Benefits vs. Perks: Effectively Attract and Retain Talent

Arguably the most important aspect of hiring and retaining employees is the benefits and perks your company can offer them. More and more employees are seeking enhanced benefit packages over a higher base salary. In today’s post we will discuss the difference between a benefit and a perk; as well as cover the popular benefits and perks that employers can offer.

Benefits vs. Perks

Benefits and perks have a tendency to get lumped into the same category. While they are similar, it is important to distinguish the difference between the two. Simply put, benefits are generally costs that employees would have to carry on their own, while perks are “nice to haves”.

Benefits are a form of non-wage compensation and include retirement costs, health insurance, life insurance, disability insurance, commuter, and legally required benefits. Perks, on the other hand, include everything an employer offers their employees above their benefit offerings. Generally, perks are neither expected nor legally required.

Employee Benefits

• Workers Compensation Insurance (required)

• Unemployment Insurance (required)

• Social Security & Medicare (required)

• Paid Sick Leave (required in most states)

• Health Insurance (required with 50+ Full Time Equivalents)

• Family Medical Leave (required with 50+ Full Time Equivalents)

• Retirement Benefits

• Life Insurance Benefits

• Short & Long Term Disability Benefits

• Commuter Benefits

Employee Perks

• Access to Employee Discounts

• Financial Wellness

• Work Flexibility

• Legal Services

• Flexible Stipends and/or Wellness Stipends

• Cell Phone and/or Internet Reimbursement

• Company Provided Food

• Tuition Reimbursement

• Time Off (Vacation & Volunteer)

• Gym Memberships

• Child Care Assistance

Perks and Company Culture

It is important for employers to take a deep dive into what perks they offer and ask themselves: “Can we enhance our perks? Are the perks we offer relevant?” The types of perks a company offers can give insight into the company’s culture. For example, a company providing tuition reimbursement can indicate that the company is willing to invest in the education and professional development of their staff.

While perks can do a lot to enhance company culture and retain talent, they must also be strategically implemented. For example, it’s not beneficial to offer pet insurance if none of your employees have pets. A way to keep in touch with the needs of your employees is to take frequent surveys. One or two “Benefit & Perks Surveys” each year will go a long way in gauging the interests and lifestyles of your employees. The results can be used as a guide to make effective decisions on what perks will have the highest utilization.

Keep In Mind

It is important to analyze your financial risk when offering benefits and perks to your employees. Remember when companies (typically start ups) would pay for 100% of employee’s health insurance premiums? You don’t hear about it often because it wasn’t scaleable. As these companies grew and premiums began to rise, most were unable to maintain the costs of covering 100% of health insurance premiums.

It is crucial to understand your exposure when evaluating what you will offer your employees. Forecasting your costs for potential headcount and accounting for increases over time (for example, health insurance premium hikes) will help make realistic decisions on what your company can offer. It is always better to start small and increase your offerings over time, rather than having to create separate policies with exceptions for tenured staff - or even worse, having to take away certain benefits and perks from your employees entirely.