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6 Unintended Consequences of the Employee Benefits Package

6 Unintended Consequences of the Employee Benefits Package

 

From your benefits package not being appreciated to growing entitlement amongst your team, here are six answers to the questions, “Can you share some potential unintended consequences of an employee benefits package, and how we can avoid them?”

 

  • Employees May Take Their Benefits for Granted
  • Going Overboard With Benefits
  • Could Eventually Lead to a Higher Turnover
  • An Unexpected Tax Expense for Employees
  • Luxury Offices Can Look Like a Rebuttal to WFH
  • Leading to a Sense of Entitlement Among Employees

 

Employees May Take Their Benefits for Granted

One of the potential unintended consequences of an employee benefits package is that employees may become complacent and take the benefits for granted. 

To avoid this, employers should ensure they communicate to their employees the value of their benefits packages and how these can contribute positively to their overall well-being. Additionally, employers should regularly review the benefits offered and assess their effectiveness in addressing employee needs, so that they can make necessary adjustments or provide additional benefits when appropriate.

Furthermore, employers should ensure that employees are actively engaged in selecting and reviewing their benefits packages by providing them with sufficient information and guidance.

Michael Fischer, Founder, Elite HRT

 

Going Overboard With Benefits

There is no perfect benefits package, but there are ways to avoid unintended consequences. One of the most critical aspects is developing a benefits package that meets your employees’ needs without going overboard. Ensuring benefits are not wasted or misused and distributed equally can be helpful.   

Additionally, consider involving your employees in the process by soliciting feedback. They may provide valuable insight into potential areas for improvement or unintended consequences that you may have overlooked. 

Stay on top of benefits management, track the benefit utilization, and ensure that all employees know the benefits to which they are entitled. With a bit of thought and planning, creating an employee benefits package that works for everyone is possible.

Natalia Grajcar, Co-Founder, Natu.Care

 

Could Eventually Lead to a Higher Turnover

A higher level of turnover can happen when employees feel like their salaries or benefits are not competitive compared to other employers, which can make them more likely to leave for better opportunities elsewhere. 

To avoid this, employers should ensure that their benefits packages are up-to-date and competitive, considering current market trends. Employers should also ensure that their benefits are communicated clearly to employees so they understand what they are entitled to and feel like they are being taken care of by their employer.

Asker Ahmed, Director and Founder, iProcess

 

An Unexpected Tax Expense for Employees

When offering employee benefits, planning and communication are crucial to avoid unintended consequences, e.g., an unexpected tax bill for employees. 

With equity compensation, it could be practical to motivate employees. However, it might incur an unexpected income tax bill at the point of exercising or vesting, even when employees aren’t selling their shares. 

To avoid this, employers should weigh the pros and cons of each equity type and plan, and build an effective communications strategy around this. For instance, consider going with a plan type that provides preferential tax treatment, such as an Employee Share Purchase Plan, where it may be possible for the employee to avoid a taxable event before the sale of shares. 

Even if you don’t consider this option, it’s important to educate your employees, before they make a sale, on how to manage any taxes that may be incurred. It’s advisable to start as early as possible and continue during the life cycle of the equity.

Iky Tai, Global SEO Specialist, Global Shares 

 

Luxury Offices Can Look Like a Rebuttal to WFH

The trend of luxurious offices and flexible hours, for instance, has been replaced with higher wages and an emphasis on work-from-home policies. This is something companies should know when splurging on that state-of-the-art headquarters. 

Potential candidates may actually see those comped lunches and massage tables as a ruse to get people out of their homes and back into the office. Flexible work hours might insinuate that late-night meetings are typical. If you’re still touting gourmet donuts and 24/7 office access, your company may chase the trend, instead of setting it. 

Tim Walsh, Founder, Vetted

 

Leading to a Sense of Entitlement Among Employees

An employee benefits package can lead to a sense of entitlement among employees if they come to expect benefits as a given rather than a perk. 

To avoid this unintended consequence, employers should communicate the value of the benefits package, emphasizing that it is subject to change based on the needs of the company and the market. Additionally, tying benefits to specific performance metrics and connecting benefits to company performance can create a culture of accountability and reward employees when they work harder. 

Overall, it’s important for employers to balance providing competitive benefits and avoiding unintended consequences such as entitlement. By communicating the value of the benefits package, tying benefits to performance, and regularly reviewing and adjusting the package as needed, employers can create a culture of appreciation and accountability that benefits both employees and the entire company.

Derek Bruce, Senior Director, Newcastle First Aid Courses

 

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