In-and-Out offers employees free burgers, and Intel provides free car washes and notary services.

One of the best ways to attract and retain great employees is with competitive benefits and perk packages. After pay, robust benefits — especially health benefits — are routinely cited as the most important factor for employees when considering a position. Workplace offerings that used to be seen simply as perks, such as remote work, educational subsidies and parental leave, are now increasingly seen as essential options for today’s dynamic workforce.

What Are Employee Perks?

Employee perks are additions to employee compensation — which includes salary and benefits. Perks are not required by law or considered basic necessities. They typically help define and reinforce a company’s overall culture and are considered important parts of enhancing the employee experience.

Employee Perks vs. Employee Benefits: What’s the Difference?

Benefits are forms of noncash compensation that cover necessities an employee would otherwise have to pay for on his or her own. On the other hand, employees would be able to go on without perks, but they may hold value in encouraging someone to work or stay with the company.

What are employee benefits?

When defining benefits, the U.S. Bureau of Labor Statistics includes paid leave, supplemental pay, insurance, retirement and legally required benefits such as Social Security. Benefits usually make up about 30% of total compensation — with wages and salaries accounting for the remaining 70%.

Key differences:

Benefits are tax deductible business expenses. Some perks, such as adoption assistance, tuition reimbursement, onsite meals and holiday parties, are partially tax deductible for the employer. But perks such as commuter benefits, parking stipends, pet insurance and many more are not. Perks are not generally included in employment contracts because they are not part of total compensation.

Why Are Employee Perks Important?

There are certainly altruistic reasons companies can offer perks. Whether it’s a flexible work schedule, parental leave or the occasional free lunch, perks can make employees happy. But beyond altruism, perks can play an important role in employee experience and engagement. By connecting with your employees and providing them resources that they value, you can boost employee satisfaction — an important metric for hiring and retention.

Employee perks should be just one tactic in your overall human capital management (HCM) strategy to better engage with employees and create an attractive and positive workplace culture. Before selecting which perks might be a good fit for you and your employees, consider ways to measure the impact of different efforts and how a perk and benefit package can impact key performance indicators, such as employee satisfaction. HCM platforms can help administer and track performance of employee engagement efforts, including perks programs. Employee surveys before and after rolling out a program can provide insightful data to help measure efficacy, and HCM platforms can help administer and analyze the results.

Benefits of Employee Perks

Employee perks improve the quality of life for employees while encouraging them to start or stay with your company.

  • Perks strengthen and reinforce company culture. They convey messages about company culture. For instance, offering tuition reimbursement shows that your company places a high value on continuing education.
  • Perks help recruit top talent. Remote and flexible work are both a blend of benefits and perks. One-third of job seekers say they would turn down an offer if it didn’t include the ability to work remotely.
  • They help reduce health care costs. Health insurance costs are a top priority for small businesses and have been for decades, and costs continue to rise. But well-designed health programs that include wellness perks can lower costs in absenteeism, workers compensation and disability.
  • Some perks may be tax deductible. Tuition reimbursement, adoption assistance, meals for employees on-site and more are wholly or partially tax-deductible business expenses.
  • Changes to the Fair Labor Standards Act at the beginning of 2020 made offering perks even easier. Many perks, such as wellness plans, cell phone reimbursements and parking benefits are no longer considered part of an employee’s pay, so they are not subject to the same taxes.

How to Choose the Best Perks for Your Employees

Perks can help reinforce a company’s culture, but they can’t define it. Ask yourself: What is the company’s mission and purpose? For instance, L.L. Bean sells outdoor gear, so it gives employees discounts, access to camps near a lake in Maine and manages an outdoor recreation club for employees. Ask employees what perks and benefits they’d like to see. And include it regularly in employee surveys because your company culture and employee makeup may change over time.

25 Top Employee Perks and Benefits to Retain Talent in 2021

Perks and benefits can impact hiring, retention and employee satisfaction. Benefits like health insurance, dental care or retirement plans are considered part of the overall compensation package. And perks can be the icing on the cake to help boost a company culture that encourages employees to pursue a positive work-life balance, get and stay healthy, continually learn or many other attractive attributes. All this can have beneficial effects on employee wellness, productivity and engagement.

Before implementing perks, identify specific goals and track progress. It could be your company’s ability to attract top-tier candidates. Or maybe it’s to address issues of employee satisfaction and to reduce turnover. Whatever the case, try to tie specific business objectives to whatever perk programs you put in place.

And don’t forget to include a communication plan to share the available perks with employees. Include reminders throughout the employee lifecycle, not just during onboarding, and let workers know as perks change.

Some perks to consider in 2021 include:

  1. Remote work: Emphasize productivity over presence in a certain physical space and embrace the benefits of remote work. Not all work can be done remotely, and not all workers want to work remotely. But by allowing for flexibility, you can keep employees happy, reduce office costs and a focus on productivity can boost your bottom line.

  2. Flexible schedules: More than half(opens in new tab) of workers say they would leave their job for one that offers flexible work time. Flexible work can be remote work, but it also can be core hours in the office, flextime, job shares and more. Flexible schedules cut down commuting time and help employees connect more with families. One successful example of embracing flexibility were so-called “silent meetings” at data and records management company Iron Mountain. Teams actively collaborate on a cloud-based document at the same time, discussing and looking at the notes in unprompted and unscripted conversation. It’s proven a productive alternative to listening to speakers and looking at a slide deck.

  3. Gym or fitness reimbursement: One of the most popular perks for employees are gym memberships and other healthy lifestyle incentives. Employees at Reebok, for instance, can take a CrossFit class or use the on-site company gym during the workday. Many organizations have adopted apps and services to gamify fitness with contests and challenges to compete for prizes.

  4. Parental leave: Some leave is required for companies with more than 50 employees through the Family and Medical Leave Act (FMLA). But that leave does not have to be paid under FMLA. Consider providing paid maternity and paternity leave. And make the policy inclusive for adopted children, as well. Spotify offers 6 months of paid leave to all employees, including for families adopting children.

  5. Childcare or tutoring services: Although not as common as some perks, this is growing in popularity. For example, consulting company Accenture launched a program adopted by Microsoft, Bank of America and others to subsidize tutoring at Mathnasium, Sylvan Learning and Code Ninjas.

    Some organizations also provide on-site daycare services or partner with other companies for free or reduced-price services.

  6. Elder care: For many people, understanding how to navigate the care options for elderly family members is a major concern. And some companies are launching programs to help employees maneuver a complex health care system. For instance, law firms McDermott Will & Emery and Greensfelder, Hemker & Gale recently added elder care benefits with access to care guides who help coach employees on caring for and finding services for aging loved ones.

  7. Financial advice: Give employees the tools to make sound financial decisions. Consider credit counseling services, general investment advice and retirement-specific investment guidance options.

  8. Meal allowances or free food: Free coffee in the breakroom, team-building lunches and snacks at the ready are just some of the perks to consider. While probably not a major factor in retaining employees, it can be a small service that will help employees feel more welcome in the office and free food can be a sign of gratitude.

  9. Online learning: If you want to keep employees around, help them grow. Some 94% (opens in new tab) of people in a LinkedIn survey said they would stay at a company longer if that company helped them learn and grow professionally. Walgreens University offers hundreds of trainings, leadership development and career advancement programs online and at regional campuses, as well as its own learning center in Illinois — with many of the programs offering the opportunity to gain college credit.

  10. Cell phone reimbursement: When a cell phone is used for work some reimbursement is required by law in certain states, like California. And it’s fast becoming an expected standard in workplaces. Reimbursing for a “bring-your-own-device” policy can save your company from having to purchase all new equipment.

  11. Charitable matching: In multiple surveys of job seekers, applicants have shared the importance of working for a company that supports charitable causes and gives back to the community. One of the most popular ways for organizations to do this is through matching employee gifts up to a pre-determined dollar amount. Your organization helps causes that are important to your employees while encouraging community building and benefiting from a tax deduction. For example, media giant Disney provides a 1:1 match for charitable donations to certain organizations.

  12. Educational assistance/loan reimbursement: In a survey of 22,000 recipients of tuition assistance, 84% said the perk was an important factor in their decision to join a company. The IRS allows tax deductions for tuition reimbursement up to $5,250 annually — and some companies reimburse more. For example, Starbucks pays 100% of tuition for those earning a bachelor’s degree for the first time at Arizona State University.

  13. Continuing education, upskilling and reskilling: Upskilling programs have a twofold purpose — to provide the company with skills necessary to carry out its business objectives while more deeply engaging employees in their work and retaining them. Upskilling has become an important strategy for organizations to both attract diverse talent and ensure inclusiveness. For instance, at AT&T, a program to upskill 100,000 employees offers educational opportunities with online learning platforms and local universities. but the program also offers a Career Intelligence portal where employees can see job options, skills required and potential salaries, as well as the projected growth of those roles.

  14. Discounts: Many retail and food service businesses offer generous discounts on their items. Whole Foods offers a 20% discount, Gap 50% and Barnes and Noble 30%. But discounts don’t have to be limited to retail and food service industries. Many companies also offer purchasing power programs whereby employees can make major purchases and pay for them directly from their paychecks. Some businesses offer company marketplaces that provide a wide range of discounts on everything from everyday items to vacation purchases.

  15. Stock options: Many companies offer equity in the form of stock options or a percentage of ownership for private companies anticipating the company will go public or is acquired by a public company. For public companies that provide this perk, they typically offer employees the option to buy stock options at a discount. Starbucks was the first private employer to offer stock options to qualifying full- and part-time employees.

  16. Equipment/tech reimbursement: Reimbursements or allowances for home office equipment is a popular perk. Job posting site Indeed reimburses employees up to $500 for standing desks, chairs and lighting. And online book company Chegg pays home internet bills and gives employees $500 for home furnishings. Google is giving employees up to $1,000 for home office equipment. This is another perk that may not be required, depending on the specific situation and the state. While federal law generally requires employers reimburse expenses to the extent that those expenses cut into minimum wage, there are state laws that may require home office reimbursement.

  17. Pet insurance: There’s evidence that pet friendly workplaces lead to more engaged employees. These employees are far more likely to stay with the company and recommend their place of work to others. Some 91% (opens in new tab) of those at pet-friendly companies said they were fully engaged in their work and nearly ¾ said they would turn down a job offer at another company with similar pay. While only about 10% of companies offer pet insurance, it is another opportunity to engage with employees.

  18. Wellness programs: Wellness programs are offered by more than half of employers in the U.S. Programs focused on particular health conditions (24%) and health screening (31%) have declined, and benefits like quiet rooms (21%), fitness activities (about 30%) and standing desks (60%) have increased. Into 2021, expect a push on perks that aim to address mental health. At Johnson & Johnson, mental health services are available not only to employees, but their families as well. The multinational corporation also has a team of more than 1,000 employees trained as mental health diplomats who learn mental health first aid.

  19. Volunteer time off: In addition to matching employee giving to charitable causes, allotting time for workers to volunteer for their favorite nonprofits during work hours is a way to show your company’s commitment to the community while engaging with employees.

  20. Corporate swag: Tap into the innate desire to belong to a community and give swag to your employees. Mainstays like mugs, water bottles, glassware and more spread your brand and are a fun perk for workers.

  21. Music streaming subscriptions: Listening to music can reduce anxiety and blood pressure while improving sleep quality, mood, mental alertness and memory. Streaming music services boast playlists for focus, working from home, creativity and more. Providing a premium subscription to a music streaming service is a way to encourage those benefits, while making employees happy.

  22. Vacation reimbursement: At some companies, paid vacation is actually a paid vacation. Expedia offers leisure travel reimbursement, as well as discounts. Evernote offers employees a $1,000 annual vacation stipend to travel somewhere new. And Airbnb provides an annual travel and experiences credit.

  23. Unlimited PTO: Allow employees to take however many sick, personal and vacation days they require, so long as their work is completed and it’s approved by a manager. It comes with the added benefit of removing vacation liability for employers, who don’t have to pay it out if an employee leaves. This idea has gone mainstream. And some employees at Grubhub and Netflix have access to unlimited PTO.

  24. Yay days and sabbaticals: Aside from health benefits, people rank time off as the most coveted and important benefit. For employers with traditional time off policies in which vacation is accrued, many are examining vacation policies. Something to consider is taking a page from REI, which offers Yay Days — two paid days off each year for employees to get outside, off the clock and enjoy activities of their choice. Other companies offer sabbaticals. Vistaprint offers four-week sabbaticals called Vistabreaks to full-time employees for every five years of service. It can be merged with up to two weeks of vacation for a total of six weeks of paid leave.

  25. Birthdays off: Maybe a full month-long sabbatical isn’t possible, but how about a birthday? At Build-A-Bear Workshop, all associates are given a day off with pay in the month they celebrate their birthday.

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What to Avoid When It Comes to Perks

Your employee perk programs should be one part of your overall workforce plan. For example, if you own a restaurant addressing employee turnover, you may want to focus on efforts that you think can impact employee retention. Whatever your case may be, start by identifying specific and measurable goals before rolling out any new employee perks.

After the plan to measure new initiatives is in place and you’ve selected the perks you’ll offer to employees, create a communications plan. If employees aren’t aware of the perks, they won’t use them and you won’t be able to move the needle on your workforce strategy. Many employees are often unaware that their companies offer volunteer time off, support for childcare or access to mental health services. Communicate about perks regularly and often through the company intranet, emails and by asking employees to share their own experiences with others.

Some perks may need special attention from senior leadership to help implement. For example, if junior members of staff don’t see their management taking advantage of unlimited PTO, they may be wary to take time off themselves, which can lead to higher levels of stress, poor health and burnout.

Regularly track the progress of your goals and consider an HCM platform that can help aggregate employee data, such as turnover rates, recruitment information and employee performance data to make your employee perk and overall workforce strategy even more powerful. The most effective HCM solutions are able to connect HR and finance to better connect workforce plans with the bottom line.

Perks have come a long way since they were first recorded in 1636 when Plymouth began paying a pension to colonists who were disabled while fighting in on behalf of the township. Finding the right mix for your employees should be done carefully.

Ask your employees what perks and benefits they’d like to see. Identify how specific perks can connect to overall company goals like retention or boosting specific aspects of desired company culture. HCM platforms can help provide the data and information you need to track progress toward those goals. Whether it’s through employee surveys, automated PTO tracking or other communication methods, HCM software can even help in the implementation of the employee perk initiatives. Aligning perks to support and reinforce the company culture will help recruit new workers and retain talented ones.