The unemployment rates in the country have been the lowest in the past 50 years. While these numbers bode well for the economy and for employees, they also highlight just how competitive the current labor market is. Employees can switch jobs easily and can choose jobs that best suit their skills and lifestyle.
In a competitive labor market, there are many conversations around Benefits, Perks and Employee Rewards. These terms are often used interchangeably but they are really not the same. Here’s how Benefits, Perks and Employee Rewards differ and how they can impact your organization.
What are Benefits?
Benefits are non-wage forms of compensation provided by the employer. Benefits can typically be classified as legally required benefits and voluntary benefits.
- Legally required benefits include social security and medicare contributions, family and medical leave and health insurance amongst others.
- Voluntary benefits include benefits such as stock options and 401(k) plans.
- Benefits are more likely to appear in an employee contract over perks and rewards.
- Benefits are typically offered to all full-time employees and are not connected to performance.
Why are Employee Benefits important?
53% of millennials consider a quality benefits package as a factor when choosing an employer.
63% of employees stay on longer with an organization due to great benefits.
These numbers alone indicate how crafting a great benefits package doesn’t just attract top talent but also helps with their retention.
A great benefits package isn’t just a good hiring strategy but is also an investment in happier, healthier and more productive employees that can help your organization grow.
What are Perks?
Perks are also non-wage forms of compensation that employers offer over and above your pay and benefits. Perks while more loosely defined than benefits are indicative of company culture and values.
- Perks can include ‘nice to have’ extras such as free meals at work or gym memberships.
- Perks are less likely to be explicitly mentioned in an employee contract.
- Perks don’t typically scale according to rank, seniority or performance.
- Nice to have perks can include remote work options, free onsite meals, and snacks, gym memberships, childcare, and employee retreats.
Why are Perks important?
While perks can definitely help with hiring top talent, they are key in defining the company culture and values. Even the smallest of perks can positively impact employee engagement. Perks that advocate better work-life balance are especially popular and can lead to happier, more productive and more engaged employees.
What are Employee Rewards?
Employee rewards are directly tied to employee performance, unlike benefits and perks. Employee rewards serve to inspire employees to work harder and smarter and achieve greater heights.
- Rewards are typically not specified in the hiring contract.
- Employee rewards can scale according to rank, seniority, and performance.
- Rewards may include financial and material rewards or recognition.
Why are Employee Rewards Important?
Employee rewards are a great way for organizations to appreciate the hard work and contributions of their employees. They serve to boost morale and productivity. Employees who feel valued by their company and managers are more likely to be engaged at work and stay on longer with their employers. So rewards don’t just promote healthy competition among employees and boost productivity but also lower employee turnover saving organizations thousands of dollars.
Benefits, Perks and Employee rewards are great investments by companies to not just hire top talent but also promote a healthy and happy work culture. Your benefits, perks and reward offerings will define your company’s values along with motivating and retaining your best employees.