What are fringe benefits?
Fringe benefits are supplementary forms of payment that employers provide employees in addition to a salary. While employees must receive government-mandated core benefits, fringe benefits afford additional assistance to employees in their day-to-day lives. Employers can deliver fringe benefits in various forms, such as:
- Gift cards
- Savings bonds
- Company car
- Student loan refinancing program
- Critical illness insurance
- Pet insurance
Fringe benefits are cash equivalent and can be qualified as taxable, partially taxable, non-taxable, or tax-deferred. Depending on the number of hours worked, companies also sometimes offer fringe benefits as an incentive to high-performing freelance workers.
Why should HR leaders care about fringe benefits?
Organizations use fringe benefits to provide holistic support to employees. Rather than just providing a salary, employers offer fringe benefits to address the employee as a whole person with a broad array of interplaying needs. A system of personalized benefits can aid in:
- Attracting top talent
- Driving engagement
- Boosting retention
- Reducing financial stress
What can HR leaders do to implement a successful fringe benefit program?
HR leaders can formulate and facilitate a solid fringe benefits framework through these practices:
- Outline objectives. Determining the goals and overall purpose of fringe benefits can assist companies in creating a program that addresses employees’ needs and fits the budget. Aligning benefits objectives with business and HR strategies can ensure that the fringe benefits promote the company’s ultimate goals.
- Play by the rules. Understanding the ins and outs of the legalities surrounding fringe benefits can help HR leaders build a benefits program that suits employees and employers. Enlisting the help of an employment law specialist can help the organization adhere to local and federal laws.
- Offer an array of choices. Employees with different lifestyles or in different life stages may find certain benefits advantageous over others. Offering various options allows employees to decide which ones to accept and use.
- Explain. Often, employees don’t fully comprehend the benefits or how to use them. Communicating how the benefits program works and explaining each option helps employees understand and effectively utilize the company assistance program.
- Assess. Regularly evaluating the effectiveness of the fringe benefits program allows HR leaders to regain alignment with their long-term goals. For example, HR leaders can periodically survey employees to collect feedback to improve the benefits program. Collecting the raw data from employees gives HR leaders valuable insight into offering fringe benefits that can elevate the employee experience. The objectives should reflect a fluid and agile approach towards satisfying employee needs.
Recommended For Further Reading
How can fringe benefits improve company culture?
Fringe benefits can soften the stress in employees’ everyday lives, so they can demonstrate higher-performance work, feel enthusiastic about their jobs, and engage positively with coworkers. Ultimately, investing in employees through a supportive fringe benefits program can nurture, enliven, and strengthen the company culture.