The Importance of Employee Benefits

In some ways, the importance of employee benefits cannot be overstated. Not only can they enhance a worker’s experience at a company; they can also provide support beyond an employee’s regular salary/compensation. Benefits can include health insurance, retirement plans, paid time off (PTO), bonuses, stock options, disability coverage, access to educational opportunities, and wellness programs. Some companies may also offer flexible working hours or childcare support.

Benefits can contribute to the overall well-being of employees by offering financial security and access to different forms of care. They can also enhance job satisfaction and employee retention. According to a 2024 Consumer Survey by Strategic Education, Inc., 91% of employees believe employers should be investing in their continued education.  

Offering competitive benefits can make a company more attractive to top talent, helping to retain skilled workers and alleviate turnover. Additionally, benefits like PTO and wellness programs can improve work-life balance, which can boost morale and productivity. By offering benefits to its employees, an organization can also foster a positive workplace culture—helping employees feel supported.

Employee benefits examples include those that support an employee’s financial well-being, support a satisfying work-life balance, and benefits that help employees’ professional development and capabilities.

One of the most popular benefits is health insurance. Health insurance helps employees cover medical expenses for themselves and their families. Coverage commonly includes doctor visits, hospital stays, and prescriptions. Many health insurance plans also include coverage for dental and vision care as well as preventive measures like check-ups and vaccinations. Health insurance is one of the most common and valuable benefits employers offer, as it provides some financial protection should unexpected illnesses or injuries happen.

What are the 4 major types of employee benefits?

Beyond health insurance, there are 4 types of benefits that employers should consider offering to their employees:

Access to life insurance or other policies. This kind of benefit can assist employees’ long-term financial goals as well as what they’ll be able to leave to their loved ones. Some life insurance policies will cover a years’ worth of salary, while others can cover a larger sum. It depends on what the employee elects for in terms of the amount of coverage. Additional coverage may require the employee pay more out of pocket.

Retirement savings accounts. 401(k) accounts are a popular way for employees to save toward the future. They are designed to facilitate a satisfying retirement by ensuring that there will be a steady, if fixed, income in an employee’s later years. They can also create peace of mind as employees know they will have some financial stability after their working years are over. It’s important to note that often, 401(k) plans will offer tax advantages as contributions to a traditional 401(k) are made with pre-tax dollars—this reduces the employee’s taxable income.

Paid time off and paid sick time. Paid time off, or PTO, is designed to cover different times when an employee is unable to work. This can include vacation time, times when the employee or family members are sick, mental health days, and other essential needs. 

If an employee uses PTO, they’re able to receive income while not working. PTO is very helpful in supporting employees financially during times when they need to focus on things outside of work. PTO can also support a satisfying work-life balance as it allows employees time to recharge, which can assist with alleviating burnout and can improve overall well-being.

Career development opportunities and education benefits. Career development opportunities include a wide-ranging set of benefits. Simply put, they can include any program that expands an employee’s potential, knowledge, and/or capabilities. This can also include tuition assistance, which is one of the more popular education benefits.

This type of benefit can open up new career avenues for workers. For example, according to a recent survey conducted by Workforce Edge, 96% of Workforce Edge users surveyed are using their education benefits to improve their opportunities for future promotion, career advancement, or higher salary.**
_{**Source: Workforce Edge Learner Survey 2024}

When a company provides access to tuition reimbursement, workshops, certifications, or other types of continuous learning programs, it invests in their workforce's skills and expertise. This can help employees advance their careers and enhance their job performance.

While every employee is different and seeks out different benefits, there are a few benefits that are among the most sought after. These could also be considered the best employee benefits, as they have remained popular among many workers in the current job market.

Employer-covered health insurance. Health insurance is a valued benefit that can attract top talent and boost job satisfaction. Companies that offer health insurance to their employees are providing them with financial protection for medical expenses and help ensure access to necessary care. This benefit promotes overall employee well-being by covering doctor visits, prescriptions, and preventive services, which can help maintain good health.

Access to life insurance. Providing this type of insurance to employees is important because it can offer financial security and peace of mind for both employees and their family members. In the event of an unexpected death, life insurance helps cover items such as funeral expenses, debts, or future needs like children’s education. Life insurance can also support long-term financial planning and demonstrate that a company is committed to its employees' well-being. In turn, this can foster loyalty and trust throughout a company’s workforce.

Retirement plans. Usually in the form of 401(k) accounts, retirement plans can be crucial for helping employees secure their financial future. These plans encourage long-term saving, often include tax benefits, and can feature employer matching contributions that boost overall retirement savings. By providing a structured way for employees to plan for retirement, companies show they care about their workers’ long-term well-being.

With a variety of benefit options available, it’s essential that organizations determine which package will best support their employees. Whether traditional or non-traditional, each company has unique needs and a specific workforce, so a benefits package that works for one organization might not be as effective for another. This makes it crucial for companies to develop a customized package of unique employee benefits. Some examples of unique benefits include:

Education benefits. When employees have access to learning and development opportunities, they often feel more invested in their work. For example, according to the 2024 Workforce Edge User Survey, 91% of Workforce Edge users report their general level of engagement at their current jobs is very or fairly engaged.  

Stipends for home office setups. This option can be useful for remote workers to customize their workspace while minimizing personal expense.

Pet-friendly work environments. The ability to bring dogs, cats, or other pets to work can reduce stress and create a more relaxed atmosphere.

Travel perks. Some companies offer discounts on travel or support remote work in different locations.

Career development benefits. Whether through tuition assistance, access to webinars, or other learning opportunities, or training programs, benefits that boost employee’s skills and knowledge can support a culture of learning. Employees who have access to career development opportunities can also use their new skills while enrolled in their program. According to the 2024 Workforce Edge Learner Survey, 60% of Workforce Edge users surveyed believe going back to school with their education benefits has helped them apply skills they learned to their job.

Employee benefits vary in terms of their overall cost to an organization. For some companies, providing access to health insurance may be the most expensive, as healthcare costs themselves can be relatively high in the United States.

What is the purpose of employer-provided benefits?

The purpose of employer-provided benefits is to support the goals and lives of workers throughout an organization. These benefits are designed to provide tools, financial assistance, and other perks that can lead to a satisfying work-life balance.

For workers, the benefits that are available can factor in to their decision to apply for a new role or remain at their company. For this reason, benefits can also be very valuable to an organization. From offering health insurance and life insurance to providing education benefits, how a company leverages employer-provided benefits can make a huge difference for an organization. For example, according to LinkedIn’s 2024 Workplace Learning Report, 9 out of 10 global executives plan to either increase or keep steady their investment in L&D this year, including upskilling and reskilling.  

The value of employee benefits cannot be overstated. Health insurance can be very important, as many Americans receive this type of coverage through their employer. In recent years, access to education benefits have also been proven to be valued by employees across industries.

For example, a 2022 survey by Amazon and Workplace Intelligence found that employee development is key for attracting talent. Nearly 90% of respondents said strong skills development programs (87%), ample career advancement opportunities (88%), and paths to different career tracks (87%) were important when considering a new job. 

Because of their overall importance, companies with unique employee benefits should look for ways to communicate what’s available to their workforce. This can be accomplished through internal emails, events, postings on a company’s website, and during annual check-ins between workers and their managers.

When you offer benefits to your team, you can show that your company supports them both during and beyond their time at work. There are, of course, advantages and disadvantages of employee benefits.

To streamline the process, organizations can partner with companies such as Workforce Edge. Workforce Edge can help you manage your education benefits, maximize spend, and raise awareness of what’s available within your teams. Workforce Edge also provides a comprehensive benefits management platform for employees—helping them connect with the programs and savings that best meet their interests.

Schedule a consultation to get started.