Many countries have their own systems of paying their employees and laws and regulations regarding payroll, but an often overlooked factor are the benefits employees receive along with their payroll, also known as a compensation package.
Many employees will expect to receive more than just a paycheck – especially employees residing in the United States. Here are four common benefits employees receive in the United States as part of their compensation package:
Many companies in the US are legally-formed corporations, which means the employees of the corporation have a duty to act in the best interest of the shareholders/owners of the corporation. This idea has recently been brought to the forefront of the news with Elon Musk’s purchase of stock in Twitter. Many financial experts are arguing that the employees are not acting in the best interests of the owners of the company by resisting Musk’s purchase of Twitter, since Musk has offered to buy shares of the company at a price considered well-above market value. (therefore increasing the price-per-share of the company)
The main strategy companies use to combat this is to offer bonuses to employees who perform well and act in the best interests of the company. For example, if in the first quarter of 2022 a company significantly outperforms its expectations, the chief financial officer may receive a one million dollar bonus. Many other employees may receive a bonus trickling all the way down, to the most entry-level employees who may receive a bonus of 1,000 dollars or so.
Paid Time Off
Employees living and residing in the United States typically receive what is called paid time off. This is when the company pays the employees for a day’s work when the employee is not required to come into work and perform his or her normal duties. An example of a common time employees receive paid time off is on holidays.
The Pew Research Center conducted a study in 2020 and found that 65% of adults in the United States identified themselves as Christian, with the second most common as Judaism. Of those Christians, a majority identified with the Protestant denomination and Catholic denominations. This means employees will more than likely expect their holiday of Christmas (a holiday celebrating the birth of Jesus Christ) to be observed. For Protestants they typically celebrate Christmas Eve and Christmas Day, and Catholics often celebrate Christmas for 12 days.
Employees also often receive what is referred to as vacation days, which is typically two weeks in the United States. This differs from country to country, and in other countries it is often higher. For example, in Germany the minimum amount of vacation days received is twice the amount as the US – four weeks. The United States is often heavily criticized for this, with many people saying Americans are “overworked” and “spend too much time at the office.” Nevertheless, the “gold standard” is still set at two weeks for most employees in the United States.
Lastly, there are a designated number of sick days employees are given. This can vary from company to company, but is basically a number allocated to employees so they can receive compensation in the unfortunate circumstance they get sick some days.
Medical, Vision, and Dental Insurance
Because of the unique way healthcare is handled in the US, health insurance is typically included as the total overall compensation given to employees when they work for a given company – otherwise it is often too expensive for people living in the US to pay on their own or “out of pocket.” For some reason, insurance in the United States has been divided into three separate categories – medical, vision, and dental. Medical insurance covers any medical costs relating to anything in the body but the eyes and teeth.
So, for example, if someone has a gastrointestinal disorder of the stomach their medical insurance would be responsible for covering the cost. If someone needed to go to the dentist for a routine cleaning of their teeth the dental insurance would typically cover the cost. If someone wanted to go to the eye doctor and get new glasses the vision insurance would cover the cost. As overcomplicated as this current system may seem to people living outside the US, it is the best current system in place for Americans to receive healthcare. There have been major efforts to reform healthcare in the United States within the last decade or so, most notable with the Affordable Care Act known as Obamacare (passed by President Barack Obama in 2010). Many widely regarded this as a failure and unsuccessful attempt to reform healthcare, and healthcare will likely be expected to be provided by employers to Americans for years to come.
401(k) / Retirement Savings Plan
Many employees in the United States also expect there to be a savings plan for retirement in place so they can retire comfortably and happily. A common vehicle for retirement for many employees in the US is called a 401(k) – which is a plan that incentives employees to save for retirement by providing many tax benefits. These are often set up through companies and companies will often “match” employees’ contributions by putting in a certain amount of money based on what employees put into their 401(k). For example, if an employee decided to contribute $1,000/month into their 401(k), the employer will also contribute up to $1,000 to the employee’s retirement fund.
There are various other retirement and saving plans such as pensions and social security that employees use to retire in the United States, and this must be kept in mind when it comes to retaining talent and wanting to keep talent from abroad.
There is not only one form of compensation for employees living in the United States. Because of the heavy focus on profits within corporations, the different holidays and amount of days for paid time off, the complex and unusual healthcare system, and unique ways of saving for retirement, it can be difficult to navigate how to provide an employee with a fair compensation package. But if you keep these above points in mind, you will be able to retain the best talent for your global business and will easily overcome these barriers while recruiting and hiring employees in the United States.