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Offering a robust portfolio of employee benefits can come at a cost—but in today’s labor market, the cost of not offering employee benefits is becoming too much to bear. It’s a delicate art figuring out the perfect balance between offering a competitive suite of employee benefits, including health insurance and other ancillary lines of coverage, while still keeping an eye on the bottom line.
Why Benefits Matter
Amidst the Great Resignation, which saw 41 million Americans voluntarily quit their jobs in 2021 and another 4.3 million quit in January 2022, it’s never been more important than now to evaluate your benefits offerings. According to Willis Towers Watson’s 2022 Global Benefits Attitudes Survey, 44% are “job-seekers” or those who are looking for a job or plan to soon.
The survey, which polled 9,658 U.S. employees from large and midsize private employers in December 2021 and January 2022, found that 56% of job-seekers said that pay was a top reason they’d leave their current role for a new one. Behind compensation, health benefits were the second-most important factor driving employees surveyed to find a new role.
What’s more, according to an Aflac survey, within 12 months of starting a new role, 49% of employees will look for another job if they aren’t satisfied with the benefits package. What this illustrates is that employee benefits are no longer a nice-to-have perk but rather a core component of a condition of employment.
The Benefit of Benefits
Beyond being an essential tool to remain competitive in today’s tight labor market, there are other advantages to offering employee benefits, including boosts in employee retention, engagement and morale, productivity, and tax benefits.
Benefits and Employee Retention
In an effort to combat high levels of turnover, employers across the country are re-evaluating their benefits offerings to ensure they’re competitive in today’s market. This can work to your advantage if you’re not able to necessarily pay more outright to boost employee salaries, which are at an all-time high due to the tight labor market. If an employer offers a robust, comprehensive benefits package at an affordable price to employees, they may be more likely to overlook potentially lower pay than market values in the inflated market in exchange for better or more benefits. As an added boost, happy, loyal employees are more likely to ask their friends to come work with them, which can help your attraction efforts as well.
Benefits and Employee Engagement and Morale
An engaged employee is one that is happy and proud of their work, and they’re more likely to spread the word about how great their role and the company they work for is. Engaged employees are also less likely to leave the company for another role, which is a huge concern amidst the Great Resignation. One of the ways that you can boost morale and employee engagement is through your benefits program.
Consider conducting an annual engagement survey to find out, in addition to the levels of employee engagement at your company, what benefits employees want and how valuable your current offerings are. For example, some of the most desired employee benefits in 2022, according to a Ramsey Solutions survey, include health insurance, retirement benefits, dental insurance, vision insurance, life insurance, PTO, employee assistance programs, and emotional/mental health support.
Depending on the demographics of your workforce, these stats may or may not hold true, which is why it’s so crucial to have your employee base give feedback on your benefits programs to find out what’s most important to them. In doing so, you’ll also make them feel like they’re being heard and cared for, which does wonders for boosting engagement and overall morale at work.
Benefits and Increased Productivity
Offering a suite of comprehensive employee benefits can help ensure your employees remain healthy. Health insurance and other benefits focused on well-being, such as mental health benefits and gym membership allowances or discounts, can help employees prioritize their mental and physical well-being. Splitting the cost of such important benefits with employees can help remove the financial burden of seeking care and prioritizing exercise, which is proven to be a mood-booster. When employees can get the care that they need at a lower cost, they’re more likely to go to the doctor when they’re sick and seek support for mental health concerns. All of this translates to happier and healthier employees, which means they’re more likely to be productive and present when they’re working. Plus, healthier employees tend to take fewer sick days, which translates to more ROI on your end.
Benefits and Tax Advantages
There are a handful of tax-advantaged employee benefits that you may be able to offer and take advantage of. Employees and employers can reap the rewards of such tax-advantaged accounts. Be sure to work with a licensed insurance agent to fully understand the tax implications of offerings benefits, as this list is for informational purposes only and the benefits highlighted may not be applicable for your company:
- Health insurance
- Retirement contributions
- Tuition reimbursement
- Student loan repayment assistance
- Cafeteria plans
- Childcare reimbursement
- Life insurance
- Medical spending accounts (e.g., HSAs, FSAs, HRAs, etc.)
There may be additional tax-advantaged benefits that your company can offer that aren’t listed above. The above list captures some of the most common that may be available.
Putting It All Together
Employees look to their employers not only for a paycheck, but also for benefits. In today’s market, where employees could leave your company and likely find a higher-paying role, it’s imperative that you leverage all possible solutions to remain competitive, and attract and retain top talent. Offering top-notch employee benefits is an investment you need to make in order to stay ahead and keep current employees happy.
How to Know What Benefits to Add
While offering high-quality, affordable health benefits and voluntary benefits like dental, vision, and retirement benefits, are always appreciated by employees, you may be wondering what other types of benefits to offer. After all, unless your employees are utilizing the benefits you offer, the point of offering benefits altogether may seem moot.
To figure out what benefits your employees want, you’ll need to leverage benchmarking information. You can look to what other companies in your industry are offering, but you should also gather feedback from employees to learn what they think of your current offerings, what could be improved upon, and what should be added. Conducting a regular employee benefits survey will give you insight into such thoughts, which can help you tailor your future benefits plans accordingly, ensuring that you’re investing your resources in the most effective benefits.
Offering Employee Benefits on a Budget
If you’re a small or midsized business, figuring out the balance between offering competitive benefits while also preserving your bottom line can be tough. This is especially true considering the fact that health benefits continue to rise in cost, and, unlike in the past where cost-shifting strategies like raising plan deductibles or designing plans where employees contribute more were the answer, employees are aware of their benefits and carefully review plan details. Considering alternative plan funding arrangements, like self-funded or level-funded health plans, could help you manage your health care costs, depending on your company design.
Beyond this, there are plenty of ways to offer competitive employee benefits on a budget. Ancillary lines of coverage are typically cost-effective ways to build out your benefits offerings, as employees highly value employer-sponsored voluntary benefits like dental and vision plans. In addition, consider evaluating whether your company is able to allow remote or hybrid work or flexible working hours, as those are perks employees are looking for in today’s market and are potentially low-cost ways you can attract and retain top talent.
Don’t Underestimate the Benefit of Employee Benefits
There’s never been a more pivotal time for you to overhaul your outlook on employee benefits in today's market. Instead of being a nice-to-have addition to employment, in some cases, employee benefits are the deciding factor in whether an employee stays or leaves your company. With millions of Americans leaving their jobs each month for something better and brighter, you need to do what you can to retain your top talent. In the same vein, you’ll want to do what you can to attract top talent.
Outside of offering higher pay, which isn’t always an option for positions and businesses, offering competitive benefits packages can help you weather the storm of the Great Resignation. Beyond this perk, the advantages of providing benefits are far-reaching and include boosting productivity, engagement, and morale, as well as providing tax advantages.
Navigating the complexities of employee benefits, including knowing what to offer, how to best structure plans, and complying with applicable regulations and tax rules, can be difficult. That’s why we’re here to help. The team at KBI Benefits is here to answer any and all questions you may have regarding employee benefits. We can also help you realize the true value of a competitive, comprehensive benefits package, and take it one step further to help you add offerings to your portfolio. Contact us today to learn more.
By Chris Freitas
Sources:
https://www.peoplekeep.com/blog/five-advantages-of-employee-benefits-for-small-businesses
https://www.sbmabenefits.com/2021/03/07/how-do-benefits-improve-employee-morale/