7 Reasons to Offer Employee Benefits
November 16, 2023
If your company doesn’t offer employee benefits, or if you worry about losing current employees and potential hires to competitors with strong benefits programs, it may be time to consider providing employee benefits that match the expectations of the marketplace. After all, employee benefits can help you attract better candidates while keeping current workers happier and more productive, so your company is more likely to meet (and even exceed) its goals.
What Are Employee Benefits?
What are employee benefits? To define employee benefits, you must contrast them with other types of compensation like wages and salaries. Typically, employee benefits are non-financial “payments” the employer provides as a way of recognizing good performance or the value of the work or because competitive pressures force the employer to match what other employers in the market or industry offer their employees.
In what way are employee benefits better than wages? For one thing, your employees may find benefits more attractive than their wages. For another, employees are usually expected to pay income taxes on compensation but not on benefits.
Today’s companies can choose from a long list of employee benefits and services that may have a significant impact on worker satisfaction. That’s why the employee benefits definition varies widely among companies.
Why Are Employee Benefits Important?
Employee benefits for small businesses and big businesses alike matter more than ever, given a tight labor market that shows no signs of easing anything soon. In addition, many employers worry that inadequate benefits may cause them to lose workers. A recent article pointed out that two in every five employers believe workers are willing to leave their jobs to find positions offering better benefits. Plus, only 54 percent of American workers—barely half—say they’re happy with their current employer’s benefits plan.
1. Attract Talent.
The tight labor market underscores the meaning of employee benefits in recruiting new employees. Savvy employers recognize the quality of benefits plays a central role in attracting high-quality candidates. That’s important because owners and managers know companies cannot meet growth goals and other objectives without having the right people in place. Offering a robust benefits program tells potential candidates you’ll value them as employees.
2. Minimize Employee Turnover.
Why offer employee benefits? Consider the situation that puzzles and frustrates employers: without warning, valued employees announce they’re leaving to take a job elsewhere. Turnover is expensive, too, so anything employers can do to keep employees satisfied is important, and the importance of employee benefits in keeping current employees happy shouldn’t be underestimated. As noted earlier, barely half of U.S. workers say they’re satisfied with the benefits their employers provide. That means nearly half are unhappy with their employee benefits. In fact, the same report concluded that roughly one in ten employees would accept lower compensation in return for better benefits. Clearly, improving current benefits can improve worker satisfaction and reduce turnover.
3. Promote a Healthy Workforce.
Healthier workers tend to be happier workers. They’re better able to manage stress, have lower absenteeism rates and tend to be more productive. Generous employee benefits programs make it easier for employees to take better care of themselves.
In addition to starting with a good health insurance plan that ensures employees can access the care they need when facing health problems, employers can also add benefits such as wellness programs to reduce unhealthy behaviors, along with mental health benefits and policies that don’t penalize employees for staying home while they’re battling the latest bug instead of spreading it to their co-workers.
4. Increase Productivity.
How does the right employee benefits plan impact productivity? It’s pretty straightforward. When your employees are happy and healthy, they’re usually more productive. People who enjoy their work and are treated well by their employers are willing to work harder in return for the compensation and benefits they receive.
5. Enhance Morale and Loyalty.
Here again, when employees believe you’re taking good care of them and addressing their needs and concerns, they’re less likely to be tempted to take another job—even if that employer is offering higher pay. Making employee benefits a key focus of your retention strategy will help you keep the right people and ensure they do their best for you.
6. Support Culture.
Employers tend to overvalue the role of compensation in employee satisfaction. What do they undervalue? One of the most important is the company’s culture. When management creates and sustains a culture in which employees feel respected and valued, and where they believe they’re making real contributions to the company’s success, they tend to be happier. Simply put, more satisfied employees tend to stick around longer. One recent survey concluded that 60 percent of workers felt their employers cared for them and said they planned to stay with those employers for at least three more years. Only seven percent of workers who didn’t feel cared for expected to stick around that long.
Employee benefits, meaning the right mix of available benefits designed for employee needs and preferences, provide visible proof that a company takes its culture seriously. Many company leaders like to claim their employees are the company’s greatest assets, but a lackluster employee benefits program sends the opposite message.
7. Differentiate Your Workplace.
Offering employee benefits—and the types of employee benefits you decide to offer—may be the deciding factor if a candidate is choosing between multiple offers. As you’ve seen in the preceding paragraphs, employee benefits are more important to many employees than their employers may realize. A generous and carefully thought-out employee benefits plan increases your chances of landing the best candidates and keeping them around.
How Can Employers Help Employees Value Their Benefits?
Now you know seven reasons why employee benefits are crucial. But do your employees know how important and, more significantly, how valuable those benefits are?
Although your benefits package may be substantial, your employees might not know it or understand the value of the employee benefits you offer. Employers reap the advantages of offering employee benefits only when their employees understand and use them.
A “total compensation statement” demonstrates to employees the monetary value the employer is providing beyond the standard paycheck. Knowing the full value of their compensation packages can help increase employee morale and loyalty, and these statements can serve as a helpful retention tool. Learn more about total compensation statements here.
Where Are Employee Benefits Among Your Company’s Priorities?
Business owners and managers may not realize how the cost of offering more robust benefits compares to the value they can realize through greater productivity and improved employee morale. To better understand what today’s employees expect and identify the most cost-effective way to meet those expectations demands professional expertise. Hylant’s employee benefits team can discuss your objectives, review your current compensation and benefits structure, and recommend the most cost-effective way to enhance your company's offerings.
Related Reading: Understanding the Value of a Learning Workplace Culture
The above information does not constitute advice. Always contact your employee benefits broker or trusted adviser for insurance-related questions.
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