Your company may offer employees access to programs and freebies designed to add value to their professional and personal lives—but are they voluntary benefits, or perks?
It may seem like semantics, but there’s a difference between the two—and in some cases, it’s one that can affect the value your employees ultimately get 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.
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, 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.
The Society for Human Resources Management (SHRM) defines core benefits as health care and retirement savings plans that address challenges faced by nearly all employees, but many companies now structure their total compensation packages to include voluntary benefits, too. Although the voluntary benefits offering extends well beyond the 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.
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, a MetLife survey found that 73% of employees said benefits customized to their needs would increase their loyalty to an employer, and 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.
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 dismissed as frivolous. Perks can indeed help shape and support company culture and affect how employees feel about the time they spend at work and with other co-workers. All of these factors contribute to employee productivity, satisfaction, and loyalty, as well as to company culture.
However, company culture cannot be shaped or defined by perks alone. Workplace culture begins with the company ethos that leaders embrace, embody, and communicate to their employees, peers, and clients every day. In turn, employees start to believe in and embrace company culture to the extent that it comes to life in the way they view and approach their jobs.
At the end of 2019, unemployment rates were the lowest they have been since 1969 according to the Bureau of Labor Statistics data—and while these rates fluctuate, organizations will always need to recruit and retain top talent. The job market has transformed a lot in recent years, and organizations are focused on goals that are intentional to both their employees and their business. Offering voluntary benefits and perks that employees perceive as meaningful can help make sure 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.
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E*TRADE Financial Corporate Services, Inc. recently acquired Gradifi, Inc. Gradifi offers financial wellness benefits focused on solutions for employers to provide their employees student loan and college savings benefits.
Statements regarding company benefits programs are true to the best of Gradifi’s knowledge at the time of publishing. Information subject to change at any time.
Some companies described may be clients of Gradifi, Inc.
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