Hiring and retaining employee talent is a critical factor in success, and providing fringe benefits can be an effective tool in this process.
Identify the critical importance of providing strong benefits packages, particularly in light of current external factors (e.g., health care costs)
Most employees expect some form of nonmonetary benefits in addition to wages.
In order to be competitive in their industry, companies can offer various fringe benefits to attract and retain employees. Benefits, if well managed, can be a source of competitive hiring practices.
With the increase in healthcare costs, employees are trending more towards jobs with benefits that will assist them with covering these costs. Companies also capture scale economies when negotiating with insurance companies, lowering cost per employee.
Various forms of nonwage compensation provided to employees in addition to their normal wages or salaries.
A combination of wages and benefits such as health insurance, vacation time, and retirement plans have become an expected form of compensation for today's employees. As the search for high-quality workers becomes more difficult and health care costs increase, it has become important to offer fringe benefits to gain a competitive advantage. Common benefits include the following:
Medical and dental insurance plans
Leisure activities on work time, such as in-office exercise facilities
Long-term and life insurance
Miscellaneous employee discounts
Free lunches at work
Rising Healthcare Costs
Healthcare costs have risen at a rate that makes it difficult for governments, businesses, and individuals to keep up. Without health insurance, individuals can easily be forced into poverty by trying to obtain medical care on their own.
While the cost negatively impacts businesses, it also offers an opportunity through competitive advantage. This is to say, organizations can capture lower health insurance costs per employee due to scale economies, allowing organizations an important bargaining chip in the hiring process.
Another key benefit for top talent is the offering of stock options. While stock as compensation has unique taxation rules, which can make it more or less attractive for specific people, it also has the added benefit of motivating the employee (particularly top management) to work to achieve broader organizational success. Stock options essentially mean ownership of the company, and this company ownership (i.e., equity) drives positive employee behavior.