Your company may offer employees access to programs and freebies designed to add value their professional and personal lives—but are they voluntary benefits, or perks?
It may seem like semantics but there’s a difference between voluntary benefits and perks—and in some cases, it’s one that can impact the value your employees ultimately gets from either. Here’s a closer look at what constitutes a voluntary benefit versus a perk, and why these nuances are important when it comes to recruitment and retention.
What’s a voluntary benefit?
The history of employer-sponsored benefits like healthcare insurance began in the early 1940s when the 1942 Stabilization Act limited the wages that employers could offer to the scarce workforce that existed during the time of war. The experts at JP Griffin Group explain that employers started to offer health benefits to employees, as a way to provide additional compensation that would attract employees.
Though the Society for Human Resources (SHRM) says health care and retirement savings plans that address challenges faced by nearly all employees fall under the category of “core benefits,” many employers now structure their total compensation packages to include voluntary benefits, too. Though the voluntary benefits offering extends well beyond those early healthcare benefits of the 1940s, the goal is essentially the same: To attract top quality talent, retain valued employees, and hopefully, give employees a reason to be more satisfied, engaged and loyal to their employer.
SHRM explains that voluntary benefits are often considered “additional benefits.” Typically, employees have the option to choose which voluntary benefits they’ll use (if any) and pay for (in full, or partially). Because of this flexibility, employers can tailor their voluntary benefits offering based on their brand, culture and recruiting goals, and changing priorities and needs that employees may have from one year to the next. For example, pet insurance, legal aid, and identity theft protection fall under the category of voluntary benefits, but so do programs that support financial wellness and/or help employees improve their financial literacy and stability.
Though the type of voluntary benefits offered from one company to the next may vary drastically, they’ve become an increasingly important aspect of the overall benefits package. In fact, SHRM reports that 73% of employees who responded to a MetLife study said benefits customized to their needs would increase their loyalty to an employer; Money reports that nearly 90% of young workers with student loans said they would commit to a job for five years if the company helped pay off their tuition debt.
What’s a perk?
The Cambridge dictionary defines a “perk” as a special advantage one is given because of their job. When used as a verb, “perk” is defined as “to become more cheerful, lively, or interesting.” Both of these definitions accurately capture the benefits and limitations perks can offer a company and its employees.
If you can think of special events or aspects of your workplace that are intended to lighten the mood, support interpersonal relationships and simply make work feel less like work —it’s probably a perk. An office party, smoothie bar in the break room, casual Friday dress code, or ability to bring a pet to work are all workplace perks. Though perks are essentially intended to “liven up the atmosphere,” they should not be discounted as frivolous. Perks can indeed help shape and support company culture, impact how employees feel about the time they spend at work, and with other co-workers. All of these are important to productivity, satisfaction and loyalty, and contribute to your company culture.
However, company culture cannot be shaped or defined by perks alone. Workplace culture has to begin to with the company ethos that leaders embrace, embody and communicate at work, to employees, peers and clients, every day. In turn, employees start to feel, believe, and embrace company culture to the extent that it comes to life in the way they view and approach their jobs.
Why Does the Difference Between a Perk and a Benefit Matter?
Unemployment rates are the lowest they’ve been since 1969, according to the Bureau of Labor Statistics data. When there is not enough qualified talent to fill the available jobs, businesses need to be intentional about recruitment and retention strategies–just as they did when benefits became part of employee compensation back in the 1940s. Offering voluntary benefits and perks that employees perceive as meaningful can ensure your business has the top talent it needs to succeed.
Whether you offer a balance of perks and voluntary benefits or focus more heavily on one because you believe it’s a better fit for your employees’ needs and wants, both are important to your brand, your culture and employee satisfaction. The end goal with either should be to understand what your employees value, so you can structure an offering that keeps them happy, engaged and loyal.