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A company’s success depends on the efficiency of its management, customer relations, organised processes, and the ability to take advantage of technological developments. You must have a capable, loyal, efficient, and responsive workforce for these processes to work.
An organisation cannot function without its employees. Investing in your employees is therefore equally necessary. It shows them that you appreciate their time, effort, and skills they employ in the company’s growth.
It is critical to do so, as new opportunities are available to employees every day. As per a survey, 82% of employees who know about the company’s culture and benefits will have a better impression of the company and stay longer.
Many companies introduce training and other employee development programs to help their employees grow. But, other than that, companies also need to offer additional perks to their employees. These are the non-salary expenses, also known as the employee benefit expenses. Group Health Insurance is once such employee benefit. Through this article, we’ll highlight these benefits in greater detail.
You may like reading about our group personal accident insurance policy and group term life insurance policy.
Employee benefit expenses – what are they?
As the name implies, employee benefit expenses refer to expenses incurred by the company to benefit its employees. These expenses may be cash or non-cash. They are over and above the basic salary employees receive and can include anything from health insurance to shopping coupons. While some of these benefits may be universal, some may be given as work appreciation.
Some of these benefits are mandatory for companies, such as employee provident funds, statutory leaves, gratuity, health insurance, and maternity leave. Other additional benefits such as bonuses, paid vacations, and dental insurance is subject to the organisation’s policies. Some companies may offer these benefits to retain and attract top talent. With the pandemic, companies that offer work-from-home benefits had a 25% lower employee turnover.
Advantages Of Employee Benefit Expenses
Employee benefits are meant for the benefit of employees. But, if we look at the larger picture, they indirectly have numerous benefits for the employer. Here is a list of such advantages:
A loyal workforce
As an organisation, you want to hire the best team. But, even if you attract the best talent, will it guarantee their loyalty in the long run? Probably not. You need to implement specific incentives to retain them and reduce employee turnover. It also helps to reduce the time and resources implemented in hiring new talent. Moreover, if employees stay around for the long term, the more organised and efficient processes are.
Enhanced productivity
An employee’s productivity is directly related to how happy and satisfied they feel at their company. A happy workforce
also enhances employees’ motivation. If they feel motivated, they will work at their topmost efficiency and, thus, higher revenues for the company.
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Healthy team
An old saying goes: health is wealth. Even if they are present, sick and tired employees won’t be able to work well. They may cause errors and even expose others to illness. Offering paid sick time
and health insurance will rejuvenate and energise your workforce. Additionally, your employees will feel that you care about them. The healthier the workforce, the higher the work productivity and, hence, the greater the organisation’s success.
Better talent
Hiring the right and the best team is a task. All companies strive to hire top candidates. However, with increased competition, how can that be done? It is where these additional incentives come into play. Nowadays, employees aren’t just looking at their salaries. It is also essential for them to know how invested the employer is in their employees.
Types of employee benefit expenses
The organisation must follow the accounting treatment outlined in IndAS-19 and AS-15 of the Income Tax Act for recording these expenses. Here are different types of benefits.
Statutory Benefit Expenses
These are the benefits required by law that an employer must provide to its employees. Following are the mandatory benefits expenses an employer needs to consider:
Voluntary Benefit Expenses
In the previous section, we read about the expenses organisations must incur on their employees. Below are some additional employee benefits an organisation can provide.
- Paid vacations
- Childcare facilities
- Wellness programs
- Performance bonus
- Food and entertainment coupons
- Free concert or movie tickets
- Access to clubs or lounge
- Corporate discounts
- Disability benefits
- Critical Illness cover
- Personal Accident Insurance
- Higher Medical coverage
- Work from Home
- Education programs for career development
How To Manage Employee Benefit Expenses?
Establish a Cost-Effective Employee Benefits Plan
When aiming to control employee benefits expenses, it is crucial to establish a benefits program that is economical. This could entail researching for more affordable insurance options, introducing a high-deductible healthcare plan, or encouraging employees to opt for less pricey benefits. Moreover, consider offering benefits that appear highly valuable but are actually inexpensive, such as flexible work hours or the option to work from home.
Analyze Your Existing Employee Benefit Plan
To effectively control the costs of employee benefits, it is crucial to first analyze your current benefits scheme. Inspect the benefits you currently provide and assess whether they meet the preferences and requirements of your workforce. You may discover that some benefits are underutilized, indicating a possible misallocation of resources.
Promote Employee Wellness
Encouraging employee health is another strategy to control the costs of benefits. This can be achieved by launching a wellness initiative, supplying nutritious snacks and beverages at the workplace, or offering fitness center memberships. By advocating for a healthier lifestyle, you can potentially lower healthcare claim expenses and enhance employee productivity.
Read about: Employer Employee Insurance
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Conduct an Annual Review of Your Employee Benefit Plan
Ensuring a yearly review of your benefits scheme is vital to check if it continues to serve your employees' needs and aligns with your business goals. Scrutinize the costs associated with benefits and contemplate modifications if deemed necessary. Also, consider deploying an employee survey to collect feedback about the existing benefits scheme.
Team-up with a Benefits Consultant
Teaming up with a benefits consultant can also assist you in managing employee benefits costs. A consultant can help you scout for economical insurance plans, advise on benefits structuring, and provide assistance with meeting compliance standards. By engaging a benefits consultant, you can ensure the best benefits package is offered at the most reasonable price.
In a nutshell
Hopefully, after reading the above article, you have a better understanding of what employee benefit expenses are all about. Organisations must adopt these benefits as quickly as possible.
Surveys show that 50% of employees will leave their jobs for better employee benefits. For better guidance, you can always take the help of experts like Plum Insurance. They provide customised solutions regarding group health insurance, wellness programs, and more as per the needs of your employees.
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FAQs
Q. What are some strategies to manage employee benefit expenses effectively?
A. Strategies to manage these expenses include analyzing your current benefits package, implementing a cost-effective benefits program, promoting wellness among employees, reviewing your benefits plan annually, and collaborating with a benefits consultant.
Q.How can a company encourage employee wellness to manage benefit costs?
A. Companies can promote wellness through initiatives like providing nutritious snacks and beverages at work, offering gym memberships, or establishing wellness programs. These actions can lead to reduced healthcare claims and improved productivity.
Q. How can partnering with a benefits consultant help manage employee benefits expenses?
A. A benefits consultant can assist with finding affordable insurance options, offering advice on benefits design, and helping meet compliance requirements. This partnership ensures that a company offers the most valuable benefits package at the most reasonable cost.
Q. How do different industries compare in terms of the most valued employee benefits?
A. In the tech industry, employees often value stock options and remote work flexibility. However, in manufacturing, health insurance and job security may rank higher. The finance sector might prioritize bonuses and career development opportunities. Thus, companies must tailor their benefits package to the industry's unique demands and employee expectations.
Q. What are the specific challenges companies face when trying to balance the cost of employee benefits with the need to attract and retain top talent?
A. Companies struggle to offer competitive benefits while managing financial constraints. The challenge lies in choosing benefits that attract talent without adversely affecting the bottom line. Additionally, the need to stay updated with industry standards and employee expectations adds to the complexity. Employers must therefore strategize to offer cost-effective benefits that still hold value for employees.
Q. Can offering a wide range of employee benefits have any negative impacts on a company's culture or operations, and how can these be mitigated?
A. Offering a wide array of benefits may lead to increased operational complexity and costs. It might also raise expectations to unsustainable levels. To mitigate these issues, companies should focus on core benefits that align with their values and employee needs. Regular feedback can help adjust offerings to better match employee preferences and company capacity. This approach ensures a balanced and sustainable benefits program.
