How to build a competitive employee benefits package in 2026

A robust employee benefits package is a strategic necessity to attract and retain top talent at your organization.

Since employees have a diversity of needs, including physical, mental, social, financial, and others, it is vital to design your benefits package in line with what actually matters to employees. The task can be broken down into six steps:

1. Defining goals
2. Assessing employee needs
3. Setting a realistic budget
4. Working with HR staff and other stakeholders
5. Offering a variety of perks
6. Establishing metrics for monitoring utilization

While it appears easy on the surface, creating the perfect employee benefits package is a bit more complex. Benefits management tools can make this less of an issue, but it’s still worthwhile to know what is involved in the process on a strategic level. So, let’s go over the key steps of designing flexible benefits plans in more detail.

Key takeaways

• Align the employee benefits package with the company's overall strategic objectives, ensuring a cohesive and supportive connection between organizational goals and the benefits offered.
• Craft benefits that cater to the diverse needs of employees, fostering an inclusive workplace culture. Prioritize variety to accommodate different lifestyles, ages, and family statuses.
• Establish a feedback loop and regularly evaluate the benefits package's effectiveness. Use data-driven insights to make informed adjustments, keeping the package competitive and aligned with evolving employee needs and industry standards.

What is a good employee benefits package?

A good employee benefits package offers a variety of perks that align with the diverse needs and preferences of employees. Let’s expand upon the steps we’ve outlined in the introduction:

1. Define goals: Clearly outline package goals that are aligned with company objectives.
2. Assess employee needs: Understand diverse employee needs through surveys or interviews.
3. Set a realistic budget: Establish a financial plan balancing competitiveness and sustainability.
4. Work with HR experts: Collaborate with HR for a legally compliant and competitive benefits structure.
5. Prioritize diversity: Design packages addressing a variety of employee needs.
6. Establish metrics: Develop measurable criteria to assess package success.

So, what are the advantages of offering a flexible benefits plan at your organization? Let’s answer this question briefly.

A diverse and comprehensive benefits package will set your organization apart, making it more appealing to prospective employees in a competitive job market. Employees are also more likely to stay with an organization that demonstrates a commitment to their well-being and growth, reducing turnover and the associated recruitment and training costs.

Meeting the needs of existing employees by offering custom benefits plans also enhances overall job satisfaction, contributing to a positive workplace culture and reducing turnover. A well-aligned benefits package fosters a sense of value and belonging, increasing employee engagement and productivity.

Advantages of a competitive employee benefits package

A well-structured employee benefits package serves as more than a recruiting tool; it functions as a strategic lever for organizational performance and workforce stability. 

Companies that design benefits programs with both employer and employee needs in mind typically see measurable returns across retention metrics, productivity benchmarks, and total compensation cost efficiency.

1. Reduced turnover and recruitment costs

Competitive benefits programs address one of the most significant hidden expenses in organizational budgets: employee turnover. When accounting for recruitment, onboarding, training, and the productivity gap during replacement hiring, the true cost of losing an employee substantially exceeds their annual salary. 

This cost burden becomes particularly acute in industries like healthcare, retail, and hospitality where turnover rates traditionally run higher than average.

When benefits align with workforce priorities, companies redirect resources from reactive replacement hiring toward proactive talent development. The retention impact multiplies in specialized roles where replacement costs spike due to scarce talent pools and longer time-to-productivity curves. Organizations known for strong benefits programs experience lower voluntary turnover and stronger workforce stability over time.

2. Tax efficiency and budget optimization

Pre-tax accounts such as HSAs and FSAs reduce both employer and employee tax burdens simultaneously. Post-tax lifestyle spending accounts can be structured to maximize perceived value without proportional cost increases. Organizations managing benefits through unified platforms like Forma identify budget optimization opportunities through better account utilization tracking and reduced administrative overhead.

Tax-advantaged benefits allow companies to deliver higher perceived value per dollar spent. An employer contribution to an HSA costs less than the nominal amount after accounting for payroll tax savings, while employees receive the full value plus their own tax advantages on contributions and qualified withdrawals. This dual tax benefit makes pre-tax accounts particularly efficient from a total compensation perspective.

3. Improved employee satisfaction and engagement

Employee satisfaction and engagement metrics consistently correlate with benefits quality and flexibility. Companies offering customizable benefits—rather than one-size-fits-all programs—report higher utilization rates and stronger employee sentiment in annual surveys. This customization matters particularly for multi-generational workforces where a recent graduate and a mid-career professional have fundamentally different benefits priorities.

Flexible benefits allow employees across different life stages to extract maximum value from the same budget allocation. When employees choose benefits meaningful to their circumstances, utilization increases substantially compared to traditional fixed-benefit models. Higher utilization translates to better return on benefits investment and stronger employee appreciation of total compensation value.

4. Strengthened employer brand and talent attraction

Competitive benefits packages strengthen employer brand positioning in talent markets. When candidates compare offers, benefits differentiation often tips decision-making, especially among experienced professionals evaluating total compensation rather than base salary alone. Benefits programs signal organizational values—whether prioritizing health and wellness, professional development, family support, or financial security—and attract candidates whose priorities align with those values.

Companies known for strong benefits programs spend less on recruiting marketing and see higher offer acceptance rates. The employer brand advantage compounds in competitive hiring markets where multiple organizations compete for the same candidate pool. Benefits become a differentiator when salary ranges converge across competitors.

5. Simplified compliance and risk management

Modern benefits platforms handle complex compliance requirements across federal, state, and international jurisdictions, reducing legal risk and administrative burden on HR teams. For companies with global workforces, this compliance infrastructure becomes essential for maintaining equitable benefits standards across different regulatory environments.

Compliance automation reduces HR administrative time substantially compared to manual benefits management, allowing teams to focus on strategic program design rather than paperwork processing and regulatory tracking. This efficiency gain becomes particularly valuable during benefits administration peak periods like open enrollment or when responding to regulatory changes.

6 steps to build a competitive employee benefits package

While the exact benefits vary from industry to industry, here are a few general rules that can help you understand the process of figuring out the right benefits package for your team.

1. Define the organization's goals with the package

Setting clear goals for the employee benefits package aligns it with overall business objectives. By defining specific objectives such as attracting top talent, improving employee satisfaction, and boosting productivity, the benefits package becomes a strategic tool. For example, if the goal is to enhance talent retention, the package may include perks contributing to a positive work environment, ultimately supporting the organization's long-term success.

2. Define the budget

Establishing a realistic budget is crucial for the financial health of the organization and the success of the benefits package. The budget should reflect the company's capacity to invest in employee well-being while remaining financially sustainable. By clearly defining financial boundaries, the organization ensures that the benefits offered are competitive and economically responsible, contributing to a balanced and effective package.

3. Design your program with experts

Involving HR professionals or benefits consultants is vital for creating a well-structured and legally compliant benefits package. These experts can navigate the complexities of benefit regulations, industry standards, and employee expectations. Their input ensures that the package is competitive, aligns with legal requirements, and meets the unique needs of the workforce. This collaboration enhances the overall quality and reliability of the benefits program.

4. Consider diversity

Encouraging the design of benefits packages that cater to the diverse needs of all employees fosters an inclusive workplace culture. Recognizing and addressing the varied needs of a diverse workforce contributes to a sense of belonging and equity. This approach attracts a wider range of talent and enhances employee satisfaction and engagement, creating a positive and supportive work environment.

Creating diverse benefits packages is easy with the help of Forma’s benefits management platform.  <span class="text-style-link text-color-blue" fs-mirrorclick-element="trigger" role="button">Talk to our experts</span> and discover how Forma can streamline and automate benefits provision at your organization.

5. Create metrics to evaluate your program's efficacy

It’s important to remember that creating your benefits package is not a one-time responsibility. It’s a continuous process where you have to analyze the efficacy of your package and gradually improve your policies. 

Establishing measurable criteria is essential for assessing the success and impact of the benefits package on employee satisfaction and company goals. Metrics could include employee retention rates, engagement surveys, and performance indicators. By regularly evaluating these metrics, the organization gains insights into the effectiveness of the benefits package, allowing for adjustments and improvements over time.

Evaluating your benefits program’s efficacy can be achieved using an employee management solution. Tools like Forma can help you assess how your employees are utilizing benefits, giving you valuable feedback to fine-tune your benefits plans further.

6. Keep a culture of always learning from feedback

Emphasizing the importance of continuous improvement based on employee feedback creates a responsive and adaptive benefits package. Regularly seeking and analyzing employee input helps identify evolving needs and preferences. A culture of continuous learning fosters agility in adjusting the benefits program to stay competitive and aligned with the workforce's expectations, contributing to ongoing employee satisfaction and loyalty.

How can I ensure our benefits package remains competitive as the market evolves?

Maintaining competitive benefits requires structured monitoring rather than reactive adjustments when retention problems surface. Benefits leaders should establish annual benchmarking cycles that compare offerings against industry peers, geographic competitors, and companies competing for similar talent profiles. 

Benchmarking against market standards provides the data foundation for informed program adjustments, while regular employee feedback mechanisms reveal utilization patterns and unmet needs that enrollment data alone cannot capture.

Technology selection significantly impacts competitive positioning over time. Legacy benefits administration systems struggle to accommodate new benefit types or integrate with modern payment infrastructure. 

Organizations using unified platforms can adapt quickly when market conditions shift, adding new lifestyle spending account categories, adjusting health reimbursement arrangements (HRAs), or expanding pre-tax account offerings without wholesale vendor changes.

Key strategies for maintaining competitive benefits include:

• Annual benchmarking cycles that compare your offerings against industry standards, peer companies, and geographic competitors
• Regular employee surveys during and after open enrollment to identify valued benefits, utilization gaps, and emerging needs
• Broker partnerships with firms like Mercer, Aon, WTW, or other industry consultants for market intelligence and trend analysis across industries
• Flexible budget allocation using customizable spending accounts rather than fixed perks that may lose relevance
• Platform modernization that supports rapid benefit additions and regulatory compliance without system overhauls

Proactive communication about total compensation value to prevent perception gaps and maintain employee awareness year-round

The case for competitive employee benefits packages

We’ve highlighted the importance of building competitive employee benefits packages by examining their importance for attracting talent, aligning benefits with organization goals, and fostering a welcoming workplace environment. 

We can conclude that maintaining a balance of competitiveness and financial prudence, coupled with expert guidance and adaptability, ensures the package remains relevant and beneficial.

If you want to provide flexible benefits at scale while keeping complexity low and user experience high, consider <span class="text-style-link text-color-blue" fs-mirrorclick-element="trigger" role="button">scheduling a consultation</span> with one of our experts and find a flexible benefits solution your employees deserve.

FAQ: How to build a competitive employee benefits package – Frequently asked questions

Let’s attempt to answer a number of questions that often crop up in conversations about employee benefits packages.

What is normally included in a competitive employee benefits package?

A comprehensive employee benefits package often includes health insurance (medical, dental, vision), retirement plans, paid time off (vacation, sick leave, holidays), FSAs/HSAs for pre-tax savings on medical/childcare expenses, life and disability insurance, wellness programs, LSAs, gym memberships, professional development (tuition, training), family-friendly benefits (parental leave, child care), rewards & recognition (bonuses, recognition programs), legal and identity protection, flexible work arrangements (remote work, flexible schedules), financial education (budgeting, investing seminars), health and wellness initiatives (on-site wellness, mental well-being programs), transportation benefits (commuter benefits, parking assistance), and stock options/equity grants for sharing in company success.

How do you talk to employees about their benefits?

To talk to employees about benefits, use clear, simple language and diverse communication methods like meetings, emails, and online portals. Foster an open dialogue, personalize messages, and ensure changes are clearly communicated. Make information accessible to all and maintain ongoing communication, not limited to enrollment periods. Appoint "benefits champions" for support and establish a feedback loop for continuous improvement.

How can companies measure the success of their benefits packages?

To measure a benefits package's success, gather employee feedback through surveys, monitor benefit utilization rates, and compare turnover rates to gauge retention impact. Analyze employee engagement metrics, conduct focus groups, and perform a cost-benefit analysis to understand financial implications. Benchmark against industry standards, establish a continuous feedback loop, collect employee success stories, and evaluate recruitment metrics. These methods help assess the benefits' value to employees, their popularity, and the financial and competitive advantages they bring to the organization.

How to choose and design a benefits package that aligns with company culture?

Start by identifying the values your organization prioritizes—whether that's health and wellness, professional growth, work-life balance, or family support. Survey employees to understand which benefits would feel most aligned with how they experience your culture daily. If your culture emphasizes flexibility and autonomy, customizable spending accounts allow employees to self-direct benefits within your defined parameters. If collaboration and community matter most, consider benefits that support team activities, shared experiences, or collective wellness initiatives. The strongest alignment occurs when benefits reinforce the behaviors and priorities your culture already rewards.

How to create a competitive benefits package for remote workers?

Remote workers need benefits that address their specific circumstances: home office equipment, internet stipends, co-working space memberships, and ergonomic furniture support. Expand traditional commuter benefits into remote work spending accounts that cover technology, connectivity, and workspace needs. Consider time-zone-flexible benefits like asynchronous mental health support, on-demand fitness programs, and virtual professional development. Health benefits should include telehealth options with broad provider networks since remote employees may live anywhere. Forma's platform supports global benefits administration, allowing companies to offer equitable remote work support across different locations and currencies while maintaining consistent program structure.

How to set up employee benefits?

Begin with needs assessment through employee surveys and market benchmarking to understand what benefits matter most to your workforce and how your competitors structure their programs. Define your budget and determine which benefits will be employer-paid versus employee-funded with pre-tax advantages. Select a benefits administration platform that can manage multiple account types—HSAs, FSAs, HRAs, and lifestyle spending accounts—in one system rather than juggling multiple vendors. Draft plan documents, establish eligibility criteria, and ensure compliance with applicable regulations. Partner with brokers or consultants if you lack internal expertise, particularly for complex regulations around pre-tax accounts. Communicate the program clearly during rollout with educational resources that help employees understand their options and maximize value.

Can you offer different health benefits to different employees?

You can offer different benefits to different employee groups, but certain legal requirements govern how you segment eligibility. Generally, distinctions must be based on bona fide employment classifications—such as full-time versus part-time status, job category, geographic location, or union membership—rather than individual characteristics. You cannot discriminate based on protected classes or design eligibility to favor highly compensated employees in ways that violate nondiscrimination testing requirements. HRAs offer flexibility for employers to customize coverage for different employee populations while maintaining compliance. Many organizations offer tiered benefits where all employees access core coverage, but certain groups receive enhanced benefits or additional allowances based on legitimate business classifications.

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