Businesses want to provide their workforce with the best benefits possible. It’s obviously unfeasible to offer everything to everyone, not only due to costs but due to some benefits being more desirable than others to different employees.
The costs of benefits per employee will differ considerably based on factors like industry, workforce size, economic status, and geographical location. Company leaders always look for the most efficient and cost-effective way to develop and offer key benefits and competitive salaries. But keeping up with operational budgets internally while still attracting and retaining top talent can be challenging, especially in an ever-changing, post-pandemic rebound.
When assisting businesses with building the best benefits package, it’s crucial to consider all of these objectives and more. Market trends and data insights can be helpful to employers looking to keep a finger on the pulse of employee benefits. Other considerations include reviewing current costs, evaluating employee contributions, and off-payroll employee benefits, as well.
How Much Do Benefits Cost?
In March of 2021, the Bureau of Labor Statistics released the statistics of employer costs for employee compensation. The average total came to $39.01 per hour worked, which breaks down into $26.84 representing salary, leaving $12.18 in total benefits costs.
These figures are only an average. It depends upon the wage percentile and varies considerably when you reach the 90th percentile. The benefits break down into five major categories: paid leave, supplemental pay, insurance, retirement, and legal.
There are many other benefits among these and some newer benefits that give businesses the edge to attract the top talent in their industry. Benefits like pet insurance, professional development, telemedical, and even home lab testing are gaining popularity as company offerings.
For the public sector, insurance-related benefits cost an average of $3.14 per hour for an employee. And this cost average represents the employer-paid portion. On the higher end, education and health jobs both tend to pay around $4.19 for each employee per hour. Colleges and universities are higher, at about $5.90. Teachers get a good portion of approximately 11-12% of their benefits put towards insurance alone; this is in secondary and primary education levels.
Unfortunately, for sales roles and other similar scale professions, average costs are as low as $1.52 per hour for each employee. This is only 6% compared to the 11% of the education sector and shows some interesting insights into which positions are valued.
In the private sector, the average cost per employee per hour is $2.70 for the same health care insurance as the public sector. A vast data collection is available for the private sector across every industry; the average comes to 8% of the total compensation.
The private sector analytics offer a considerable range of employer costs. The lowest averages include the $0.72 in the foodservice industry. But utilities-related industries see a better margin of $4.00, and this is up to 10% which is close to the public sector’s higher end. All of these statistics usually represent the most popular health insurance benefits investments, affecting the majority. So while these are helpful, each company has its dynamics that may shift these costs.
Health insurance premiums sponsored by the employer are higher in the public sector than in the private sector. But there are employers in the private sector making significant changes and providing competitive and attractive benefits packages with great value for the employee.
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What Is the Value?
All of these benefits have different costs applied to them and represent different values to each employee. But it can be challenging to figure out how to provide these benefits effectively; pet insurance is worthless if the employee does not have a pet. There are platforms designed to help build comprehensive benefit plans. They help businesses build the most attractive packages for their workforce and allow customization and flexibility.
Providing the right plan with optional opt-in benefits can improve not only retention rate but also onboarding. Attracting the best talent is always a priority, but what about keeping the current top performers? There should be an incentive for all, and providing the right benefits to attract and retain, is valuable.
There continues to be a surge in employees working from home after the effects of Covid-19. Employees are embracing these new working environments, as are the employers. Workforces may continue to shift to represent these at-home workers, along with the mass adoption of off-payroll staff. Freelance, gig workers, and independent contractors are popular for companies looking for flexibility in employment costs and operational performance.
The value to employees is having comprehensive benefits that support them and those they care about as well. The value for employers is having a stable, happy, and focused workforce with an improved retention rate and productivity.
What Are the Best Ways to Offer Benefits?
Companies can review goals and budgets on an ongoing basis. Don’t get too ahead with trying to offer everything; there’s no need. Figure out what you want to provide and what is possible to offer. Knowing what your employees value most can be the guide you need to adapt. And simply listening or asking what employees want is the best way to obtain the data required to create a plan. If your staff is part of the decision process, they will be more likely to enroll.
Pick optional benefits and make plans customizable. Through the use of advanced platforms, this is easier than it sounds. You can provide the benefits desired and meet individual needs more accurately. Highlight special perks and provide ancillary benefits. Promote key benefits that might be attractive to individuals, give employees all the information, and show benefits that complement each other.
Keep the employee conversations routine since people change goals and preferences all the time. What companies offer today might not be the value-laden perk employees want tomorrow. After all, people move, start families, and experience hardships all the time. Staying in tune with what your team values most will help you carve out the best benefits and compensation structure for increased retention.
And extending benefits to off-payroll employees is a great way to ensure you are reaching the entire workforce.
Off-payroll employees, like freelancers and contract workers, shouldn’t be left out of your benefit plans. They bring unique skill sets and valuable niche services to businesses. Offering to support them by providing off-payroll benefits can attract the top freelance talent you need.
Using platforms like Genius Avenue’s Breakroom Benefits gives you the perfect solution regardless of your employee segments in an ever-changing value environment. Give your employees and contractors the best value benefit plans that can be tailored to fit their needs and lifestyles. Breakroom Benefits helps build and create bespoke packages and is designed with both employers and employees in mind.