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Employee benefits administration: The key to staff satisfaction

Find out how employee benefits administration can improve retention and tips to choose the right perks for your team.
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Published 20 Dec 2023
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Updated 31 Jan 2025
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8min read
a group of employees having a meeting and smiling

In today’s competitive business landscape, offering an attractive employee benefits package is more crucial than ever. However, the administration of these benefits can often be a complex and daunting task for employers.

While a great employee benefits package attracts talent and supports workplace wellbeing, effectively managing employee benefits administration lets these work perks go further through thoughtful design, implementation and optimisation. To explore some creative and budget-friendly reward ideas, check out our guide on employee reward ideas that don’t cost the business.

Itโ€™s also more than just compliance โ€“ well-managed employee benefits that are right for your organisation can also help with employee retention, organisational stability and employer reputation. Before we jump into administering employee benefits, letโ€™s explore its intricacies as well as the benefits and challenges involved.

What is employee benefits administration?

Employee benefits administration refers to the planning, management and execution of an organisationโ€™s employee benefits program, which can be both monetary and non-monetary in nature. While it is a management process and a business strategy, tasks in this area usually involve dedicated personnel, software and workflows.

What role does HR play in managing employee benefits?

Since employee benefits management involves staff welfare, core functions in this context are normally assigned to an organisationโ€™s human resources department.

While HR personnel can include benefits administration within their scope of duties, larger organisations sometimes prefer to engage a benefits administrator, an in-house benefits administration team, or a third party benefits administration service such as a professional employer organisation (PEO).

Work tasks related to employee benefits administration include:

  • Employee onboarding and offboarding
  • Enrolling employees into benefits programmes
  • Tracking benefits usage
  • Benefits communication and training
  • Designing appealing benefits programmes
  • Budgeting benefit costs
  • Adhering to employee benefits compliance regulations
  • General administration for invoices, processes and documentation
  • Sourcing and managing benefit vendors like insurance
  • Evaluating and improving benefits programmes
  • Reviewing and updating employee benefits information

How do benefits impact employee morale and company culture?

a group of employees where a man is shaking hands with another manEmployee benefits help set an organisation apart from the rest, especially if a robust benefits package is paired with competitive pay. Attracting, hiring and retaining talent doesnโ€™t just save on employee turnover costs โ€“ it can also boost workplace productivity and employee satisfaction.

For insights into the top benefits employees are seeking, our article on 10 employee benefits every company should provide offers valuable information on what to include in your benefits package.

Positive work environment

Employees that are well taken care of financially, physically and mentally are likely to be more motivated and productive. Benefits that contribute to employee wellbeing like wellness programmes, healthcare benefits, flexible work hours, retirement plans and insurance all reduce stress, letting employees focus on doing their best work.

Employee engagement

Benefits are one of the ways an organisation can demonstrate values and culture โ€“ employees feel more connected to company priorities if they are aligned with employment perks. They are also more likely to be engaged and invested in their work if they feel appreciated and recognised, leading to better loyalty, commitment and performance.

Job satisfaction

a woman doing remote work at a scenic location

Comprehensive and competitive benefits show that an organisation values employee wellbeing, which in turn improves employee morale and encourages retention. Job candidates who feel valued are more likely to join the company and stay, bringing valuable skills and cultural fit to the table.

Tackling common challenges in benefits administration

Now that we know what employee benefits and benefits administration can do for an organisation, letโ€™s talk about the challenges and how to manage them.

Balancing costs and value

Creating a competitive and comprehensive employee benefits programme is important, but budget constraints will be the main bottleneck here. Youโ€™ll need to determine what works best for your organisationโ€™s situation and your employeeโ€™s needs. Considering how next-generation work benefits impact your payroll process check out our blog that explores this in detail here.

Figure out what benefits are important to you and your employees and focus on the necessary and relevant. For example, food and drink benefits would be nice for organisations that do most of their work in person, but a remote-first company would be better served by implementing a work from home equipment allowance instead.

Certain benefits providers also offer bundled packages for more value, such as health insurance combined with a wellness programme that incentivises fitness.

You can even consider offering voluntary benefits where employees get to customise their benefits programmes โ€“ providing options ensures that employees make use of the benefits provided while also reducing wastage and costs.

Compliance with government regulations

Depending on where you are in the world, government regulations may apply to your organisationโ€™s employee benefits. Ensuring compliance with local regulations is essential, since failure to comply can lead to complications and legal action.

Some benefits also have minimum regulatory requirements, like leave policies and insurance. If the benefits are monetary, there may be tax implications that you and your employees will need to be aware of as well.

Adapting to changing employee needs

As with all business strategies, employee benefits should be reviewed and revised regularly to better meet your organisationโ€™s needs. The employee benefits packages that work for now may not work as well in the future, especially if there are changes in the company.

When designing the processes for benefits administration, make room for procedures that gauge employee feedback, such as regular surveys, exit interviews, job acceptance rates, benefits utilisation rates and more. Having this data will help with pinpointing benefits that contribute to employee satisfaction and organisational growth.

Choosing the right benefits packages for your employees

To best reap the rewards of employee benefits at your organisation, make sure you select the right perks. Identifying what your employees really want in an employee benefits package will help you curate an employee experience that is both competitive and effective in contributing to employee morale.

Employee demographics can help you predict what kind of benefits will be right for your employees, as different age groups and different employee types have different priorities in life. Benefits usage statistics are also handy as they tell you which benefits are being utilised and which are not.

You can even just ask your employees outright about the kinds of benefits they prefer โ€“ most employees are happy to provide suggestions and feedback as it shows that you value their opinions and recognise their contributions.

Here are some of the most common benefits available:

Financial and retirement benefits

a man and woman discussing a health insurance form on a clipboard

Benefits should cater to employeesโ€™ expectations and priorities. Naturally, the first kind of benefits preferred are monetary perks that add on to an employeeโ€™s compensation.

Insurance coverage helps make sure that employees are well taken care of should anything untoward happen to them. They sometimes even include preventative care to manage any issues that may happen further down the line. Organisations can cover just their employees, but they can also choose to cover dependents such as spouses, domestic partners and children.

With so many types of insurance policies available on the market including dental, vision, medical, life, disability, critical illness and long-term care (LTC), it can be daunting to sift through all the options. Certain providers have bundled plans for businesses which may help with decision making and costs.

Retirement plans and pension plans are also popular options for employee benefits โ€“ future planning is essential even for employees who have no plans of stopping work any time soon.

Retirement plans are divided into two types:

  • Defined retirement plans like pension plans where employers contribute to a retirement fund on behalf of their employees
  • Defined contribution plans where employers partially or entirely match voluntary retirement contributions made by their employees

Nontraditional financial benefits like employee share schemes (ESS) can further sweeten the deal as an add-on to existing benefits packages, encouraging commitment to an organisationโ€™s success since it will directly benefit employees in monetary terms.

Health and wellness benefits

Health and wellness benefits used to be less popular than traditional financial and retirement benefits, but they are quickly becoming preferred workplace benefits. Employees are now more aware that health includes physical, mental and emotional wellbeing and theyโ€™re prioritising organisations that pay attention to these needs.

Wellness benefits can include things like gym memberships, incentivised wellness programs, allowances for equipment, tools or accessories, as well as course or class subscriptions.

These may seem less tangible than other types of benefits, but your investment in happy and healthy employees will lead to returns in workplace productivity, company culture and employee engagement.

Work-life balance benefits

a mother working from home showing affection to her daughter

Other benefits commonly provided by employers include allocations like paid time off (PTO), which can cover vacation days, sick leave, compassionate leave and parental leave. While employees are hired to do a job, they still have lives of their own outside of work โ€“ benefits like these show your staff that they matter to you as people, not just for what they can do.

Outside of time off, employers are also going with nontraditional benefits like remote work and flexible schedules, child care facilities, gym facilities, commuter expenses, personal and professional development assistance, housing benefits and parking passes. All of these help support employeesโ€™ lives beyond the office.

Streamlining the benefits administration process

With so many perks on the menu, employers and employees alike need to be well informed in order to make use of the benefits provided. This is where effective employee benefits administration comes into play.

Using benefits administration software

Managing benefits becomes more difficult when more employees and more perks are involved โ€“ manually doing everything wonโ€™t cut it after some time. Benefits administration software can take on some of the load by automating processes and integrating with other systems you may have, such as HR and payroll software.

Pick a benefits administration software solution that grows with your business, whether thatโ€™s in terms of headcount or location. While a small local company of just ten people may be able to get by without benefits administration software, itโ€™s better to be prepared as expansion can happen in the blink of an eye.

Benefits administration software can also facilitate the onboarding and offboarding process by helping with employee benefits enrollment and termination, employee benefits training and records access.

Providing clear communication to employees

All the benefits in the world will be for nothing if the employees at your organisation are unclear on how to make the most out of your provisions. Consider creating an employee benefits guide or conducting benefits training to help employees understand the benefits they are eligible for.

HR personnel like benefits administrators can also provide support and coaching for employees throughout their time working with the company. Theyโ€™ll need to be familiar with the benefits involved in order to inform employees about enrollment, deadlines, requirements and other relevant information.

Ongoing evaluation and adjustment

Designing a great employee benefits package isnโ€™t a one-off task โ€“ best practices like establishing success metrics, goal setting and targeted implementation timelines are an important part of the benefits administration process.

Data like this can then be used to better inform you on the programmeโ€™s effectiveness and usage, allowing for ongoing evaluation and adjustment that optimises and improves on the employment perks involved. Not only does this save on costs and wastage, your employees also get to enjoy benefits that theyโ€™ll use, leading to better employee satisfaction overall.

Should you outsource benefits administration?

Benefits administration can be tricky and time consuming โ€“ many firms go with an in house benefits administrator or a benefits administration team. However, you may find that you donโ€™t need dedicated personnel for benefits administration all year round, which is where a professional employer organisation (PEO) or a benefits outsourcing company can help.

Benefits outsourcing providers handle everything there is to do with employee benefits administration, from benefits package research and development, all the way to implementation and employee support. Engaging a third party to manage your employee benefits lets you focus on other business functions that may require more of your time and attention.

 

How can Employment Hero help?

Setting up employee benefits can be a complex process for small and medium enterprises (SMEs) since it involves so many moving parts. Effective employee benefits administration encourages utilisation and keeps employees engaged and motivated.

Thinking about how to best implement your employee benefits programme? Employment Heroโ€™s employee engagement platform can help you easily manage work perks and keep staff in the loop on your organisationโ€™s offerings. From cashback offers to reward and recognition features, your employees are in for a real treat.

Want to learn more? Book a demo with one of our small business specialists today and check out our blog posts to find out how being more positive can enhance overall employee wellbeing.

Nicole Lee
Content Marketing Specialist - Employment Hero
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