How startups can design benefits packages to retain employees
This week, Entrepreneurship 101 explores how Indian startups can design benefits packages for their employees, startups that are leading the way, and more.
Employees are the foundation of any startup. A founder comes up with the vision, but without employees contributing effectively towards reaching the assigned targets, the founder can never achieve overall success.
Thus, it is essential for entrepreneurs to ensure they invest time, energy, and money in hiring the best talent. Having said that, a competitive salary is not enough to attract new talent or retain existing ones.
Employee benefits form the base of employee value proposition, or EVP–the commitment employers make to their employees in return for their work and contributions to the company.
“A comprehensive benefits package shows the employees that their employer cares about their well-being and motivates them to be more invested in the company,” says Girish Menon, HR Head at foodtech giant .
Hemant Vishnoi, Founder at corporate cards and spend management platform , agrees. He says, “A well-rounded employee benefits package is crucial for an employee-first organisation to assure employees that they are taken care of.”
Gartner suggests that given the pandemic disruptions, EVP must be oriented towards employees as people, and not as workers–providing exceptional life, and not work experience; focusing on feelings, and not just the features that match employee needs.
“With pandemic-induced interruption in work-life balance, there is a greater need for wellness and benefit programmes that enable employees to take care of both their personal and professional commitments,” adds Ashish Kumar Singh, Chief HR Officer at social commerce unicorn .
In fact, a well-designed employee benefits package can help not only in hiring talent, but also in motivating existing employees.
Girish explains, “A well rounded employee benefits package is an excellent tool to attract talent and keep current employees motivated.”
An effective EVP, Gartner suggests, can reduce annual employee turnover by 70 percent and boost new hire commitment by around 30 percent. In this week’s article on Entrepreneurship 101, YourStory dives deep to understand what goes into an employee benefit package.
Employee benefits: 101
Hemant says that a comprehensive package not only takes care of employees’ financial stability, but also gives importance to their physical and mental health, and the overall satisfaction component while they are associated with the organisation.
YourStory asked startups what goes into their employee benefits packages and what makes for a well-designed package. Here’s a comprehensive checklist for emerging and existing startups:
Health insurance
A Quantum Workplace survey suggests that workplaces that provided health and well-being benefits had 11 percent more engaged employees than those that didn’t.
Ekincare, which offers workplace wellness programmes to more than 1.8 million employees from over 500-plus organisations, found that employees are now more aware about their health.
“Historically, employees in the age group of 40-60 years would leverage healthcare options. But in the last three years, employees in the age group of 20-40 years are availing health and wellness benefits provided by their employers,” says Kiran Kalakuntla, CEO and Co-founder of .
The startup onboarded over 200 companies in a span of four months in 2020 to provide customised healthcare plans and benefits to their employees.
Ekincare, which works with startups including , , , and , suggests that startups usually ask for:
- Group health insurance coverage with a base of Rs 2 lakh and the option to add dependents
- Access to basic healthcare benefits across India (AHCs, doctor consultations, and EAP)
- Dental and vision camps in the office premise
Additionally, ekincare has observed that in the last one year, startups are gradually moving towards enhancing maternity benefits. “Covers that initially started at Rs 30,000 have steadily increased to Rs 50,000, and in some cases to Rs 75,000 as well,” says Kiran.
At , employees get free health insurance for themselves, and 50 percent of the cost of dependents are covered by the startup. Additionally, the startup provides 12 physical consultations for free, which includes sessions with therapists, and can be used both by employees and their dependents. Employees also receive Medibuddy Gold subscription as part of the package.
An ASSOCHAM survey suggests that as of 2021, 43 percent of Indian employees suffered from depression, and another 70 percent had to bear all the expenses for healthcare. Therefore, startups should not only ensure they provide a comfortable and safe working environment, but also provide benefits for mental health sessions. CashKaro provides free and anonymous mental health counselling sessions in partnership with The Window Project.
Upskilling programmes
The modern EVP includes upskilling workers to keep up with emerging skills.
According to Crunchbase, since 2021, investors across the globe have had to pour about $2.1 billion into companies to either upskill or reskill existing employees. This was done in an attempt to keep existing employees around while companies across the globe experienced the Great Resignation.
To avoid a situation like that, Indian startups should invest in upskilling their existing employees.
Swiggy has partnered with and to provide access to upskilling programmes to its employees. Additionally, it arranges internal programmes like Technical Advisory Programme (TAP) for engineers, and a coaching programme focussed on individual development for leadership roles.
ESOPs
ESOPs (employee stock ownership plans) are basically granting company stocks to employees to encourage a sense of ownership. These company shares are offered to employees at a discounted rate.
Last year, the Indian startup ecosystem spent over $220 million to buy back ESOP shares from employees, YourStory reported. The buyback and liquidity event benefitted over 9,200 employees across 19 startups, and the largest ESOP events were conducted by , , , and .
In October, Swiggy’s organisation-wide liquidity programme for stock option holders created some noise as well. The programme provides a transparent liquidity plan with defined timelines–from vesting to liquidation.
“This is an industry-first initiative whereby we are democratising wealth creation by enabling all employees with stock options to participate in fixed liquidity events over the next two years in July 2022 and 2023,” Girish explains.
Social commerce unicorn Meesho, on the other hand, announced its second ESOP liquidation programme in November to attract and retain talent. Under its annual MeeSOP programme, all full-time employees, irrespective of their tenure in Meesho or their seniority, will be able to convert a maximum of 33 percent of their annual CTC into ESOPs. “ESOPs thus granted would be greater than 100 percent of the CTC relinquished,” Ashish says.
Similarly, Rohan Bhargava, Co-founder at CashKaro, reveals that 50 percent of the company's workforce holds ESOPs.
Leave policy
Leave policy is another important aspect of the employee benefit package. It ensures balance between professional and personal life, ensuring productivity, satisfaction, and performance.
Under the leave policy, startups should also focus on parenthood policies. Parenthood policies include parental leaves, flexible working arrangements for the primary caregiver, access to quality yet affordable childcare, and family-friendly policies, among others. Additionally, it is necessary to not discriminate against women employees (in terms of wages and opportunities) based on pregnancy and motherhood.
EnKash offers female employees one-day care leave every month, and two special leaves to all employees, annually, to celebrate their personal occasions.
Under its special perks programme, EnKash provides a paid domestic vacation for employees and their families (spouses and kids if married; parents if single) on completion of three years with the startup, and an international vacation after completing five years in the company for employees across levels.
CashKaro offers 18 paid leaves a year with the option to encash or carry forward them upon completing one year of service. The startup also organises a company-wide offsite every year.
Initiatives to lead the way
Over two years ago, Swiggy realised the need for designing policies that provide a holistic experience and created an all-inclusive benefit package. More recently, Swiggy made some changes to its benefit programme to include committed liquidity programme for ESOPs, enabling employees to invest in company ESOPs through its ‘Build your own dollar programme,’ non-tenure-based promotions for middle management and above levels, and employee-owned learning wallet, among others.
Meesho's MeeCARE programme for its employees and their families encompasses mental, emotional, and physical health through yoga, meditation, insurance plans, and lessons on nourishment and female health. The programme also educates employees on financial protection.
“The programme aims to enable employees to balance professional and personal goals,” Ashish explains.
Last year, Meesho introduced a parenthood policy to keep up with the evolving societal beliefs and to ensure non-discriminatory benefits. The social commerce platform announced a 30-week gender-neutral parental leave policy for primary caregivers, also doing away with the differentiation between natural childbirth, surrogacy, and adoption; and covering live-in partners. For secondary caregivers, leave can be availed for 30 days.
The startup has also partnered with Plum to cover maternity-related expenses up to Rs 1,00,000 for normal and C-section deliveries and covers infertility treatments as well.
CashKaro has an open-door policy and focusses on skill development of its team. Through its in-house upskilling programme, LearnKaro, the team is introduced to experts in the field of their choice, and they can attend weekly classes to upskill themselves.
“I personally conduct SQL classes twice a week… This policy helps not only develop, but also retain talent. The team feels like the company is invested in their growth,” says Rohan.
The platform is a globally certified Great Place to Work. “If you had to spend over eight to nine hours every day at a workplace, you should feel extremely comfortable and excited to show up to work every single day. While a great team and culture will do that, I feel the benefits you offer just pushes a candidate over the edge in the decision to join an organisation,” Rohan adds.
The startup also provides extra financial support to its employees under the Staff Welfare Loan policy. Under the loan policy, employees are given access to an interest-free loan from the company and defines their own pay-back terms.
Education solutions provider Next Education contributes a fixed amount for every employee to the government’s Employee Pension Scheme (EPS) on a monthly basis. “80 percent of our employees, with the exception of consultants and interns, benefit from the scheme,” says Beas Dev Ralhan, CEO at Next Education.
Summing up
As a startup grows, the employee benefit package has to grow with it. Rohan says the benefits package at CashKaro has grown and transformed multiple times as and when its team has grown. “As a team of 20 members, seven to eight years ago, we didn’t have as many benefits as we do now with a team of 350-plus, and growing,” he says.
He further adds that recreational policies and compensation for working extra days or hours have worked as a great retention measure for the startup.
To this, Girish agrees and says, “Benefits packages are usually tied to the stage of the organisation and needs of the employees.” Therefore, Swiggy has been evolving its benefits from time-to-time.
While startups have been improving their benefit packages to attract and retain talent, companies should also be mindful of the basic benefits that employees are missing out on.
Debashish Ghosh*, a Senior Manager at an ecommerce giant, says that although his startup offers basics like medical insurance, car leasing, paternity and maternity leaves, sabbaticals, gym memberships, and more, “Flexible work timings, supporting higher education and professional degrees, and provision of assistance in infant care for working women would be great additions to the employee benefits package.”
Similarly, Kusharga Mukherjee*, Product Manager at a leading fintech startup, suggests that companies should reduce disparity between employees in terms of packages and allowances for the same designation. Additionally, startups should have the flexibility to change the EPF contribution percentage based on the employee’s preferences.
Moreover, “Given the ever-increasing health challenges that employees face as a result of overworking in startups, the number of leaves sanctioned has a scope to be increased,” he adds.
To sum up, “An employee benefits package is extremely important for three key reasons–to attract, develop, and retain talent,” says Rohan.
*Name changed to protect identity.
Edited by Megha Reddy
