Employee Perks And Benefits, What’s The Difference?
Employee perks and benefits are both used to attract, retain, and motivate workers, but there are some fundamental differences you need to know.
What Are Employee Benefits?
Employee benefits are additional forms of remuneration provided to employees beyond their regular salary. These benefits can significantly enhance an employee's total compensation package and play a crucial role in recruitment, retention, and even productivity.
Employee benefits examples
Common types of employee benefits include:
- Health insurance: Covers medical expenses for employees and sometimes their families. This can include dental and vision coverage.
- Retirement plans: Contributions made by the employer to a retirement fund, such as a 401(k) in the United States, to help people save for retirement.
- Paid time off (PTO): Includes vacation days, sick leave, and personal days that employees can use to take time off work while still being paid.
- Life and disability insurance: Provides financial protection to employees in case of serious injury, illness, or death.
- Employee assistance programs (EAPS): Offer resources and support for personal issues, including counseling and crisis intervention.
Why are employee benefits important?
The cost of employee benefits isn’t insignificant (on average 30% of total compensation) and they can play a significant role in attracting and retaining talent.
The benefits package also helps shape the company culture and can be used to help care for employee wellness and boost productivity.
Lastly, in some jurisdictions, certain benefits are also legally required.
What Are Employee Perks?
Employee perks are additional, normally non-monetary incentives that companies offer to create a more attractive work environment, support employee’s personal and professional lives, and foster a positive organizational culture.
Examples of employee perks
- Free meals and snacks: Providing complimentary food options such as breakfast, lunch, or snacks within the workplace.
- Company events: Hosting social events like outings, parties, or retreats that help build team cohesion and morale.
- Gym memberships or fitness classes: Offering free or discounted rates at local gyms or onsite fitness programs.
- Flexible hours and work-from-home options: Giving employees the option to work flexible schedules or telecommute to accommodate personal needs and improve work-life balance.
- Employee discounts: Providing discounts on company products or services, or arrangements with other companies for discounted rates.
- Transportation: Offering shuttle services, parking benefits, cycle-to-work schemes, or subsidies for public transportation.
- Wellness programs: Initiatives like stress management workshops, financial wellness classes, meditation classes, or on-site healthcare services.
- Childcare support: Assistance with childcare, such as onsite daycare facilities or contributions to childcare costs.
Employee benefits vs employee perks
Employee benefits and employee perks differ significantly in their nature and purpose.
Employee benefits
- Essential needs: In many cases, benefits are fundamental components of an employee's compensation that typically cover essential health, financial, and security needs. These include health insurance, retirement savings plans, disability insurance, and paid time off.
- Legally required: In many countries, certain benefits are mandated by law, such as social security contributions, unemployment insurance, and workers' compensation.
- Standard across companies: While the extent and specifics can vary, benefits like health insurance and retirement plans are common across many organizations and industries.
- Long-term Impact: Benefits are often designed to provide long-term support and security to employees and their families.
Employee perks
- Lifestyle enhancements: Perks are typically non-essential additions that aim to make the workplace more enjoyable or to cater to the personal lifestyles of employees. These include things like free meals, gym memberships, and casual dress codes.
- Not legally required: Perks are generally not required by law and are offered at the discretion of the employer to enhance company culture and employee satisfaction.
- Varied and unique: Perks can vary greatly between companies and are often used as a competitive edge to attract and retain the desired talent. What perks are offered can reflect the company’s culture and priorities.
- Immediate benefits: Perks often provide immediate, everyday benefits that enhance the daily working experience and job satisfaction.
Why employee perks are important
Like benefits, perks can be used on top of salaries as a way of attracting and retaining talent. They can also be used to support employee wellbeing and help shape culture.
For example, I used to work for a Danish company that offered free lunches. Not only were these healthy and delicious, but it meant that the majority of people took lunch together in the cafeteria and bonded over food.
That perk, combined with others such as a gym and flexible hours, made me feel cared for as an employee.
What Are Employee Rewards?
Employee rewards are a form of recognition given to employees to acknowledge their contributions, achievements, and commitment to the organization.
These rewards are used to motivate and incentivize employees, helping to boost morale and enhance productivity.
Employee rewards can be financial or non-financial, and they vary widely depending on the company's culture, goals, and resources.
Employee rewards examples
Employee rewards can fall into a few categories:
1. Monetary rewards:
- Bonuses: Additional cash given for meeting or exceeding performance targets, or as part of an end-of-year profit-sharing scheme.
- Raises: Increases in salary based on performance evaluations or promotions.
- Profit sharing: Distributing a portion of the company's profits among employees, usually based on their role or performance.
- Stock options: Offering employees the option to buy company stocks at a lower price, which can be lucrative if the company performs well.
2. Non-monetary rewards:
- Public recognition: Acknowledging an employee's hard work in front of peers, such as during meetings or through company-wide emails.
- Awards: Giving trophies, certificates, or plaques in recognition of achievements or milestones.
- Additional time off: Providing extra vacation days or paid time off as a reward for hard work or meeting targets.
- Professional development opportunities: Offering opportunities for further education, training, or attending industry conferences, which can also benefit the company by enhancing the employee's skills.
3. Experiential rewards:
- Company trips: Organizing outings or trips for high-performing teams or individuals.
- Special events: Inviting employees to exclusive events, such as dinners, galas, or sporting events.
Why are employee rewards important?
We all like to be rewarded for our efforts, whether that be a simple thank you or something extra.
Rewards are essentially carrots used to motivate employees go higher performance and reinforce desire behaviors. When used correctly, they can be extremely effective at this.
Join The People Managing People Community
For more employee perks and benefits insights, join our supportive community of HR and business leaders sharing knowledge and best practices to help you grow in your career and make greater impact in your org.