The 3 Types of Employee Benefits Every Company Needs

When's the last time you audited your benefits package? You've likely hit the basics – health insurance, retirement savings, maybe even parental leave – but have you considered which benefits really get the return you want?

Benefits offer the opportunity to make a statement about your investment in employees. Turnover decreases by 87% when employees trust employers are committed to their well-being, making your benefits package a crucial driver of retention and workplace satisfaction.

Let's get into the three types of benefits your company needs and the importance of offering the right mix.

3 Types of Employee Benefits

Benefits typically fall into one of three categories: protective, growth, and instant.

Protective Benefits

Protective benefits are safety nets – they're there for your staff when needed but usually offer peace of mind. These kinds of benefits typically have an ongoing cost to employees.

Examples:

• Health insurance
• Dental insurance
• Life insurance
• Sick leave

Why you need them: Protective benefits are often seen as must-haves and non-negotiable for many employees. Because of this, protective benefits don't add a lot of value since your workforce feels they're owed this support. That means low differentiation potential for you and low value in terms of retention and attraction. However, not having these benefits will drive away current and potential talent, making them essential.

Bottom Line: Protective benefits are must-haves for many employees, but offer low differentiation and low value.

Growth Benefits

Growth benefits are building blocks – they help your workforce prepare for the future. These benefits sometimes have a cost to employees, but can be provided at no cost to add higher value.

Examples:

• Retirement savings
• 529 education savings
• Tuition reimbursement
• Parental leave

Why you need them: Growth benefits are personal investments employees want though they won’t see the payout until much later. Delayed gratification is sometimes enough to keep your staff motivated, but they often don't feel the value day-to-day. Though growth benefits can help with differentiation, they only provide some return.

Bottom Line: Growth benefits invest in employee futures and offer medium differentiation and medium-to-high value.

Instant Benefits

Instant benefits are pain relievers – they impact your team immediately. These benefits typically have no cost to employees, making them highly valued and highly sought after.

Examples:

• Student loan assistance
• Tuition assistance
• Child care assistance
• Gym membership

Why you need them: Instant benefits are perks that employees truly want so they can live better lives now. They relieve pain points day-to-day, helping your workforce thrive. They also improve morale and retention because employees feel the value of the perk immediately – they don't have to wait for retirement or an emergency situation to use it. Instant benefits provide the highest differentiation and value for your company.

Bottom Line: Instant benefits relieve employee stressors and offer high differentiation and the highest value.

Education Benefits Promote Growth and Instantly Relieve Stress

Today’s workforce cares more about instant benefits than ever before, so it’s no surprise that high on employee wishlists are student loan assistance and 529 savings benefits.

Why? Because paying for education – whether past, present, or future – is a heavy burden that can be lifted through strategic benefits. Investing in employee financial well-being is investing in a satisfied and motivated workforce, and education benefits give you and your employees the boost they need.

Employer Student Loan Repayment

Employer student loan repayment assistance relieves an ongoing stressor from employees. Monthly loan payments can take a significant chunk of employee paychecks, delaying their other goals like parenthood or homeownership as they pay off past education.

Did you know?

• 1 in 3 employees have personal student loan debt
• More than a third of employees who don't have student loan assistance say it's the benefit they want most
• 34% of employees would participate in student loan assistance if it was offered by their employer

When only 14% of companies offer student loan repayment assistance, you have the unique opportunity to be a forerunner in education benefits while attracting new applicants and satisfying your current staff. Plus, under a 127 plan, up to $5,250 of employer contributions to an employee’s student loans are tax-free, making it a win for everyone involved.

529 Education Savings

529 education savings contributions help employees at many stages of life (not just parents!) and can act as a protective, growth, or instant benefit depending on the circumstances. With expanded uses for 529, it's now a great option for college savings, credentialing, continuing education credits, and other opportunities for upskilling.

Did you know?

• 1 in 4 employees are currently saving for education expenses
• Over half of adults say the tax benefits make them inclined to enroll in a 529 plan
• 86% of employees would participate in a 529 plan if it was offered by their employer

When only 11% of companies offer education savings benefits (and only 2% offer employer contributions), adding the benefit immediately sets you apart from competitors. Depending on your state, employers may also get tax advantages for contributing to employee 529s.

Fill Your Benefits Gap

Your benefits package probably has various protective and growth benefits, but it may be time to add the benefits that really give you a return on your investment.

Differentiation is important to attracting new talent, but filling in your benefits gap retains your current workforce. The right mix of benefits helps your company do both and stand out to applicants while having employees boast you're a great place to work.

Make sure you have all three types of benefits to maintain your competitive edge. Bridge the benefits gap at your company with Paidly.