base salary or wages. 

When you hear the term ‘employee benefits’, it’s likely you’ll first think of things like health insurance and a company car. In other words, perks that still involve monetary compensations in some form. 

But nowadays, any good employee benefits package should also include a broad range of benefits that don’t directly involve money in some way (flexible working, for example). What candidates look for in a work benefits package has evolved a lot over the years, and it’s important your business moves with the times.

Why are employee benefits important?

If you’re reading this article, it’s likely you already know how important employee benefits are. But in case you need some hard evidence, here are just a few reasons why offering employee benefits is good for business.  

• Benefits help with candidate attraction - A good benefits package is essential if you want to stand out to top talent as a great employer. As much as 41% of workers in one study said they’d consider changing jobs if an opportunity came along that offered a better benefits package than the one they currently had.
• And the really interesting part? This number got higher the younger the workers were (57% of millennials and 65% of Gen Z). This suggests that offering attractive employee benefits will only get more important as more young people enter the job market. 
• Benefits can shape your employer brand - The benefits you choose can also say a lot about your company values. For example, choosing sustainable employee benefits can show candidates you care about the earth, not just profits. Or providing free childcare sends a strong message about your commitment to addressing gender inequalities in the workplace. Whatever your core company values are, use your employee benefits as a way of promoting these to current and future staff.
• Employee benefits are great for employee retention - It’s no secret that a decent employee benefits package keeps staff loyal and happy in their position for longer. In one survey, as much as 78% of employees said they were likely to stay with their current employer specifically because of the employee benefits program they offered. In another study, companies that scored highly for their benefits package saw 56% lower attrition than those businesses that scored low for benefits.
• A good work benefits plan saves money - You might think that adding a benefits plan to your team’s salary package will cost the business an arm and a leg. But in the long-term, benefits can actually save the company money. If you provide employee benefits that people love, they won’t expect high raises or inflated salaries. And as benefits have also been proven to reduce staff turnover, this will save the company a lot of money and resources on hiring and training new staff.
• Good benefits drive performance - Offering a good benefits plan will make employees feel valued, which naturally boosts morale and in turn, drives performance. When people feel appreciated at work, their productivity levels improve, which can only mean great things for business.

Employee benefit examples

Choosing the right employee benefits for your team will always depend on a few core factors. For example, the size of your company, whether you run a hybrid or remote team and even which country your employees are based in. 

But let’s take a look at some employee benefit examples that you might want to consider for your business.  

What are the 4 major types of employee benefits? 

There are four core types of employee benefits that are often seen as the go-to employee benefits to offer your staff: 

1. Medical insurance 

2. Life insurance

3. Disability insurance 

4. Retirement plans.

But nowadays, these types of benefits don’t really represent the broad scope of what an attractive employee benefits package should be. And it’s worth noting that some of these more traditional employee benefits are required by law in Europe. Mentioning legal requirements in your benefits package as if they’re ‘perks’ won’t go down well with candidates, so it’s important to make it clear you know the difference.

The best employee benefits 2023 

The kinds of employee benefits that are going to attract and retain talent in 2023 are those that reflect how your employees live their lives. 

So for example, private gym memberships, flexible working options, employee travel benefits, paid self-care days and four-day working weeks are all examples of employee benefits that candidates are looking for in 2023. 

Best employee benefits for remote teams 

There are some employee benefit examples that work especially well for remote or hybrid teams. If you’re a hybrid company, it’s worth acknowledging that some benefits you offer - like free lunches and ping-pong tables for example - won’t benefit your remote employees. So what can you offer them instead?

The best benefits for remote employees would be things like providing a home office stipend to help them with the additional costs of setting up and running an office. Other benefits ideas for hybrid workers include cleaning services, childcare benefits or a mobility budget to get them to and from the office for free, if they work a hybrid role. 

Find out more about how transport benefits can help you attract and retain top talent.

Best employee benefits for SMEs 

If you’re creating an employee benefits plan for a startup or SME, you might not have the budget to be able to offer the likes of free private healthcare or a company car.

But the good news is, as a smaller company, you’re agile enough that you’re able to offer some employee benefits that bigger companies can’t. For example, a four-day working week would be much easier to implement at an SME than at a large corporation, as the logistics of rolling something like that at scale involves more risk.

Benefits with forecastable monthly payments are also a good option for SMEs as they make it easier for managing costs. So instead of giving out company cars to your employees (where rising fuel costs can bust your budget) offer a pre-determined monthly travel allowance so there are no surprise costs at the end of the quarter. 

How much do benefits cost per employee?

The average cost of benefits per employee will differ largely depending on the benefits you offer (of course) as well as the industry, job role and geographical region of the business. 

However, a recent survey by the US Bureau of Statistics showed that in the United States, benefits cost 29.6% of an average private sector worker’s salary. So if you’re splashing out an additional 30% of employee salaries on benefits, how do you measure ROI effectively to ensure you’re getting the most out of them?

How to measure the ROI of your employee benefits package

Measuring the ROI of employee benefits depends largely on what you plan to get out of them. Is it lower employee turnover you’re after? Higher employee satisfaction? Better job applicants? Whatever your intended gains are, it’s important you track your results against costs to ensure you’re getting the return you want.

You can calculate employee benefit ROI in two ways: hard ROI (using financial data) and soft ROI (using things like employee happiness signifiers). 

Naturally, hard ROI is easier to calculate because it includes using financial data. The basic equation you would use to calculate the hard ROI of your employee benefits plan would be the following:

ROI = ((gain – cost)/cost)*100

This will give you a percentage you can track to see the financial ROI of your employee benefits package and work out ways to continually improve it. 

But as you can imagine, the true ROI of employee benefits is more complex than this. Sometimes, you won’t see the immediate benefits of offering perks to your team. Benefits can take time to make an impact and soft targets like happiness signifiers aren’t always easy to track. It’s important to bear this in mind when you’re talking about the ROI of benefits - we’ll discuss a few ways around this in the next section.

How to save money on employee benefits programs

If you’re looking for tips on how to save money on work benefits, there are a few things you can do. For example, you could look at offering staff virtual benefit options like online healthcare support or virtual personal training rather than offline perks, as these tend to be less costly.

But saving money on employee benefits also involves thinking a bit differently about why you’re offering benefits in the first place. For example, offering wellness packages to everyone on your team might look expensive on paper, but has your staff sickness rate decreased since you began offering this as a perk? 

Getting the full picture of the soft ROI of your employee benefits package is about looking holistically at your company's cultural data and how your benefits package could be impacting the numbers long-term.

Don’t be scared about cutting any benefits your staff aren’t using either. For example, are you throwing away boxes of mouldy fruit now that most of your team is working from home? 

Regularly assessing which benefits your team is (or more importantly aren’t) using ensures you’re focusing your spending on what’s actually important to them. These are the kinds of best practices that will ensure you get the best results from your compensation and benefits strategy. 

Employee benefits management best practice

As you can imagine, the key to any successful employee benefits package lies with good management. As the job market evolves and your team’s needs change over time, your employee benefits plan will need to grow along with it. 

Here are some tips to ensure your employee benefits package always speaks to your team’s needs and provides a good return on investment for the business. 

• Measure costs and employee benefits uptake closely - How will you know if your work benefits are providing a good return if you don’t keep track of the numbers?
• Get regular feedback from employees - Running regular feedback surveys on your benefits plans will give you the hard evidence that you can use to grow and evolve what you offer.
• Include benefits in handbooks and all job descriptions - What’s the point in providing a great benefits package if you’re not shouting about it? Ensure your benefits are promoted in all employee onboarding material and on every job vacancy you advertise
• Offer digital employee benefits - Opting for digital benefits that are easy to track online will make it much easier to track, measure and manage ROI. There are lots of benefits providers that provide detailed employee usage reports that allow you to track how much your staff use their benefits, so you can see which perks are worth paying for and which ones aren’t being utilised.
• Hire a comp and ben specialist - If all of this sounds a bit complicated to you, that’s because, to be honest, it can be. This is why it’s not unusual nowadays for companies to hire a Compensation and Benefits professional whose sole responsibility is to manage and develop the company’s employee benefits package. Hiring someone to manage benefits will mean less stress for you and gives you the confidence that you’ll have someone with their eye on the ball, ensuring you’re always offering the most competitive benefits package on the market. 

Employee Benefits FAQs

What is an employee benefit plan?

Employee benefits plans are predefined benefit packages employers put in place to provide employees with a sense of increased value on top of their salaries. Employee benefits plans can include everything from health benefits to 

What is employee benefits insurance?

Employee benefits insurance (also referred to as employee benefits liability or EBL) is a type of insurance designed to protect employers from any errors or issues when distributing a benefits plan to employees.

What employee benefits are required by law?

Depending on which country or countries a business is operating in, there will be some employee benefits that the employer is legally required to provide for its staff. Most countries will have statutory holiday pay and maternity pay, for example, but the statutory amount differs from one region to the next, and employers will often supplement that amount as part of their employee benefits package.

Are employee benefits taxable?

All employee benefits are taxable, but there are many differences country-to-country in terms of how they are taxed. In most countries, employee benefits tax will be deducted from an employee's payslip. But in Australia and New Zealand, for example, employee benefits tax is paid by the employer, not the employee. Some countries also provide exemptions and tax breaks on employee benefits. 

Have you thought about adding a mobility budget to your employee benefits package? It’s an employee benefit that’s flexible, safe, sustainable and most of all - employees love it. 

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