How to budget for more employee benefit offerings

To compete for talent in this incredibly tight labor market, employers are having to increase their compensation and benefits packages beyond the traditional healthcare, dental, vision and 401(k) offers.

Popular perks in 2022 include pet insurance, tuition reimbursement, unlimited paid time off (PTO), mental health support, health and wellness benefits, and of course, flexibility. As some of the biggest companies in the United States are quickly learning, employees aren’t heading back to the office five days a week. They either want a hybrid schedule – where they come in maybe one or two days a week – flexible working hours or to be fully remote.

Basically, companies must be able to customize benefits based on an individual’s holistic life, says Elisabeth Duncan, VP of HR at Chicago-based Evive. The HR tech firm serves high-profile brands, such as Capital One, The Home Depot, UPS, Walgreens and San Francisco-based Gap Inc.

“Benefits now are about how you’re enabling your employees’ lives,” Duncan told HRD. “Flexibility is critical for retaining and attracting talent in multiple life stages, from working parents to young professionals leading a nomadic lifestyle. They want policies that allow for a greater ability to not be working.”

Watch: What are the most popular employee benefits and perks?

Because of the nationwide talent shortage, HR leaders and hiring managers are willing to ditch traditional prerequisites simply to fill positions. To tap into such a diverse talent pool, it’s a priority for organizations to consider a cross-generational approach in their benefits and perks to meet the needs of each demographic of potential workers. When U.S. employees were asked in Evive’s annual National Employee Journey survey to rank which benefits they would like to see, they differed across generations.

The only benefit that ranked No. 1 across all generations – baby boomers, Gen X, millennials and Gen Z – was the four-day workweek. It’s a popular trend throughout the world, especially in Iceland and Belgium, and it may pick up steam in North America. Next month, 35 companies in the U.S. and Canada, including New York City-based Kickstarter, will undergo a six-month trial organized by nonprofit 4 Day Week Global. Furthermore, California Congressman Mark Takano introduced legislation last year to reduce the standard workweek to 32 hours by lowering the maximum threshold for overtime compensation.

“I don’t think the four-day workweek will come to America anytime soon, but organizations are going to try to meet that desire,” Duncan says. “Maybe that’s through summer hours, where everyone cuts out at noon on Fridays in the summer or maybe the office closes every other Friday.”

The survey also indicated that financial planning is one of the least frequently offered benefits by companies in the U.S. Only 15% of employees said it was an option at their organization; yet, financial planning was also one of the most desired benefits of those not offered with 25% expressing interest. Perhaps it’s an educational issue – most employees may be unaware about the financial planning process. For example, 25% of employees believe their total expenses in retirement, such as housing, medical and leisure, will be $100,000 or less. However, on average, Americans retiring at age 65 will need $1.1 million for a comfortable retirement, according to Evive.

Employers must add more financial wellness offerings that equip employees with more confidence and knowledge to manage their money, Duncan says. “Most companies have access to financial planners through their 401(k) plans,” she says. “Employees usually get a certain amount of hours of consultation for free. Most people either don’t realize it or don’t take advantage.”

Providing all of these benefits and perks can be quite daunting, especially when HR leaders discuss budgeting with the finance department and company leadership. While there’s no doubt that employers need to invest in their employees more than ever during the Great Resignation, it doesn’t necessarily have to break the bank. In terms of tight budgets, look at what you have control over, Duncan suggests.

“Whether it’s flexibility in scheduling or allowing for sabbaticals, there’s not always an upfront cost,” Duncan says. “We’ve been tossing around the idea of allowing employees to have a month out of the year where they don’t have to be in the office. It doesn’t necessarily add dollars to my HR budget, but it shows employees appreciation for work-life balance.”

She also suggests evaluating your current benefits package to see where you can make adjustments to not only save money, but also better meet your workers’ needs. “If people aren’t taking advantage of a benefit, it may be best to get rid of it and allocate that money for more desired benefits,” Duncan says.