Articles, Operating a Business

Why are Employee Benefits Important: 12 Reasons

Written By: Isabelle Jordan
Reviewed by: Mike Reyes
Last Updated December 1, 2023

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It’s no secret that the current labor market is overstocked. As a result, employees quickly get tired of working in one company and looking for a new place. That’s why many HR managers and business owners puzzle over how to increase employee engagement. Benefits and privileges are the best way to motivate employees.

Studies show that the more employee-oriented a company is, its corporate culture strengthens. Employee engagement is a concept that can be interpreted in different ways. It includes active participation in the company’s development, enthusiasm at work, and pleasure from their results and successes.

In general, involved employees love their work and care for the company. They stick to their goals and values a lot. Therefore, a company that supports and encourages employee engagement will work better. But that’s just one reason, and twelve others can be found in the further article.

What are employee benefits?

A benefits package is a set of different benefits provided by the employer as incentives for employees and attraction of candidates, creating a more positive image of the company, not offered by labor law, and a package of social benefits. Every company decides for itself about the set of benefits for employees. 

It depends on the organization’s financial capabilities and management’s ability to understand how necessary it is to encourage or attract staff in this way. A benefits package allows enterprises to reduce the cost of an employee through the benefits they provide to employees. It seems that it is a “tasty candy” for both parties.

How to choose a bonus package?

millennial counts his money at the end of the month

When choosing a social package, one should consider the employees’ age group and preferences. For example, Generation X focuses more on income, career growth, and stability. However, despite their age, they are usually ready for constant development to learn new technologies. They realize it is impossible to achieve excellent results without going ahead.

Such employees would be glad if the company offered training in computer technologies, a foreign language, or modern staff management methods. But, unfortunately, the younger Generation Y takes on well-paid jobs and disregards hobbies, traveling, and the desire to spend enough time with the family.

They will happily accept such “perks” as numerous staff parties and team-building activities, compensation for sports activities, material benefits for marriage and childbirth, health insurance and sanatorium-resort treatment for family members, and organization of holiday events for employees’ children.

Importance of employee benefits

Offering employee benefits is of tremendous value as it shows them that the employer invests in their physical and mental health and future. In addition to providing solid benefits packages, employers can also offer reward programs to celebrate employee achievements and loyalty. For more detailed information on why employee benefits are essential, see below.

1. Engaged employees work better

Research shows that employees who love their company are 21% more productive than those who don’t care about their employers’ future. In addition, employees who put effort and heart into the company are more likely to be proud of working here, enjoy coming to work, and feel valued.

Bringing people into the company’s life with extra responsibility or a competitive moment, people in business increase the entire organization’s productivity. So, everyone stands to gain from it.

2. Keep the best employees in the company

An engaged employee is less likely to change jobs because he or she is pleased with a larger salary or a comfortable location. Involvement gives people a sense of self-worth and enjoyment of the work process. That is why this factor can outweigh material ones.

3. Engaging employees increase customer satisfaction

People who are passionate about their work make a better impression on customers. Why? Because they inspire with their passion, it’s impossible to stay indifferent. Engaged employees tend to make more effort, leading to higher productivity, better service or products, and sales growth.

4. Engagement improves corporate culture

As a rule, it’s easier to work with engaged people. Not just because they’re more fun, positive, and happy but also because they give an example of how cool it is to be engaged. What is a culture of employee engagement? It is an approach based on company values.

Creating a culture of engagement requires working with employees to ensure the company’s mission is in the work process. In the ideal case, the employees will ensure that everything aligns with the company values. Encouraging the most active employees is one step toward creating a good company culture.

5. Employee engagement is a signal of success

man in white dress shirt sitting beside woman in black long sleeve shirt celebrating and important Employee Benefits campaign

It’s unnecessarily a determinant of business success; instead, engagement often appears with personal or team success. In other words, engaged employees are super productive, as they know their work is essential. As a result, they feel valued, their accomplishments are recognized, and therefore they are a significant component of the company.

Consequently, engaging employees is crucial not only for a comfortable work environment but also for increased productivity. To achieve this, owners must be democratic and share responsibility with others, recognizing their contribution to the work’s success. And then the result can surpass all expectations!

6. Stay close to your subordinates

In the Hays study, 60% of respondents reported that the boss’s primary motivating factor is a pleasant personality. He/she should not take employees as tools for achieving the company’s financial goals but as people. The boss should hand out assignments and control the execution process and become a mentor and be open to questions and suggestions. At the same time, 56% of respondents said an unpleasant manager was a severe demotivating factor. In comparison, 40% stated they had quit because they didn’t find a common language with their manager.

7. Free schedule as a way to reduce staff costs

macbook pro displaying a part of a global remote team

In 2018, 13% of the Kelly Services survey respondents mentioned remote working and flexible hours as motivational factors. It is a successful option amidst the pandemic as it creates a comfortable environment for employees and helps employers reduce staff costs — 36% of companies in the KPMG survey said they had chosen that way to save money.

8. A path to a higher position as a way to motivate employees

People want to gain experience and do their projects. It makes them work more efficiently than their colleagues, who come to serve another day for a paycheck. If entrepreneurs channel such people’s energy in the right direction, it will do well for the company.

Employees should be allowed to set up their projects, represent the company at events, and propose solutions to improve their work. Employers have to let them know to be valued. Try to let them explore new directions and share their view of the company’s development.”

9. Gamification as a way to improve teamwork and stimulate creativity

Gamification can increase staff engagement by 20-60%. In addition, it helps to improve teamwork and stimulate creativity. Gamification is based on game mechanics with virtual currency, ratings, and prizes. It is grounded on the need to self-actualize and get recognition and works best for companies where employees are digital-oriented: so they regularly use gadgets. The simplest way to integrate a more formalized, gamified approach is to adopt top-rated recognition software. You can automate many aspects of this, and increase engagement across entire teams as a result.

10. Health insurance as a way to get employees to be less sick

an image depicting important health benefits package an employer can offer

Corporate health insurance allows employees to be treated and diagnosed at private clinics for free. In exceptional cases, it pays for hospitalization and long-term inpatient treatment. In addition, employees can get vaccinations, routine checkups, and dental care. Sometimes family members are also covered. Thus, employees will be less likely to get sick and take sick lists.

11. Share in the company as a way to keep for an extended period the most valuable employees

If the top manager becomes irreplaceable, the employer can offer the employee to become a part-owner of the business. When stocks are lent, it is usually a small package — up to 10% of the share capital, but it also gives the right to receive dividends and take part in stockholder meetings. In addition, stocks can be sold or left as an inheritance, a powerful motivation for top managers. Thus, the employee is not just attached to the company; they become interested in its profitability.

12. Training for the account of the company as a way to improve employee efficiency

Masterclasses, training, team building, English courses, or tuition fees at universities and business schools are essential for loyalty programs. This method can dramatically improve employee performance. Continuous and high-quality training makes the staff competent and helps employees to move up the career ladder faster. But training shouldn’t be formal, dull, and distracting from significant duties. So employers should choose the lecturer and training program carefully.

Examples of benefits employers can use

If a top manager leaves, it puts the entire company at threat. They can take away half of the team and partners, crumb profitable deals, or break trade secrets. That’s why knowing the most effective tools to help hold valuable employees, both managers and rank-and-file workers, is significant. 

Free dress codeHow to balance comfort and professionalism? The best solution is to let employees determine the dress code themselves. After all, if owners are confident in their skills, there is no doubt that they will do a quality job regardless of how they are dressed.
Sports during working hoursEquipping an office with a music room and similar activities reduces employees’ stress levels.
Music room in the officeThe office environment and company culture can support employees’ mental and emotional welfare. For example, it’s good if the office has healthy meal options for staff. And a great option is weekly massage and yoga sessions available during office hours to keep everyone comfortable and creative during the workday.
Free books and E-booksEmployees who love reading will certainly welcome free access to e-book services. Employees can also join book clubs with their colleagues or create them to discuss what they’re reading. This will pull them together and strengthen the team. 
Freedom and funding of travelingEmployees can spend a certain amount of money on traveling anywhere in the world. One study showed that travel reduces the risk of heart disease. Buying travel insurance policies for a few of the best employees from a travel insurance company is a brilliant solution. Firstly, the cost of travel insurance will be very favorable. And secondly, it will serve as an excellent motivator for other employees.
Insurance package for employees’ petsAccording to studies, work-related stress costs the U.S. economy $500 billion annually. 80% of life coaching clients say these consultations help them cope with life’s problems.
Massage and yogaThe Scripps Research Institute provides an insurance package for employees’ pets. One study showed that having a pet with brokers reduces their blood pressure, which was not seen in those with cats or dogs.
Confidential psychological counselingWhen working hard, it’s nice to have an employer who allows plenty of rest. A proper work-life balance is an outstanding feature that employees will appreciate. For example, at Metis Communications in Boston, employees get birthday days off and a bonus week off during the last week of December in addition to three weeks of vacation time. After four years with the company, employees receive the fourth week of vacation each year; after five years, employees are eligible to get Friday vacations in the summer.
Lots of free timeWhen working hard, it’s nice to have an employer who allows plenty of rest. A proper work-life balance is an outstanding feature that employees will appreciate. For example, at Metis Communications in Boston, in addition to three weeks of vacation time, employees get birthday days off and a bonus week off during the last week of December. After four years with the company, employees receive the fourth week of vacation each year; after five years, employees are eligible to get Friday vacations in the summer.
Focus on the FamilyDeloitte offers benefits focused on parents and parents-to-be. For example, new moms and dads can get up to 16 weeks of paid parental leave. The employees can also use leave to care for a partner, child, or parent with a severe health condition. Moreover, employees can get a refund of up to $25,000 for adoption or surrogacy maternity expenses.


When it comes to motivating employees, external financial rewards become just one of the tools. Employees need regular personal and team recognition to do their jobs even better and be valued and listened to by management for their projects, problems, and ideas. In addition, employees should be given tasks that promote their personal growth and career development.

If it is possible, they should work on their own and independently. And employees should know that they are contributing to the company’s success and helping realize its mission or business. Job satisfaction and intrinsic motivation can significantly improve the functionality of the organization and the productivity of each employee and the team as a whole and positively impact the total score.

A company’s profitability depends heavily on innovative suggestions and ideas from employees, and an efficient communication process between management and employees helps solve problems and increase loyalty. HR management systems such one provided by Lanteria can also help manage the task. Regardless, finding the motivational methods, such as benefits, that work best for your employees is essential to ensure the company’s most crucial resource — the ability to grow and develop by constantly building capacity.


What is the best and fastest way to increase employees` loyalty to the company?

Corporates. The example of many successful companies confirms that. For instance, Smule employees at a music app development company can bring their instruments into the office for weekly jam sessions. In addition, various holiday parties include a Halloween costume party, Thanksgiving dinner, Wednesday game nights, and a monthly karaoke party.

What are the two ways to reward the best employees?

There are two ways to encourage employees.
1- Motivate the team through mass events, gifts, or bonus systems.
2- Publicly reward the best employees, setting an example for them.

  • What three employee benefits besides cash rewards are the most important today?
  • Among the essential options of motivation for employees:
    Taking care of employees` health;
    Encouraging employees to play sports;
    Flexible working hours.

  • What are four reasons why employee bonuses might not work?
  • Poor preparation for implementing changes.
    Weak link between results and rewards.
    Employee burnout.
    Lack of a systemic approach.

  • What are the five main reasons for employee benefits?
  • Employee Acquisition. An attractive bonus package can provide highly qualified employees.
    Employee Retention. An above-average benefit plan can go a long way in keeping employees at a business. 
    Respect. Offering employee benefits shows that an employer understands and respects the needs of employees.
    Health. By offering employee benefits, an employer can keep the employees healthy, increasing the efficiency and productivity of a business.
    Employee attitude. A competitive benefits plan is vital as it can improve employees` attitudes about their job. 

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