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Employee benefits: Leverage this talent retention strategy and maintain a happy workforce


Hiring the right people is only the beginning when building a thriving business. You also need a strategy to retain them and grow your business.

It can be especially challenging when certain skills, such as data wrangling, are in short supply in your region or sector.

If employees can demand high compensation for their skills from another employer, what’s stopping them from jumping ship? 

In many cases, the answer is a competitive employee benefits package that shows your investment in your workers and your commitment to your company values.

It can boost your employee retention rate and insulate it from fluctuations in the market.

In this blog, we discuss the different types of employee benefits, the importance of employee benefits for retention, and the best practices when putting together employee benefits packages.

What are employee benefits?

Employee benefits are any perks employees receive in return for their labor that employee compensation doesn’t encapsulate. 

They address employee wellbeing and career support and are great to include in employee retention strategies.

Employee benefits are easily confused with employee incentives, which tie into performance. However, employee benefits usually apply to groups of employees or a whole workforce without role-specific conditions.

For instance, employee recognition programs are an example of an employee incentive because the employee must earn them. Healthcare is an employee benefit because there is no performance requirement.

What are the 4 main types of employee benefits?

Specific employee benefits come in and out of fashion, similarly to employee retention trends

However, there are four main types of employee benefits:

  1. Financial and retirement, for example, phased retirement plans

  2. Personal time off (PTO) and leave, for instance, unlimited vacation

  3. Work-life balance perks like flexible work 

  4. Employee health benefits and wellness benefits, such as employer-funded gym memberships

What are some common employee benefits examples?

Employee benefits are a great way to maintain a positive working relationship with your employees. 

Traditional employee benefits include things like medical and life insurance. Many employees take health insurance as a baseline requirement.

To stand out from the crowd, you can also offer non-traditional employee benefits or fringe benefits that address the emerging needs of employees in a changing business landscape.

Types of employee benefits

Employee insurance benefits examples

Financial and retirement

- Training and career development

- Life and medical insurance 

- Stock options and profit sharing

- Phased retirement plans

- Flexible spending accounts

Time off and leave

- Unlimited vacation days

- Parental leave

- Paid days for volunteering

- Family leave

Work-life balance

- Flexible work schedules 

- Meeting-free days 

- Onsite childcare for parents

- Wellness programs

- Employee assistance programs

Health and wellness

- Private healthcare plans 

- A lifestyle spending account for expenses from childcare to groceries

- Disability insurance

- Dental insurance

- Vision insurance

- Free in-office yoga classes

Why are employee benefit programs important?

We discuss how employee benefit programs impact your business below, but before we get there, let’s zoom out a bit and discuss why you should prioritize employee benefits. 

Employee benefit programs can reduce your employee turnover rate. You can design employee benefits to tackle specific issues affecting your workforce.

Employee benefits also help you entice top employees, even when you can’t offer them the sky-high salary of some organizations. 

For many workers, work-life balance trumps a big paycheck, and a great combined benefits and compensation package can win them over.

Employee benefits also help you support full-time and part-time employees to do their best work by acknowledging the importance of employee wellbeing

By incorporating work-life balance benefits to reduce burnout, you ensure minimal disruption to your business – that’s a worthwhile investment for your bottom line.

Finally, employee benefits help you put your money where your mouth is regarding your company’s mission and values. 

If you own a small business and you “treat employees like family,” you can prove this with your employee benefits packages.

The positives for employees are obvious. They feel supported and valued by their employer, not to mention confident and invested enough to produce work they’re proud of.

The advantages of employee benefit plans

Now that you understand the high-level importance of employee benefits, let’s discuss the material impact employee benefit programs can have on your business.

1. Improve employee wellbeing

As briefly mentioned above, employee benefit programs can elevate the employee experience by providing extra motivation and support. 

Flexible work is a great example. Flexible work benefits caregivers and people with chronic illnesses, but there’s evidence that it works well for employees of all stripes.

Almost 40% of workers say switching to flexible work improved their mental health, alongside many other benefits. 

How does working flexibly benefit you both personally and professionally graph

Flexible work is a powerful deterrent for employees to jump ship to an employer who can pay more but offer less flexibility. Nearly three-quarters of office workers would choose long-term flexibility over a pay rise.

2. Promote an inclusive atmosphere

Creating an inclusive employee benefits plan can go a long way to building an inclusive culture.

Providing benefits that all employees can access shows you understand and care about the unique needs of your employees.

For example, the number of Americans living in multigenerational households has quadrupled since 1971, with people of color more likely to live with such an arrangement.[1]

Many workers, particularly marginalized workers, belong to a “sandwich generation” where they are caring for their parents in addition to their children. Employee benefits that can make the workplace more inclusive for these people include: 

  • Remote work policies

  • Onsite childcare

  • Elder care benefits 

These inclusive policies can positively impact your business by giving more marginalized people access to the workforce.

3. Improve retention and loyalty

Three-quarters of employees say their benefits package is important to whether they stay with their employer, and employee health and retirement benefits become important over time.[2]

The benefits package over time has improved and increased retention graphic

Yet, retirement and healthcare aren’t the only benefits that can impact retention. The number one reason people quit their jobs is inadequate career development and advancement. 

Employers can combat this by giving employees professional development plans.[3]

4. Improve productivity

Employee benefits can positively impact your bottom line by improving employee engagement. 

High-performing organizations are 12% more likely to offer at least one work or life benefit than low-performing ones. 

Investing in your employees reduces quiet quitting, stopping employees from mentally “checking out” of jobs that they believe don’t value them.

Parental benefits that include family members, like daycare options, are a good example. A 2020 study found that organizations that support working parents have more than five times the revenue growth of those that don’t, in addition to higher retention.[4]

Employee benefits guide: 8 best practices for leveraging employee benefit programs to retain your best performers

By now, it’s clear that creating the right employee benefit systems can help you tap into the benefits of employee retention, higher productivity, and a good work environment. But how can you choose the best employee benefits package?

Here are eight tips to get it right.

8 best practices for creating employee benefits packages: Summary table

Eager to get started? Here’s a quick summary of our employee benefits guide. 

Best practice

Key actions 

1. Hire a benefits specialist

Use talent assessments to evaluate the legal understanding of employee benefits specialists

2. Build the right tech stack

Use global HR technology to provide local employee benefits to global workers 

3. Align employee benefits with your corporate identity

Choose employee benefit programs that support your key message – for example, using clean commute incentives if your mission emphasizes sustainability

4. Keep up to date with employee wants and needs

Use employee feedback to understand employees’ needs and design appropriate employee benefit programs 

5. Make sure your employee benefit programs are inclusive

Choose an inclusive healthcare plan, such as one that offers menopause support and gender-affirming care 

6. Create a balanced benefits package

Ensure you have an employee benefit plan for each major need area, for instance, financial security and physical health 

7. Keep track of benefits, their costs, and ROI

Include metrics for internal mobility because this is a key sign that employees are choosing to stay within your organization 

8. Adjust your employee benefits package as your company grows

Reinvest revenue back into employee benefits, for example, by providing professional development plans to employees 

1. Hire a benefits specialist

One of the challenges of building an employee benefits plan, particularly for global or remote businesses, is ensuring that it complies with employment laws wherever your workers are.

You must ensure you’re meeting key benefits requirements in different areas as mandated by the Affordable Care Act and the Department of Labor. 

For example, in the UK, employers offer full-time employees at least 28 days of paid leave per year.

Some companies decide to use HR outsourcing to administer their benefits programs. 

Outsourcing suits smaller organizations that don’t want to run foul of employment laws but don’t have the budget to hire a full-time HR professional.

If you have the budget to hire someone to manage employee benefits, you can follow the lead of many organizations hiring benefits specialists. Top companies with business specialists in-house include:

  • Snap Inc. (the company behind Snapchat)

  • Yelp

  • TikTok

Use talent assessment tests to evaluate applications to ensure your benefits specialists have all the skills you need. 

You can test job seekers’ communication skills and their understanding of legal concepts.

Beyond HR skills, you should also check that your benefits specialist has diversity training to make their approach more inclusive. If they don’t, provide it to them.

2. Build the right tech stack

The right tech is essential to maintaining a happy workforce because it enables you to make data-driven decisions and track the outcomes of your initiatives.

Skills tests help you hire the right people by showing objective data about each candidate’s skills and limiting the influence of bias on hiring.

Similarly, a lot of HR software programs have features to help you choose which employee benefits to offer your workforce and track which ones your employees use.

HR tech can even help you roll out employee benefit programs in global teams. Some HR technology, like Deel, is available worldwide, enabling global teams and remote businesses to offer localized benefits to employees no matter where they are.

To integrate HR technology into your tech stack, consider hiring a full stack developer to manage your processes – again, using skills testing to hire the best.

full stack developer tests by TestGorilla screenshot

3. Align employee benefits with your corporate identity

Your company values are important to your employees because they give a deeper meaning to their work. However, not all employees believe their employer takes their company values seriously in their decision-making.

Although 82% of employees think corporate purpose is important, only 42% believe it drives leaders’ decision-making. 

Mission-driven decision-making is key for you to stand out from your competitors. 

Employee benefits help with leadership communication by giving executives concrete examples of how they’re acting on their values.

For example, a company that claims to value sustainability can consider offering benefits that support this mission, such as:

  • Cleaner commute incentives 

  • Volunteering days for sustainable causes

  • Company allotments or gardens 

This unity between values and action benefits your corporate reputation and attracts clients. 

It’s also good for your employer branding, helping you to attract and retain top talent.

4. Keep up to date with employee wants and needs

You have to choose the right employee benefits to make an impact, which seems simple, but surprisingly few employers do it.

There is a massive 83% gap between the employee benefits workers have and the ones they want regarding support for their health and wellbeing.[5]

To avoid falling into this trap, listen to employee feedback and use a benefits survey. Don’t just ask which employee benefits to provide. 

Instead, try to understand the issues that affect your employees’ work the most. You can then use this information to craft initiatives that address them.

Don’t simply make one employee benefits plan and never change it. Employees’ needs change as your organization grows. Keep up with the changes by collecting feedback through:

  1. One-on-one meetings between employees and managers

  2. Regular surveys 

  3. Stay interviews

  4. Employee listening tools 

  5. Exit surveys

Finally, publicize your programs. Employees can’t benefit from perks they don’t know about – don’t waste your efforts by not talking about them.

5. Make sure your employee benefit programs are inclusive

Maintaining diversity in the workplace is hard if benefits aren’t inclusive.

You work hard to hire a generationally diverse team. Yet, if your healthcare insurance plan doesn’t provide services like menopause support, you could alienate some employees and cause them to leave.

Be aware that your diverse staff could have different access or healthcare needs to do a great job with your diversity and inclusion initiatives. 

For example, you should ensure that your benefits are trans-inclusive, selecting employee health plans that include gender-affirming healthcare, which can pay dividends for your retention rate. 

Employees who feel “very included” are almost three times more likely to pursue career development and promotion with their employers than those who don’t.[6]

6. Create a balanced benefits package 

Different types of employee benefits satisfy different needs. Some may address career growth. Others help with employee wellbeing.

Aim to cover a lot of bases and put greater emphasis on areas that have more meaning for your workforce. Here are examples of the needs that different benefits address:

Employee needs

Inclusive employee benefits to address them

Financial security

Retirement and pension plans 

Investing in advice and support 

Physical health 

Subsidized or employer-funded gym memberships 

Onsite exercise classes 

Free healthy meals in-office

Managing caregiving responsibilities 

Flexible working 

A sick day allowance for taking care of children and dependents 

Elder care support 

The best employee benefit programs use a mix of traditional and non-traditional benefits to meet a broad range of needs.

Our benefits package at TestGorilla includes:

  1. A learning and development budget

  2. Unlimited paid time off (and encouragement to take the time off)

  3. Share appreciation rights

  4. Wellness sessions every three weeks

  5. An employee referral program with reward tiers

  6. Flexibility in the workplace in the form of flexible schedules

  7. The ability to travel while working 

  8. Yearly offsite get-togethers

  9. A yearly remote tech budget

You can deploy many of these to meet your business objectives directly. For instance, employee training programs can address skills gaps in your workforce and boost efficiency.

7. Keep track of benefits, their costs, and ROI

When it comes to monitoring the success of your benefits programs and swapping out perks that employees aren’t using, HR analytics are your friend.

In addition to monitoring the usage statistics of individual programs, you should also pay attention to broader trends within your organization after implementing employee benefits.

For example, you can use skills tests to monitor the success of upskilling initiatives to check that employees are using these benefits and they have the desired effect.

You should also be looking at internal mobility as a metric. It shows commitment and suggests workers don’t have to look elsewhere for career growth.

One study even found that employees promoted within three years of hiring were 70% more likely to stay with the company than those who weren’t.

You could track internal mobility through internal talent marketplace software. It lets you store skills data and easily spot candidates for internal promotion.

8. Adjust your employee benefits package as your company grows

Finally, research by Friday Pulse shows that bigger companies do not necessarily have happier employees. 

Smaller companies with a strong sense of purpose often employ the happiest employees.[7]

One reason for this may be that, although big companies might rake in huge profits, they don’t share these profits with the employees who helped generate them.

To avoid this, always reinvest a portion of your profits back into employee benefits as you grow. One way to do this and maintain pressure on business growth is to invest more in employee career growth as your profits rise.

For example, you could move from a learning and development model mainly focused on employee coaching to a paid internal and external training balance as your budget grows.

Employees notice you value their work and want to invest in them as much as they have invested in your growth. 

4 examples of companies succeeding with employee benefit plans as a talent retention strategy

Our employee benefits guide shows you how to design strong employee benefit systems in your company, but sometimes, the best way to learn is by example. 

Here are four examples of organizations using employee benefit plans to improve retention.

4 examples of companies succeeding with employee benefit plans: Summary table


Employee benefits examples and their impact


Patagonia provides onsite childcare for employees

Considered a “bedrock employee benefit” by leaders 

Results in a turnover rate of 4% – a third of the industry average 


Introduced the “gender dysphoria benefit”

Enables employees and their dependents to apply for HSBC to pay for their gender-affirming care 

The bank’s turnover rate is half the industry average


Offers non-traditional benefits like unlimited holiday and fertility assistance

More than 80% of employees say they would not leave for a higher paycheck 

Just 18% of employees are considering new employment 


Aligns employee benefits with corporate purposes by offering employees free access to concerts

Attrition fell by 15% after implementing a remote work policy


Patagonia, the sustainable clothing giant, is a pioneering organization regarding employee benefits. 

Childcare benefits, in particular, stand out within its offering. The company provides onsite childcare for employees, enabling working parents to participate fully in the workforce. The chief human resources officer said that these measures are a bedrock employee benefit.[8]

The result is an exceptionally low turnover rate of just 4%, which is impressive considering that the average retail and consumer product industry turnover rate is 13%.[9]


HSBC is an international banking giant that recently announced its commitment to providing gender-affirming care for employees. It calls this the “gender dysphoria benefit,” aimed at removing barriers for trans people in the workplace.

This employee benefit plan enables employees and their dependants to apply for HSBC to pay for their gender-affirming healthcare.[10]

The move has been celebrated by many, landing HSBC on the Human Rights Campaign’s list of the best places to work for LGBTQ people.[11]

This inclusive approach to employee benefits may be why HSBC’s turnover rate has remained low despite fluctuations in recent years. 

Although the bank’s voluntary turnover rate rose to 12.7% in 2021, this is still low for the sector, where the average turnover is 23.4%.[12]


HubSpot is well-known for embracing many non-traditional employee benefit programs, including:

  • Unlimited holidays

  • Flexible working hours

  • Tuition reimbursement

  • Parental and sick leave

  • Fertility assistance

These benefits may explain the loyalty reported by many of its staff. 

More than 80% of HubSpot employees say they would not leave the company if offered more money, and only 18% are considering new employment.[13]


Spotify is a strong example of a company whose employee benefit programs align with its corporate identity. 

In addition to a free premium subscription to the platform, Spotify employees have free access to many concerts, a natural choice for a music-loving workforce.[14]

The company is also a case study for remote work benefits reducing turnover. After implementing a remote work policy, Spotify saw attrition fall by 15%.[15]

Keep valuable skills in-house with the best employee benefits packages

Ultimately, employee benefits are a chance for you to show your investment in your employees and to show them who you are. 

Although another company might be able to offer your employees a higher salary than you can, if you follow these best practices, they can’t replicate the supportive environment you’ve created. 

That’s what keeps top talent around in the long term.

To learn more about improving employees’ work-life balance, read our guide to flexible working.

Or, if you’re ready to get serious about employee benefits, hire a benefits expert with our US Employment Law test.


1. Cohn, D’Vera, et al. (March 24, 2022). “1. The demographics of multigenerational households”. Pew Research Center. Retrieved November 17, 2023. https://www.pewresearch.org/social-trends/2022/03/24/the-demographics-of-multigenerational-households/  

2. “Health and retirement benefits rise in significance in employees’ decisions to stay or leave”. (June 7, 2022). Willis Towers Watson. Retrieved November 17, 2023. https://www.wtwco.com/en-us/insights/2022/06/health-and-retirement-benefits-rise-in-significance-in-employees-decisions-to-stay-or-leave

3. De Smet, Aaron, et al. (July 18, 2022). “The Great Attrition is making hiring harder. Are you searching the right talent pools?”. McKinsey & Company. Retrieved November 17, 2023. https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/the-great-attrition-is-making-hiring-harder-are-you-searching-the-right-talent-pools

4. “Parents at the Best Workplaces”. (2021). Great Place To Work. Retrieved November 17, 2023. https://www.greatplacetowork.dk/images/2021/Rapporter2021/2020_Parents_at_the_Best_Workplaces.pdf

5. Yetman, Jill. (November 16, 2021). “Study: Canadian workplace health benefits critical for employee retention”. Telus. Retrieved November 17, 2023. https://www.telus.com/en/about/news-and-events/media-releases/canadian-workplace-health-benefits-critical-for-employee-retention

6. “Understanding organizational barriers to a more inclusive workplace”. (June 2020). McKinsey & Company. Retrieved November 17, 2023. https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Organization/Our%20Insights/Understanding%20organizational%20barriers%20to%20a%20more%20inclusive%20workplace/Understanding-organizational-barriers-to-a-more-inclusive-workplace.pdf

7. “Organization Size and How it Impacts Employee Happiness”. (August 14, 2020). Friday Pulse. Retrieved November 17, 2023. https://fridaypulse.com/insights/how-the-size-of-an-organization-can-make-employees-unhappy

8. Anderson, Bruce M. (September 10, 2019). “Why Patagonia CHRO Dean Carter Sees Onsite Child Care as a Bedrock Benefit”. LinkedIn. Retrieved November 17, 2023. https://www.linkedin.com/business/talent/blog/talent-engagement/why-patagonia-offers-onsite-child-care

9. Muatz, Scott. (March 30, 2019). “Patagonia Only Has 4 Percent Turnover Because They Value This 1 Thing So Much”. Inc. Retrieved November 17, 2023. https://www.inc.com/scott-mautz/how-can-patagonia-have-only-4-percent-worker-turnover-hint-they-pay-activist-employees-bail.html

10. Niewiarowski, Erik. (November 15, 2023). “10 of the best companies for trans people to work for”. Pink News. Retrieved November 17, 2023. https://www.thepinknews.com/2023/02/06/trans-inclusive-companies-healthcare/

11. “Best Places to Work for LGBTQ+ Equality 2022”. (2022). Human Rights Campaign. Retrieved November 17, 2023. https://www.hrc.org/resources/best-places-to-work-for-lgbtq-equality-2022

12. “Annual Report”. (2022). HSBC. Retrieved November 17, 2023. https://www.hsbc.com/investors/results-and-announcements/annual-report

13. “HubSpot Retention Score”. Comparably. Retrieved November 17, 2023. https://www.comparably.com/companies/hubspot/retention

14. Senjo, Petar. (March 15, 2019). “Should You Apply For A Job At Spotify”. The Frisky. Retrieved November 17, 2023. https://thefrisky.com/should-you-apply-for-a-job-at-spotify/

15. Kidwai, Aman. (August 2, 2022). “Spotify allowed its 6,500 employees to work from anywhere in the world. Its turnover rate dropped”. Fortune. Retrieved November 17, 2023. https://fortune.com/2022/08/02/spotify-allowed-6500-employees-work-from-anywhere-in-world-turnover-rate-dropped-remote-work/ 


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