Non-monetary benefits are essential to attracting a productive workforce. Many skilled laborers will not agree to work if they do not have at least a simple benefits package available to them. Similarly, it is standard in U.S. culture to offer a basic amount of non-monetary benefits to full-time, permanent employees. However, offering benefits above the expected amount can act as an incentive program, and can be used to recruit highly-skilled employees to an organization. For example, a highly-skilled employee may be more likely to join an organization where they do not have to pay for parking, receive good retirement benefits and more than the minimum amount of paid time off than an organization that is not as generous with their benefits. Non-monetary benefits are also used in the workplace to increase and maintain employee morale and satisfaction. If employees do not feel that they are treated fairly by the organization, then they will likely be less satisfied with their jobs, perform at a lower level, or leave.
There are a number of options that employers have in providing employees with non-monetary compensation. These options include benefits, flex-time, time off, free or discounted parking, gym membership discounts, retirement matching, mentoring programs, tuition assistance, and child-care. All of these options are ways of showing employees that their work is valued and are all methods of promoting a positive work-life balance for employees.
The largest category of non-monetary compensation includes benefits. Employee benefits can include paid time-off, insurances (life insurance, medical/dental insurance, and work disability insurance), and pension plans. A benefit plan is designed to address a specific need and is often provided not in the form of cash. Many countries dictate different minimum benefits, such as minimum paid time-off, employer’s pension contribution, and sick pay. In the U.S. benefits may include a health plan to which the company contributes and sometimes includes vision and dental coverage, along with basic health coverage. Additionally, similar benefits such as retirement savings matching are often mandated by the government, but an organization can also offer additional retirement benefits by offering a more generous "matching" plan for retirement savings.