The importance of benefits in compensation policies

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Benefits are not only an add-on to base salary; they could be at the heart of a company's compensation strategy and they include various perks that enhance employee's quality of life.

In this article, we will discuss why these benefits can be essential based on your situation, and how they impact both employees and employers.

Types of employee benefits

Benefits are additional perks offered to employees, apart from their base compensation. These benefits can differ among companies and generally include the following:

  1. Wellness benefits: These could be subsidies for gym memberships, fitness programs, nutritional consultations, or life coaching.
  2. Group health insurance plans: In France for instance, it is mandatory for private-sector employers to provide their employees with a group health insurance plan, contributing at least 50% of the health insurance total cost. However, companies can choose to contribute more than the mandatory minimum. Coverage can also be extended to employee's family members, or assistance services and prevention programs can be included in the plan.
  3. Company retirement savings schemes: Systems such as PEE and PERCO in France allow employees to secure additional income during retirement, alongside the mandatory scheme. By contributing to these plans, the company support employees in preparing for their financial future and securing their retirement.
  4. Reimbursement of transport costs: The company is required to reimburse 50% of the employee's commuting costs upon receipt presentation. These expenses are exempt from social security contributions and taxes for the employer. The employer can also decide to increase the reimbursement cap above 50%.

Why are benefits important in a compensation policy?

As you are structuring your compensation policies, you may consider communicating on your perks and even more, show how much you invest in your employees outside of base cash considerations:

  • This is an effective way for companies to optimize the cost of their compensation policy. The employer can therefore offer non-monetary benefits which often cost less to the company than direct salary increases. For example, benefits such as meal vouchers or free rentals can improve the quality of life and/or the purchasing power of some employees, while limiting company expenses.
  • These additional benefits complement direct compensation by offering great indirect perks to employees. This helps to enhance overall employee satisfaction and their commitment to the company.
  • Social benefits demonstrate the employer's commitment to the well-being of its employees, which promotes an atmosphere of trust and loyalty.

The impact of benefits on talent

As well as improving purchasing power, these benefits have a positive impact on various aspects of employees' professional and personal lives. Here's how they can help shape the employee experience:

  • Financial security: benefits can provide employees with a degree of financial security. For example, pension plans, life insurance and disability insurance help protect employees and their families against financial uncertainties;
  • Work-life balance: benefits such as full remote policy, flexible working hours and parental leave can help employees achieve a better work-life balance;
  • Health and well-being: benefits such as health insurance and wellness programs can help improve employees' physical and mental health. A healthy employee is often more productive and creates a better working environment.

Employee benefits: what's in it for the company?

For companies, offering attractive benefits does more than just attract top talent. It also has many benefits for the company itself:

- Corporate image: employee benefits are essential to building a strong employer brand, as they show that the company cares about its employees' well-being;

- Cost optimisation: some benefits are tax-deductible or qualify for advantageous tax schemes. For example, company contributions to a pension plan can be deducted from taxes, reducing the company's overall tax burden;

- Employee satisfaction: offering attractive benefits can help improve employee satisfaction and motivation. Satisfied and motivated employees are more productive and more committed to their work, which translates into better overall company performance;

- Employee engagement: quality benefits can help boost employee engagement, motivation and productivity, contributing to superior overall company performance;

- Employee loyalty: this is a key factor in retaining employees and reducing staff turnover, enabling the company to retain key talent and save on recruitment and training costs.