Employee benefits. Candidates ask about them. Employees expect them. And yet, many small businesses struggle to offer them. So, why do employee benefits matter? And, what makes employee benefits true benefits? Let’s dive in.
Why Employee Benefits Matter
Running a small business in the 21st Century is no easy feat. Businesses need a strong market position and in-demand products and services. But it doesn’t stop there. Success also comes from hiring and keeping the best employees, managing costs, and mitigating human resource turnover. In other words, how successfully employees are managed can make or break the business.
As we wrote about previously, the importance of employee benefits for small businesses ties back to:
- Employee Happiness and Expectations
For example, the cost of losing great employees is high. Some studies predict every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average. For a manager making $40,000 a year, that is $20,000 to $30,000 in recruiting and training expenses. Other studies say the cost is even higher - up to 213 percent of annual salary for highly educated executives.
There are various strategies used to attract and keep the best employees. In addition to wages, benefits are a key tool used to improve employee satisfaction, encourage loyalty, keep the workforce healthy, and create a competitive edge in recruiting and retention.
Benefits come in all shapes and sizes. Over the past several decades, everything from health insurance and paid time off to daycare and adoption assistance have been offered in an effort to strengthen the bond between employer and employee.
But, consider this... In order for benefits to be benefits, employees must find them beneficial.
What Employees Value
What makes benefits beneficial? What do employees value? Here are a few stats to chew on:
77 percent of employees report benefits are important to job satisfaction, compared to only 52 percent of employers (Aflac, 2014). Additionally, the Aflac survey found:
47 percent said improving benefits packages is one thing employers can do to keep them in their job;
87 percent said a well-communicated benefits package would make them less likely to leave their jobs; and
57 percent said they’re likely to accept jobs with slightly lower compensation but better benefits.
And yet, only half of employees are satisfied with their benefit offerings at work. Instead, employees increasingly value choice and the ability to personalize benefits (Metlife, 2014).
Over three quarters (78%) of employees want a greater variety of benefits to choose from and 80% of employees would value benefits customized to individual circumstances and age (Metlife, 2014).
To summarize, employees value benefits - maybe even more than employers. Employees of small businesses say they choose and stay with companies because of the benefits they offer, and yet employees crave benefits with increased value and choice. This may sound like a balancing act too difficult to achieve on a small business budget, but it is not.
One trend (and solution) is the personalization of employee benefits.
Why do you think employee benefits matter? Leave a comment or question below.