When job-seekers are offered a position with a company, compensation is usually the deciding factor for them to decide whether to accept. Many people equate “compensation” with “salary”, but realistically, it goes deeper than that. A comprehensive employee benefits package can make or break a business’ ability to hire and keep top talent. It may seem like a big expense, but we’ll look at the main reasons that it is an investment well worth making.
There are many reasons people find themselves on the job market, but they all have one thing in common: a level of urgency. A high school grad or dropout entering the workforce needs to make money. A college graduate needs to start paying back student loans. A person who has lost their job unexpectedly has rent and utilities to pay, and unemployment benefits won’t take them very far, even with affordable auto insurance payments. The employed person who is looking for a better job dies a little more each day they stay at the workplace they hate.
This urgency could lead you to the conclusion that they would take any job they would find, but in many cases, it’s close to the opposite. Now that job seeking has gone largely online, prospective employees can filter out businesses that don’t over certain compensation levels, including both salaries and benefits. This is where a company that doesn’t offer great benefits does so at its own peril. Your business may be losing its best prospects before they even apply, because you aren’t offering what they need.
Paid time off (PTO) is a huge decision-maker for older, more experienced applicants, especially in stressful fields. Perks like company phones or computers (or allowances or reimbursement for them) are critical for employees with more technical positions. Flexible scheduling and the ability to telecommute is a big positive for people in large cities, or those with familial responsibilities that need them to stay close to home. And of course, healthcare is critical across the board. Private healthcare insurance is very expensive in the U.S., and most people rely on their employers or their spouse or partner’s employers for coverage. For very different reasons, this is true for 18 to 78-year-olds, and everyone in between or beyond. More and more, parents are considering a company’s offering of parental leave for newborn babies as well. Lastly, even younger people need to plan, so retirement savings plans can get their attention, especially if the company matches part or all their contributions.
Recruitment is a major expense for almost every company, and finding the right candidates is a difficult process. Offering great benefits can only help make the process easier.
Any employer knows that getting the right people on board is all well and good, but it’s equally (or often, more) important to keep them on board. Employee retention can be difficult, especially if your top talent is public-facing. People who have a reputation for being good at their job within the local corners of their industry tend to receive job offers (or at least opportunities) out of the blue. Even outside of your best performers, companies with large workforces can’t afford to constantly be losing people and replacing them. That goes back to the cost of recruitment, but it also must take into consideration the considerable cost of training new employees, and the loss of productivity while people in key positions are still learning their roles and not generating revenue.
So, what part do benefits play in retention? Simply put, people with great benefits feel lucky to have them, and they will make them think twice about leaving their job. In a down economy, a grim reality for some is that they can’t afford to quit a job because the benefits are necessary. Paying more for health insurance would be an expense they can’t absorb, even with a new job with a higher base salary.
Great companies make great efforts to not only keep their employees on staff, but to keep them engaged as well. Companies that have earned a reputation for offering a solid benefits package have done some of the work, but this philosophy of investing in employee’s well-being should carry into the business’ mission and vision statements as well. Taking the time to foster a positive work culture that values everyone’s role in the process and practices creative and blameless problem solving will pay great dividends in both the short term and long term.
A company that does not offer great benefits is making a shortsighted move that will hold them back in the long run. Invest in people, and you’ll find yourself surrounded by great ones!