Receive our blogs in your inbox

HR tips from industry experts.

Employee Benefits

Enhancing Employee Satisfaction: The Impact of Ancillary Benefits

by FrankCrum on September 12, 2023

In the dynamic realm of business, the pursuit of success is linked to the satisfaction and commitment of employees. As organizations strive to create environments that nurture both professional growth and personal well-being, the role of traditional compensation is evolving. This article discusses how ancillary benefits can make employees happier and help businesses stay competitive.

Understanding Ancillary Benefits and Their Role in Employee Satisfaction

Ancillary benefits, or voluntary benefits, are group plans or discounts that are paid through employee payroll deductions but are outside the parameters of health insurance. These benefits typically don’t require an employer contribution but can be offered to employees at a discounted group rate.

Some common ancillary benefit offerings include:

  • Dental
  • Vision
  • Flexible Spending Account (FSA)
  • Health Savings Account (HSA)
  • 401k
  • Accident Coverage
  • Critical Illness
  • Life Insurance
  • Short-Term and Long-Term Disability
  • Pet Insurance

Beyond salary and healthcare packages, ancillary benefits include offerings that meet employees' various needs and play a pivotal role in enhancing employee satisfaction. When provided by the employer, ancillary plans allow employees to leverage the group’s buying power to achieve lower rates and broaden their range of insurance coverage. In addition, some ancillary products even come with tax benefits.

Ancillary benefits like dental, vision, short-term and long-term disability, life insurance, critical illness coverage, 401(k) plans, and more, have a profound impact on employees' lives and job satisfaction. Dental and vision coverage promote overall health, while disability benefits provide financial security during unexpected health challenges. Life insurance and critical illness coverage offer peace of mind to employees and their families, ensuring they're supported in times of crisis.

Additionally, 401(k) plans empower employees to plan for their financial future, fostering loyalty and engagement. These comprehensive benefits demonstrate an organization's commitment to employees' well-being, leading to increased morale, reduced stress, and improved work-life balance. As employees feel valued and supported, they're more likely to be productive, loyal, and dedicated, creating a positive cycle of satisfaction that benefits both individuals and the organization as a whole.

The Competitive Edge: Linking Ancillary Benefits to Talent Acquisition and Retention

In an era where attracting and retaining top-tier talent is akin to a competitive sport, organizations are realizing that the arsenal they wield extends beyond conventional recruitment strategies. Ancillary benefits have emerged as a powerful differentiator in the talent landscape, offering a multifaceted approach to not only attracting high-caliber candidates but also nurturing long-term employee loyalty.

Attracting Top Talent: In the race to secure the best talent, companies armed with a robust package of ancillary benefits stand out. Potential employees are no longer solely swayed by compensation figures; they seek an all-encompassing experience that aligns with their aspirations and values.

Nurturing Employee Loyalty: Beyond recruitment, ancillary benefits play a pivotal role in retaining valuable employees. An organization that invests in its workforce through ancillary benefits sends a powerful message: "Your well-being matters." This nurturing approach fosters a sense of loyalty and belonging, reducing turnover rates, and bolstering overall morale.

The integration of ancillary benefits into talent acquisition and employee retention strategies propels organizations toward a remarkable competitive advantage. It's not merely about enticing employees with perks; it's about creating a narrative that resonates with their aspirations, values, and ambitions.

Creating an Effective Ancillary Benefits Program

Crafting a successful ancillary benefits program requires more than simply assembling a list of appealing perks. In this section, we discuss ways to ensure the ancillary benefits program resonates with your employees.

  • Find Out What They Need: The first step in creating a program that truly serves your employees is understanding their needs. Ask your employees about their preferences and pain points, identifying areas where ancillary benefits can make a tangible difference in their lives.
  • Customization and Flexibility: Companies often have employees from diverse backgrounds and lifestyles. A successful ancillary benefits program acknowledges this diversity and offers customization and flexibility.
  • Communication and Education: Even the most impressive benefits program is futile if employees aren't aware of what's available. Implement clear communication strategies to ensure that employees understand the offerings and how to access them. Regularly provide information, conduct workshops, and offer resources to educate your employees about the benefits they can enjoy.

Designing an ancillary benefits program isn't a one-size-fits-all endeavor; it's a dynamic process that requires ongoing evaluation. By centering your program around employee needs, organizational values, and effective communication, you lay the foundation for a program that not only enhances employee satisfaction but also becomes an integral part of your company's identity.

Measuring the Impact: How Ancillary Benefits Influence Employee Satisfaction

Implementing ancillary benefits is about creating a positive impact on employee satisfaction and overall organizational performance. To quantify the success of these efforts, employers should consider a measurement plan.

  • Employee Surveys and Feedback: A direct and effective approach to measuring the impact of ancillary benefits is by gathering input directly from employees. Surveys can help you gauge employee perceptions and overall satisfaction levels regarding the benefits provided. Additionally, open feedback channels create an avenue for employees to share their experiences, allowing you to identify areas for improvement.
  • Retention Rates and Turnover: One of the clearest indicators of a successful ancillary benefits program is its influence on employee retention rates. A decline in turnover can signal that employees are satisfied with the offered benefits and are feeling more committed to the organization due to the supportive work environment.
  • Employee Engagement: Engaged employees tend to be more productive, motivated, and satisfied. By monitoring productivity, performance, and participation in company initiatives, you can assess whether the ancillary benefits are fostering a more engaged workforce.

Employers can gain an understanding of how ancillary benefits are shaping employee satisfaction by employing a few simple measurement processes.

Benefits of Outsourcing Benefits and Ancillary Benefits to a PEO

In the quest to provide a comprehensive and seamless benefits package, many organizations are finding an invaluable ally in partnering with Professional Employer Organizations (PEOs) to streamline their processes. PEOs specialize in managing various HR functions, including employee benefits administration.

Some of the benefits of outsourcing your benefits package to a PEO include:

  • Selection and Price. When it comes to ancillary benefits, employers are not generally required to contribute to their costs but can pass incredible savings along to their employees by offering group plans at a discounted rate. Through a PEO, employers can access a comprehensive selection of ancillary benefits, as well as health insurance, with prices negotiated for the group.
  • Streamlined Administration: The management of employee benefits can be complex. By outsourcing to a PEO, businesses can tap into specialized expertise and tech platforms to streamline benefits administration. Because the PEO handles payroll, benefits deductions are seamlessly implemented. This efficiency reduces the risk of errors, ensuring that employees receive their benefits accurately and on time.
  • Focus on Core Competencies: Outsourcing benefits and ancillary benefits to a PEO allows businesses to redirect their internal resources toward core functions. This strategic shift not only increases operational efficiency but also enables organizations to concentrate on their unique strengths, driving growth and innovation.
  • Navigating Regulatory Complexity: The landscape of benefits regulations is ever evolving and can be challenging to navigate. PEOs stay up to date on the latest changes, ensuring that benefits programs remain compliant with local, state, and federal laws. This proactive approach shields businesses from compliance pitfalls and potential legal complications. For instance, some states are beginning to mandate businesses to offer retirement savings programs to employees. Your PEO can ensure you remain in compliance with changing laws and are able to provide proper documentation.

By outsourcing ancillary benefits to a PEO, companies can offer their employees a broad range of products at reduced cost with little or no investment and minimal administrative effort. It’s a win for the organization and its employees.

Remember, the journey to enhancing employee satisfaction is an ongoing one – a journey where each ancillary benefit resonates not just as an additional perk, but as a testament to your commitment to fostering a flourishing workforce and a thriving organization.

At FrankCrum, our mission is to help businesses become the best they can be. To learn more about our comprehensive services, contact us today.


FrankCrum is a professional employer organization (PEO), founded in 1981 dedicated to helping business owners boost HR capabilities and broaden convenient services and benefits to employees. The origin of FrankCrum dates back to 1981, when Frank W. Crum, Jr. and his father, Frank Crum, Sr., founded the Great American Temporary Service. With a passion for helping small business owners succeed, the company has evolved and grown over several decades.