Offering employee benefits not only helps you attract new employees but leads to more satisfied employees.
And the wider the range of benefits you offer, the more satisfied your employees are likely to be.
If you’re looking to grow your business, those are two important factors to keep in mind. Because, after all, our employees are essential to the success of our businesses.
Benefits Are More Than Just Medical Coverage
With the Affordable Care Act (Obamacare) implementation, a lot of attention has been placed on medical insurance benefits. Medical coverage is important, of course. Medical benefits form the foundation of an employee benefits package.
But benefits don’t stop with medical. There are other benefits that employees value which include dental, vision, life, and disability insurance.
Employees look at breadth of the benefit package you offer as an employer. According to the U.S. Employee Benefit Trends study by MetLife, 30 percent of employees who receive 11 or more benefits intend to stay with their current employers, versus only 18 percent who receive less than five types of benefits (see accompanying graphic). That’s a dramatic difference.
Just as dramatic is the number who say they don’t intend to stay. Thirty-two percent of those with fewer than five benefits in their packages do not intend to stay, while just 21 percent of those with substantially more benefits say they won’t be staying.
In short, more benefits = more employee loyalty.
Offering more types of benefits makes a real difference in retaining that talent.
It’s About Attracting Talent and Staying Competitive, Too
Offering a better benefits package helps you attract new employees, also.
We small business owners have to compete against larger businesses for the same talent pool. With 28+ million businesses in the United States alone, and half of them having employees, that means there are millions of other employers for good people.
While you may not be competing with millions of employers for every role, it is not far fetched to say you may have to compete with dozens of employers — even hundreds or thousands when you consider how many hire remote workers today. Your competition for an employee could be located thousands of miles away.
When a candidate is considering a job with your business versus another business, how does yours stack up? Does your benefits package help or hinder?
Years ago, I had a mentor who was fond of saying business owners and executives should “look outside the four walls.”
What he meant was that if we just look inward all the time and focus on comparing how we are doing over last quarter or last year, we risk missing the bigger picture. The world is always changing. We may have fallen out of step without even realizing it.
None of us operate in a vacuum. We need to be aware of the economy. We have to know what our competitors are doing. We have to be aware of changing employee expectations.
Employees have choices in employers and as we have come out of the recession and the job market has heated up, that means they have even more choices for where to work.
So you have to ask yourself:
(1) Is my business an attractive employer?
(2) Can it compete with other employers?
(3) Are we offering what employees are looking for?
That requires taking a hard look not just at the salary you offer, but soft benefits like working conditions and importantly, the complete insurance benefits package.
ROI: Looking at ALL the Numbers
Most small business owners want the best they can for their employees. But if you were to ask most business owners the number one stumbling block to offering more or better benefits, they’d probably say “cost.”
Most of our businesses operate on limited profit margins, and so we have to watch our costs carefully.
The key, though, is which costs are you measuring? Are you looking at the totality of the costs and return on investment you will get by offering a strong benefits package?
In other words, it’s wise not to just fixate on how much the benefits cost by themselves. Consider the longer term return.
Hiring an employee has been called a “million dollar decision” by a number of executives. There’s even a book written with a similar title.
The idea behind the million dollar hiring decision is that each time you hire an employee you are making a major investment in your business. Consider:
- How much time you invest in recruiting and interviewing for a position
- The recruiter fees
- The costs of onboarding a new employee
- The ongoing training and development of an employee over a period of years
- The compensation you pay the person in salary and bonuses
- The accumulated know-how the person develops and their contributions to your business operations
Add it all up and the investment in that employee could easily amount to a million dollars or close to it, over a number of years. (In terms of know-how, the investment could be priceless!)
If that employee leaves to find greener pastures, your investment goes with it. You have to start all over again, with another equally large investment.
But what if by adding a modest amount per month you could secure that million dollar investment and keep that person from leaving? Wouldn’t that make investing in benefits like vision and dental and life insurance a wiser financial move?
Employee benefits deliver real return on investment (ROI) to your bottom line.
How to Afford Non-Medical Employee Benefits
The key to getting an employee benefits program that is attractive and that you can afford is doing your homework.
- First, don’t assume! Benefits are priced out of your company’s reach. I’ve made that false assumption before with various kinds of services, and have been pleasantly surprised to find there were more affordable options than I realized. Do your homework.
- Second, it’s no longer one-size-sits-all. Benefits programs today are about empowering employees to decide which benefits they need and want, and having a program that is flexible enough to deliver different options to different employees, without administrative complexity. It’s called the Voluntary Value Formula, and it helps keep costs down. Go here for more information.
- Third, talk with someone. Get a quote and see what it actually takes and compare all the numbers, before you make a judgment.
Don’t Forget What Else Drives Loyalty
One last thing, remember that the power of benefits goes beyond numbers alone. Offering good benefits shows you care about your employees and their financial concerns.
It turns out that this caring is itself an important factor that employees take into account. When you demonstrate that you understand the financial pressures your employees are under, and try to give them peace of mind by taking some of those financial pressures away through benefits, you earn greater loyalty. See accompanying image.
The bottom line is that offering the right non-medical employee benefits protects your employees and delivers a real return to your business.