Offering unique perks and benefits is how modern employers set themselves apart from the competition – continue reading for a breakdown of fringe benefits.
In 2018, employee benefits are no longer limited to offering health insurance and a matching 401(k). Thanks in part to the demands made by millennials and younger generations, organizations today are being asked to give much more to their employees. Queue fringe benefits: this is the category of perks and additional programming that are beginning to pop up all over the place.
If you’re a small business owner considering what benefits you will and won’t offer your employees, now is a great time to get familiar with fringe benefits and how they can enhance your overall benefits package. As SHRM points out, a recent MetLife study found that “employees who are satisfied with their benefits are “the most loyal” and that fringe “benefits continue to attract and retain employees”, signifying that the importance of benefits to employees will only continue to grow.
What Are Fringe Benefits?
First things first: Let’s define what a fringe benefit actually is. Fringe benefits are extra benefits (think of them like perks) that supplement an employee’s salary. One cool thing, according to Investopedia, is that fringe benefits are often tax-exempt for the employer.
Employees, on the other hand, technically have to include the fair market value of the benefit on their taxes for the year, but in these instances, we’re talking about the more traditional “fringe” benefits like bonuses. As How Stuff Works’ Money vertical explains, common fringe benefits used to include things like paying for moving expenses and including a stipend for car use during business travel. These days, fringe benefits are beginning to look a lot different than they have in the past.
A few examples of increasingly popular fringe benefits:
- Employer-sponsored wellness stipend (think a set dollar amount given monthly to go towards gym memberships, personal training, classes, etc.)
- Employer-sponsored learning budget (think the same as the above, but given on an annual basis for programming that encourages employee learning and development).
- Access to mental health support (this can be in form of a subscription app!).
- Office snacks or sporadic catered meals
- A unique holiday off that’s specific to your company
- Maternity and paternity support
How Do Fringe Benefits Differ From Regular Benefits?
Think of regular benefits like the things that most people are accustomed to having provided by their job—health insurance, 401(k) matching, and the like. Fringe benefits are different in the sense that these days they’re often not related to money at all, and if they are it’s only tangentially.
Today fringe benefits look more like having snacks readily available in the office and having the option to work from home if you’d like. Further, employees today are more concerned with things like free gym memberships than they are with traditional perks—fringe benefits can be enjoyed here and now, while other traditional benefits are long-term investments that don’t pay off until way down the road.
Why Is It Important to Offer Fringe Benefits?
As with many things in life, it’s the provisioning of the little things that make all the difference. On the employee side, having fun perks can make work more enjoyable and feel like less of a burden. When employees are happy, healthy, and engaged, they’re shown time and again to be more productive and do great work. Simply put, employee happiness matters, and offering unique fringe benefits is one way to tap into that. On the employer side, something as simple as offering a small gym membership stipend or buying lunch for your employees once a week can go a long way—and save you in the long run from having to offer expensive perks like bonuses.
As the SHRM article from earlier pointed out, fringe benefits are important because they can go a long way in inspiring employee happiness and satisfaction which are two principal factors that make the difference between retaining a strong employee and losing them to your neighbor who’s doing more in the fring benefit arena. If you’re not offering top-notch salaries and traditional benefits, offering enticing fringe benefits can give you a competitive advantage when it comes to striking the interest of potential new hires.