In 1942, the Stabilization Act was passed, which gave the president power to stabilize or freeze wages and salaries to help prevent inflation. Because there was a federal law preventing them from increasing salary, companies provided other benefits and perks as supplemental compensation. This trend has continued into the modern age, and now, perks and benefits are more important than ever for attracting and maintaining a good workforce. When it comes to choosing and offering perks and benefits, it’s important to understand the difference between them and how each affects your company.
Benefits are compensation that supplements a salary. These are not wages, but along with salary, they create a total compensation package for employees. Benefits come in two forms: core and voluntary. Core benefits are those that the employer gives to all employees at little or no cost. These could be things like disability insurance or PTO. Generally, you cannot opt out of a core benefits package. Voluntary benefits are ones paid in full or in part by the employee. Although the employee is buying an individual policy, they are getting the benefit of a group rate by purchasing through the business. Voluntary benefits include many types of supplemental insurance and lifestyle perks. Employees can opt to take advantage of benefit programs that are specifically targeted to them.
In fact, 73% of employees say that customized benefits would increase loyalty to their employer.1 Examples of voluntary benefits include pet insurance, identity theft protection, life insurance, and more. While employer contributions are allowed, these benefits are appealing to businesses because they have little or no cost for the employer.
Both voluntary and core benefits are vital to your company. New recruits will be scrutinizing your benefits offerings to determine if you meet their needs. In today’s workforce, things like health insurance and retirement funds are necessary benefits to stay competitive with other businesses. Voluntary benefits allow workers to tailor their compensation package to their unique needs.
Perks are another form of non-wage compensation, but they differ slightly from benefits. Think of perks as the toppings on your ice cream sundae; they may not be necessary, but they sure make things more fun. A perk could be something that helps an employee perform their job better, like having an espresso machine in the breakroom. It could be aimed at employee wellness, like offering gym memberships or catered healthy lunches. Perks brighten the office atmosphere and boost employee morale. The kind of perks your business offers should be reflective of the culture you want for your company. A company that values a professional appearance might offer free dry cleaning for employees. A company that encourages workers to take breaks at work might opt for a company ping pong table. No matter what it is, perks should very much be seen as necessary for employee happiness. Both benefits and perks are aimed at increasing employee productivity and loyalty, recruiting new workers, and enhancing the office culture. Benefits cover basic needs and are more reliable for attracting employees to your company. Perks are the cherry on top and are handy for engaging current employees or getting the edge over another company. Companies can no longer rely on core benefits alone. Innovative benefits and perks such as travel incentives, student loan repayment programs, and company-sponsored kegs are leading the way in attracting new employees and keeping the existing ones around. If you want to be a successful company, you need to be offering both benefits and perks.
Originally published at taabcard.com on December 20, 2018.