Gone are the days when a fat paycheck was all it took to keep an employee happy. Today, the millennial workforce has begun to see beyond mere compensation while choosing a job that fits their career goals. There seems to be a transition toward a forward-thinking approach to creating a safety net for themselves and their families. Thus, they have started to prefer jobs that provide the right balance of employee benefits and compensation.
In a study conducted by Glassdoor, over 80% of employees are likely to opt for a job that offers additional perks and benefits, rather than a higher pay. Thus, the one size fits all approach of companies has long been replaced by a more benefit-heavy compensation that suits the personal requirements of employees.
Why Are Employees Opting for Additional Benefits
So, let us understand why has there been a shift of employees preferring additional benefits over higher compensation packages –
Healthcare Can Be Expensive
With over two-thirds of people citing healthcare as the primary reason for bankruptcy, it has become a primary issue of concern for every salaried employee. A huge paycheck holds little value if the employee has to spend most of it on healthcare costs.
Following the Covid-19 pandemic, India's overall health expenditure saw a rise of nearly 73 percent from Rs 2.73 lakh crore in 2019-20 to Rs 4.72 lakh crore in 2021-22, or 2.1% of the GDP. Similarly, the average healthcare spending of an Indian was Rs. 2,494, which was twice the amount spent by the government at Rs. 1,261. So, with the millennial workforce remaining updated with such information, it is not surprising that they consider robust healthcare insurance as a must while choosing their jobs. With an exponential rise in health risks globally, it is indeed one of the most valuable benefits that an employee can have in the present day.
Importance of a Secure Future
Every employee is inevitably working to ensure a financially secure retirement plan in the future. However, the latest Federal Reserve Survey of Consumer Finances found that the median savings in American retirement accounts was $65,000 and over half of all Americans are at risk of being unable to maintain the same standard of living as they had before retirement.
A robust retirement fund, provident fund policy, or similar benefits are definitely on the priority list of most millennial employees who would want financial stability after retirement. Employees also prefer the option of matching the employer’s contribution to such retirement funds to help them grow stronger. Thus, a good retirement plan definitely ranks higher than a bigger pay package for most millennial employees looking for a secure future.
Prioritizing Work-Life Flexibility
Post-pandemic, most employees have experienced more flexible work hours and understood the benefits that such hybrid work life brings and how it drastically improves the overall work-life balance for the employees. Even companies understand the advantage of working from home with studies showing that in advanced economies, over 20-25% of the workforce can work from home between three to five days a week. Similarly, a sample study conducted by McKinsey found that most companies planned to reduce office space by 30% post-COVID. These figures reflect the fact that work from home is an upcoming subject. It has garnered the approval of a considerable share of the global workforce due to the increased flexibility that it provides. After experiencing the comfort of working from home, several millennial employees have started to seek jobs that offer the option of working from a hybrid workplace setting at least a few days a week.
These are only some of the reasons why employees today have started to prioritize additional benefits over a higher CTC. The fact of the matter is that companies can no longer view employees solely from a professional lens, pay them a good CTC, and ensure that they keep working.
The need of the hour is a holistic compensation that is balanced between good pay and employee benefits. Let’s take two examples for a better understanding.
Assessing the Dilemma
Imagine you’re offered a job that has a great CTC but no benefits and another one with good pay but several additional benefits like health insurance, retirement options, and a flexible work-life balance. Let’s say you opt for the former where you get a great pay. You’d still have to pay for your healthcare insurance and save up for your retirement fund yourself. This will lead to a consistent drain on your savings with the same or lesser pay. Further, you would have to work from the office every day and it will eventually put pressure on your emotional and social well-being.
In contrast, if you choose the latter, you would not have to pay for your healthcare insurance, nor do you have to worry about your retirement savings. Your healthcare would be paid for by your employer and you can retire with a robust retirement fund. Additionally, you can enjoy the flexibility of the job with a great work-life balance.
Well, the choice would obviously be the latter, where you can have a more stress-free and financially secure career.
This is something employees have successfully understood and is the reason why they prefer additional benefits over a higher CTC. From the point of view of the employer too, it helps reduce costs to the company as well as build better interpersonal relationships with the employees by showing them that the organization cares for them.
Moreover, this is very important in an age when employee retention has become a serious issue. So it is necessary for employers to create a personal relationship with their employees by providing them benefits that address their unique needs. Especially considering that most employees choose jobs offering holistic benefits and opportunities for development rather than a hefty remuneration.
Batik is an employee benefits marketplace. We have built this on a mission to help employers elevate the benefits offered to employees. Batik allows employers to access benefits across various categories such as finance, insurance, gift cards, health, fitness, etc at exclusive prices. Employers can provide benefits with just one click and support their workforce’s well-being with zero administrative burdens. In simple words, Batik is like an amazon marketplace.
Let Batik do the heavy lifting and offer flexible upskilling and reskilling benefits to your employees that not only prepare them for all kinds of workplace challenges but also help you, as an employer, create an interactive and happy work environment.