The Importance of Employee Benefits
If you had an open position at your company, what would your job ad look like? Would it mention any employee benefits? If your answer is no, you might want to rethink the importance of benefits in attracting and retaining the best talent for your company.
Offering a high wage in a job ad instead of benefits might attract applicants at first, but what is going to retain them after they are hired? What would stop them from leaving your company for a competitor offering a higher wage?
Offering a competitive salary combined with benefits and perks can prove to be a win-win combination in promoting improved work habits and reducing employee turnover. Benefits tend to drive employee engagement while providing a sense of security, encouraging workers to stay on the job, even during tough times.
But where should an employer begin if they are considering an employee benefit package?
In order to find out what appeals to job seekers, employers will need to examine today's workforce. For the first time in recorded history, there are four different age groups or generations in the workplace. They are:
- Millennials (Generation Y): born 1981-present
- Generation X: born 1965-1980
- Baby Boomers: born 1946-1964
- Traditionalists: born 1925-1945
Having such a diverse group of people in the workplace means that employers may have to consider the various needs of those age groups when creating an employee benefits package. Allowing employees to pick and customize some of their benefits according to their needs may be more appealing than a "one-size-fits-all" approach. Benefit packages that offer choices and flexibility can drive participation, and can give employers a better return on investment.
What should your employee benefit package consist of? What are job seekers looking for? In a recent survey performed by Monster, survey participants were asked to rank benefits by value and importance when considering a prospective job.
The results of the survey ranked average importance by benefit:
- Healthcare Plan: 32%
- Vacation Time: 25%
- Pay Raise: 15%
- Employee Benefit: 10%
- Performance Bonus: 9%
- Retirement Plan: 8%
It should come as no surprise that this survey shows healthcare and paid time off are more important to the surveyed employees than getting their next raise. These are two of the fundamental employee benefits, allowing an employee of any age to have a work/life balance. Basic health coverage and time off can allow employees to take care of themselves and spend time with their families. In addition, many employees today are taking care of children and aging parents. Adding complimentary benefits such as a flexible spending account, with options for dependent care, and offering flex time, or telecommuting, will also provide a sense of work/life balance.
On the other end of the spectrum, having a solid retirement plan is not to be ignored. A retirement program allows your employees an opportunity to prepare for their financial future. Managing a payroll deduction for a retirement account is easy to initiate and maintain, even for small businesses. There are many retirement plan options available for employers, where they can decide how much they would like to contribute to their employees' retirement fund, and create a vesting schedule, which would also aid in employee retention.
What about offering perks or rewards? Employers can offer low-cost options such as a floating holiday, an employee-of-the-month parking space, company-paid lunch breaks, casual Fridays, etc. Creating a culture within your company that makes employees feel valued can also be a great tool when considering or creating a benefit package.
Once you've arrived at a plan that suits both you and your employees, let your people know about it! Hold enrollment meetings, encourage participation, outline the benefits in your employee handbook, and communicate to your employees what their "total compensation package" is. This way, both the employer and employee are aware of the potential added value that having benefits can bring to the working relationship.