In a job market like today’s, the value of talent has increased manifold. Employers are aware of the immense impact that they can bring and also create an edge over their competitors. But how do we attract or retain such talent? Compensation or salary is something that every employee evaluates. But in such a difficult market, salary becomes secondary since every company is willing to stretch to attract great talent. What makes a difference? The employee perks and benefits are something that can become a differentiating factor in being an ’employer of choice.’ We always witness that certain brands become an aspiration for some people. How do you think this happens? Yes, one of the factors is that these companies make great products or deliver excellent service in their sector. But another factor is they think out of the box; they are innovative in their approach, which sets them apart from others. This can only happen when their people build a culture that allows it to happen, and perks & benefits make this possible.
Yes, Perks and benefits are different!
While we interchangeably use these terms during casual conversations. But they are not the same. They have minor differences. Let us first define both these terms and then understand the differences.
What are the Perks?
Perks are generally components that come with a particular job role or joining a company. They are factors that help the individual to perform the job more effectively. Unlike typical employee benefits, an employee receives perks over and above the salary. It is more like a motivating factor for an employee to join a particular company. Not just that, it can make the employee recommend you as an ’employer of choice’ to others. It is a great tool to increase job satisfaction.
Examples of Employee Perks
An employee perk can be as simple as providing free snacks inside the office for employees, which can make those small breaks more meaningful. A perk can also mean providing a company car to the employee, which they can use for office and personal commute. Another perk can be having a small area where employees can work out. You can also call it a gym that can take care of employee well-being and please the satisfaction of your people. Such gestures benefit both the employee and the employer. A specific area for the gym will appeal to those who want to focus on their physical fitness, and for the employer, it will give them a healthy workforce that will take fewer sick leaves, and productivity will rise. In today’s time, problems related to mental health, such as stress, burnout, or other mental stresses. Companies conduct or facilitate mindfulness sessions for employees.
What are the Benefits?
Benefits are non-wage compensation provided to employees over and above their salary. Many such components are somewhat also advertised in the job posting. If they are not advertised, then the job opportunity will appear to be below standards to many. As compared to perks, benefits are more reliable since they are fixed and assured to an employee. Benefits are generally meant to minimize the fixed cost of the employee.
Examples of Benefits
The most common forms of employee benefits are childcare, health, and dental insurance. These are pretty basic standards provided by most employers. Others can include rental allowances, travel allowances, or paid holidays to employees. The whole idea behind giving an employee a benefit is minimizing the employee’s fixed cost. The company pays for expenses that the employee will have to pay from their pocket anyway. It gives employees immense satisfaction and helps them stay with the company for longer periods.
Summarizing the overall difference
Benefits are means to enhance the salary component of the employee, whereas a perk is more of an added incentive that comes with the job. Benefits keep the employee satisfied, which perks make the workplace more vibrant and enjoyable, and where people can collaborate and innovate—providing a gaming room or allowing employees to take small naps between work. They play a vital role in enhancing the quality of work since they impact the mental stability of employees. Though both are very important for the business, they also have certain limitations. Benefits are more fixed and assured to every employee. But perks are unstable.
On the other hand, the level of the employee also matters. For instance, the company tracks the punch-in and punch-out time of all employees, but the CXOs are excused. This is a perk for them. Moreover, a senior leader will enjoy a far better-valued benefit than an average employee.
Why is it essential for you to know the difference?
However, benefits are something that is benchmarked with the entire industry. Since it involves a budget, an HR can hardly make much changes to the benefits policy of the organization. But perks are flexible and can be made more attractive. This means that perks can be a real differentiator in attracting talent since they involve no cost or a substantial amount of money. On the other hand, benefits policy cannot be enhanced above the industry standard without a rationale. So it is very important for HRs to know that perks can be more impactful in attracting new and good talent, whereas a benefit can act as a retention tool for your organization.
Since benefits and perks are different in nature, nothing makes one more important than the other. Both are valuable in creating a great place to work. There would be some organizations who may not believe in including both components in their total rewards strategy. Still, since we now know the difference between the two, we can use these two components more effectively. As we advance, many of these benefits are going digital, and perks will become experiences that will be altered by technology.
