What is included in a benefits package?

A strong benefits package shows employees that their company cares about them. It illustrates that an organization is invested in the well-being and future of their team members. And while salary plays an important role in keeping your workforce satisfied, the value of a strong benefits package should not be overlooked. According to research, 80% of employees would choose a job with more benefits over a 30% raise with no benefits, and two-thirds of the workforce consider benefits to be the most important factor when deciding on a career.

While benefits clearly go a long way in keeping employees happy, the overall impact depends on what’s included in the package. So, what is included in a good benefits package compared to an average one? Here’s what you should know.

What is included in a benefits package?

Benefits packages encompass all the ways employers compensate their workforce outside of wages alone. All organizations offer some type of benefits, but the contents of their packages will vary based on industry, location, and company values.

Some benefits are required by law, while others are optional, so organizations can be flexible in what they offer. The most basic components of employee benefit packages are paid time off, insurance, retirement plans, and additional compensation. 

Paid time off

As its name suggests, paid time off (PTO) is compensation employees receive for time when they’re not at work. Most organizations offer a certain number of personal, sick, and vacation days, as well as some paid holidays. In addition, employees may be eligible for paid leave under special circumstances, such as maternity or paternity leave after having a baby or bereavement leave if a close loved one has died.

Insurance

There are several types of insurance an employer may offer. Some common options include:

• Health insurance: This insurance helps cover workers’ medical expenses and is highly valued by most employees. Companies can cover all or some of their employees’ premiums, while any remaining balance will come out of their paychecks.
• Disability insurance: Both short- and long-term disability ensures employees will continue to receive at least some pay while they’re out due to an injury, illness, or other medical condition.
• Dental insurance: Like health insurance, this coverage helps offset many of the costs associated with dental care.
• Vision insurance: Employers can offer vision insurance to help cover the costs of eye exams, glasses, contact lenses, and other vision services. Some services may be covered by standard medical insurance if they’re related to another condition, but in most cases routine care is covered under a separate vision plan.
• Life insurance: Life insurance helps cover funeral costs and loss of income to assist a deceased employee’s family. 
• Flexible spending accounts: Flexible spending accounts help employees cover costs associated with medical bills or childcare. Under these plans, employees can save pre-tax dollars from their paychecks by using them on qualifying expenses. There are limits on how much can be contributed to these accounts, however, and funds must typically be used within the year.

Retirement plans

Historically, many jobs provided pension plans that guaranteed income during retirement. As of 2021, however, only a quarter of civilian employees received a pension plan. While many government and union workers still have access to these savings, most companies have transitioned to 401(k) retirement plans. Through these retirement accounts, employees can contribute their own income, and employers may match contributions up to a certain percentage. Contributions are withdrawn from employees’ paychecks and invested into funds they choose from a list of available options.

Additional compensation and perks

Other benefits may also include any type of pay employees can receive besides their normal wages. For example, sales commissions, bonuses, awards, and indirect compensation, such as stock options and profit-sharing, are all types of additional compensation.

In addition to these tangible benefits, some employers also position perks—like work-from-home arrangements—as part of their total benefits package. Other creative perks offered by employers may include gym memberships, pet- or child-friendly offices, company computers or cell phones, and wellness services, such as massages or health screenings.  

It’s also important to keep in mind that in some cases, it may be necessary to tailor your benefits packages to different groups of employees. For example, there are many variables to consider when offering benefits to part-time employees, including federal regulations.  

Why should a company offer a benefits package?

An attractive benefits package can make a meaningful impact on a company’s recruitment and retention strategies. Offering perks that employees seek out and value can help organizations stay competitive. If a candidate is deciding between your company and a competitor, and both positions offer similar salaries, benefits could be the deciding factor.  

Benefits don’t just help to attract new talent, however. They can also show your long-term employees that you’re committed to their health, wellness, and ongoing satisfaction and success. For example, matching employees’ 401(k) contributions shows that you want them to be financially comfortable, even in the years after they leave your organization.  

Your benefits package also offers an opportunity to illustrate how you uphold your company values and mission statement. For instance, an organization that prioritizes a work-life balance or family values might offer competitive parental leave and childcare benefits. A company that’s committed to giving back to the community may offer paid time off for volunteering. In this way, bonus packages can be an important tool for showcasing your company’s core values and attracting and retaining talent who share the same principles. 

About Oyster

Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.

Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.