What Benefits Do Employees Want Most?

Long gone are the days when potential employees decided to accept a job offer based on pay alone. In a survey commissioned by GlassDoor several years ago, 57% of respondents said “benefits and perks” were among their top priorities when choosing an employer.

The same survey found evidence that the trend towards focusing on benefits was accelerating. Nearly 80% of respondents said that they would prefer new or more benefits over a pay raise—and this figure was even higher, 90%, among 18-34 year-old respondents. A study conducted by the Bureau of Labor Statistics around the same time period validated these observations. When presented with the option of a job with benefits versus an identical job with no benefits but a 30% higher salary, respondents preferred the first job option by a 4-1 ratio.

This means that when filling an open position, employers must do more than establish the pay range they’re willing to accommodate. They must also consider what benefits to prioritize to draw—and retain—desirable talent. Some benefits require significant investment—the Bureau of Labor Statistics estimated in 2018 that benefits on average represented nearly 32% of total compensation packages—while other “soft” benefits do not. Identifying the perfect mix of costly and costless benefits can give you an edge when it comes to hiring the best job candidates.

Here is an overview of some of the most popular and desirable benefits that potential employees take into consideration when evaluating job offers. (Click on one of the links below to jump to the desired section.)

401(k) Plans & 401(k) Matching

401(k) retirement plans have become an expected benefit by all but perhaps the youngest hirees. This benefit has become so ubiquitous in many industries that prospective employees have started paying close attention to the matching contributions offered by competing employers.

In recent years, the average match has ranged between 3% and 5%. But recent data suggests that this figure is climbing—according to one survey, the most common match is 6%, with two-thirds of businesses offering a match of more than 3%.

Disability, Life & AD&D Insurance

For decades, employers have been offering employees insurance policies designed to assist them if they were unable to work, or to support their families if they died unexpectedly. But in recent years, these options have grown.

Disability insurance is an insurance policy which pays a percentage of an employee’s salary—typically between 50% and 67%—if they are injured and suffer an illness that leaves them temporarily unable to work. Such policies typically have terms of 13, 26, or 52 weeks, with 26-week policies being the most common.

Life insurance is likely the most common insurance option of this employee benefit type. The coverage amount may be fixed, or be a multiple of an employee’s annual salary.

AD&D (accidental death and dismemberment) insurance is an expansion of traditional life insurance policies. AD&D policies typically define a maximum coverage amount, which would be paid in the event of an employee’s death. However, such policies also specify percentage payouts that would be made to the employee in the event of varying types of injuries. These policies also differ from typical life insurance in that they only cover injuries and deaths resulting from accidents—not natural causes or illnesses.

Employee Discounts

While retail workers have long been familiar with the employee discounts often offered by such businesses, a wealth of negotiated and subscription discount programs have become available. For instance, employers may negotiate a group discount with a phone carrier, so that employees save 15% to 25% on their cell phone bills.

But subscription-based employee discount programs have become increasingly popular. These programs allow the employees of subscribing businesses to log into an online platform and access discounts from a variety of businesses and retailers. This provides employers with a convenient and easy way to offer the perk of discounts for many notable name brands and services.

Flexible Work Schedules

In the post-COVID years, the line between work and home life has gotten significantly thinner, especially for parents. Due to the reality of having kids in schools where COVID testing is strict and a sniffly nose can lead to days of disruption, workers are showing strong favoritism towards employers who offer flexible work arrangements.

The strain of balancing work and home has gotten so extreme that a recent survey found that one in four women is considering reducing their workload or exiting their careers entirely. Even if your own employees are not currently in this situation, this is cause for concern. Talent shortages are already at a ten-year high, and any reduction in the workforce pool will only worsen this trend.

Thus, businesses need to give serious consideration to offering flexible work schedules to employees to be able to recruit top-tier talent. As a bonus, while this perk is in high demand, it’s an unpaid benefit, allowing employers to significantly increase the attractiveness of their job listings without having to shoulder an increase in benefit costs.

Four-Day Work Week

For businesses seeking to appease worker demands for better work-life balance, four-day work weeks are an approach many are exploring, alongside the aforementioned flexible work schedules.

There are many variations on the four-day work week which have been implemented:

• 32-Hour Work Week: Some businesses are simply closing on Monday, Wednesday, or Friday, with no other changes to the work schedule or worker pay. This effectively results in a 25% increase in hourly wage, as employees make the same salary as they did when working 40 hours. However, there’s evidence that the move is a net positive for employers. A few years ago, Microsoft moved its Japan division to a 32-hour work week. It resulted in a 40% increase in productivity. In addition, employees took 25% less time off, and the office consumed 23% less electricity. This approach is typically accompanied by a reduction in meetings, giving employees more time to work on productive tasks.
• Four 10-Hour Days: Other businesses are taking a different approach, instead having employees work for 10 hours per day, four days a week, with the office typically being closed on Monday or Friday, giving employees a four-day weekend. This approach, however, presents cost concerns for businesses operating in states which mandate overtime pay when employees work in excess of 8 hours in a given day.
• Flex Schedule: This is more or less a hybrid of flexible work schedules and four-day work weeks, where employees are given the latitude to when they see fit, giving the opportunity to take a weekday off so long as they fulfill their work obligations.

Gym Memberships & In-Office Gyms

Many white-collar employees make up for the time they spend sitting (or standing) at their desks by prioritizing their physical fitness and overall health. Encouraging employees to maximize their fitness is all upside for employers, as healthier employees are more motivated, more engaged, and will likely have to take less time off for illnesses.

For businesses with the necessary footprint, installing an in-office gym is an excellent way to encourage workers to come to the office and stay in the office, by giving them a place to clear their heads and return back to their workspaces newly motivated and reengaged.

For smaller businesses, offering free or discounted gym memberships is a low-cost way of attracting and retaining the most motivated and focused candidates. You may even be able to negotiate a bulk-rate discount with a local gym, at no cost to your business.

Health Insurance

Health insurance is by far the most high-profile and widely discussed employee benefit, and one that would require its own series of articles to explore with adequate depth. This benefit is one that is complicated by its high and ever rising cost, the many different carriers and options available, differences in options from one state to the next, and many other variables.

But what is crystal clear is that employees are strongly influenced by whether an employer offers health insurance, the quality thereof, and at what cost. In a survey conducted a few years ago by SHRM with a group of 738 HR professionals, 95% indicated that health care benefits were a priority for a majority of their employees.

Every business must take the time to determine where to strike the balance between maximizing their ability to attract and retain employees by offering attractive health care benefits, while at the same time controlling their costs.

Meals & Snacks

There are few temptations that employees can resist less than the allure of free food. Whether it’s operating a subsidized cafeteria or just having a fridge full of sparkling water that employees can help themselves to, this little perk makes a noticeable difference on employee happiness.

A survey conducted a few years ago found that 56% of employees were very happy with their jobs. However, among employees who had access to free food, 67% reported being very happy—a noticeable increase.

Offering free snacks does make financial sense for businesses as well. When a group of employees head out of the office to grab a coffee, it’s easy for a quick break to turn into a half-hour or even hour-long sojourn if you’re not there to keep a close eye on things. If you’re paying your employees even $15 an hour, a 50¢ can of soda or cup of coffee is a small price to pay to keep your employees onsite and focused (and happy), if that means you recoup a mere 15 extra minutes of work from them.

Paid Family Leave

Millennial workers are strain to balance their career goals with dreams of having children, while Generation X is faced with the responsibility of caring for their aging parents, as even the youngest Baby Boomers approach their 60th birthdays. The strain of balancing these responsibilities is such that, as noted elsewhere in this article, a recent survey found that 1 in 4 women is seriously considering reducing their work commitments or exiting their jobs entirely.

Consequently, paid family leave—for caring for both newborns and elderly family members—is an extremely attractive benefit.

However, businesses that are located in states with paid family leave may be able to mitigate requests for paid family leave policies simply by making employees and applicants aware of these state-level programs.

Paid Time Off/Vacation Pay

PTO is one of the first benefits that applicants review when considering whether to accept a job offer. In a recent survey, PTO was ranked as one of the most popular employee benefits, save only for, you guessed it, health insurance. It should not come as a surprise then that in another survey, 63% of employees surveyed indicated that they would not accept a job offer that did not include PTO.

Recent data indicates that the average employee receives 9.7 days of PTO per year, not including sick days or paid holidays.

Thus, deciding how much PTO to give to employees may depend largely on whether you simply want to keep up with the Joneses, want to draw better talent by offering more than the average amount of PTO, or take a more nuanced approach and offer more PTO to longer tenured employees to encourage retention.

Remote Work

Post-COVID, there has been a tremendous amount of pressure on employers who allowed employees to work remotely to continue doing so. CareerBuilder found that job listings that allowed employees to work remotely full-time, or to work a hybrid schedule, attracted 7 times as many applicants as those requiring employees to work only in the office.

This does not come as a surprise, given the high level of demand for flexible work schedules as well.

For employers which have already done the hard and costly work necessary to implement remote work, allowing employees to work remotely full- or part-time may be key to future recruitment and retention efforts, while imposing little additional overhead.

Student Loan Assistance

More workers than ever before are carrying more student loan debt than ever before. More than 44 million Americans owe a total of $1.86 trillion in student loans, the second largest debt category behind mortgages.

A handful of employers have been experimenting with student loan assistance as part of their benefits packages. This has perhaps been incentivized by data indicating that 86% of workers aged 22 to 33 would commit to employers for 5 years if those employers offered student loan repayment programs.

Such programs have been incentivized by the federal government, which has currently amended tax laws so that employees can receive up to $5,250 in student loan repayments from employers without having to declare the reimbursement on taxes. Meanwhile, employers can claim assistance payments up to $5,250 per year as deductible business expenses.

Vision & Dental Insurance

A recent survey by MetLife found that dental insurance was the third-highest on the list of must have benefits, ranking 3rd behind only health insurance and 401(k) plans, with 72% describing it as a must have, and 24% as “nice to have.” Vision insurance wasn’t far behind, ranking fifth on their list—70% described it as a must have, and 24% as nice to have.

Vision and dental insurance tend to be attractive draws for employees because they are relatively inexpensive, and among all voluntary benefits, they have some of the highest enrollment rates. Consequently, their absence from a benefits package can leave it feeling substandard, even though vision and dental are typically treated as add-ons to the far higher profile health care insurance options.

Volunteer PTO

Volunteer PTO, sometimes referred to as VPO, has been an increasingly popular benefit offering from companies which want to project an image of being active participants in and contributors to their local communities.Under such programs, employees may take 1 or 2 days off per year, paid, to volunteer with a local nonprofit organization. A recent survey by SHRM found that about one quarter of businesses offer volunteer PTO as part of their benefits packages.