For much of 2021 and 2022, employees have been leaving their jobs in record numbers1 in a phenomenon experts call the Great Resignation. Roughly 47 million Americans quit their jobs in 2021.
With unemployment rates2 being lower than they were in 2021, more people are choosing to leave their jobs in search of better opportunities and benefits despite the talk of an economic recession. With so many vacant positions across the country, the current job market remains favorable to job seekers, meaning employers will need to go the extra mile.
In a job seeker's market, retention is key. So, how do you make your organization a place your current employees want to be while attracting new talent, especially as a small business with fewer resources?
Benefits are one of the surest ways to improve employee satisfaction and increase retention. But, with so many types of benefits now available, how do employers with a limited budget choose which ones to offer? What benefits are offered by employers to attract good employees?
Furthermore, what benefits must a company provide employees to remain competitive?
In this article, we'll go over the best types of benefits that help increase employee satisfaction and reduce employee turnover.
One of the best ways to keep employees satisfied and recruit new talent is to provide health benefits as part of your benefits package. These can come in the form of fringe benefits or perks, traditional group health insurance, or health reimbursement arrangements (HRAs).
According to our 2022 Employee Benefits Survey Report, 87% of employees surveyed value health insurance benefits, and 92% of employers offer a health benefit. If you don't offer a healthcare benefit, you could miss out on short and long-term employees who desire this benefit in the workplace.
Let's look at a few types of health benefits that improve employee loyalty in more detail.
Traditional group health insurance
Customarily, a group health insurance policy is the most significant part of an organization's benefits package. Its significance isn't only in its role in hiring and retaining employees but also in the time and financial investment employers make to search for, administer, and purchase a plan.
Depending on the size of your business and the health benefits status of the organizations you're competing with for talent, you may feel like you have no other choice than to bite the bullet and pony up for a group plan that's going to increase in cost every year when it renews.
But, there are some considerations to make before pulling the trigger. If you want to increase employee satisfaction and make your health coverage a true benefit, you need to offer the kinds of healthcare policies your employees want.
Since many companies have employees of different ages, health statuses, and income levels, a one-size-fits-all group health insurance policy rarely makes that happen. While it may look nice on paper for an employer to say they offer a group health insurance plan, there's another health benefit option that may work better for both themselves and their employees.
Health and wellness perks
Many businesses offer additional employee benefits known as fringe benefits to combat the Great Resignation and keep talented employees engaged. While many of these perks used to be office-oriented, they now apply to reimbursements and bonuses so that employees can use their perks even as part of a remote workforce.
Why would a business want to offer fringe benefits? Glassdoor's Employment Confidence Survey3 found four in five employees preferred receiving benefits or perks over a pay increase. Younger employees also named wellbeing as their top workplace want4.
Instead of offering allowances upfront, you can reimburse employees for their health and wellness expenses with employee stipends. Unlike a wage increase that automatically goes to an employee's paycheck, you have complete control over determining eligibility for reimbursement. This way, you can ensure your employees spend their allowances on the intended perks.
Plus, if your employees don't use the total amount, you can keep the remaining balance, contributing to your organization’s financial wellness.
Health reimbursement arrangements (HRAs)
A benefit option that has gained popularity in the last several years is the HRA. This type of health benefit has the same tax advantages as a group health insurance plan while giving employers complete control over their health benefits cost.
With an HRA, employers offer a monthly allowance that employees can use toward eligible medical expenses like health insurance premiums, prescription medications, and doctor's visits.
Another benefit of an HRA is the flexibility to customize the benefit to your needs. Employers can decide which medical expenses they want to reimburse, which employees are eligible to participate, and how much money they want to offer their employees in the form of allowances. This allows employers to provide a health benefit with nearly any budget.
You must offer a health plan if you're an applicable large employer (ALE) with 50 or more full-time equivalent employees (FTEs). These health plans need to meet minimum essential coverage (MEC) for at least 95% of FTEs to satisfy the requirements of the Affordable Care Act. Thankfully, an individual coverage HRA (ICHRA) can help with this.
Since employers offering an HRA reimburse their employees for premiums instead of choosing a plan for everyone, employees can go to the marketplace and select the plan that works best for them and their specific situation. Everyone gets what they need, which improves their job satisfaction.
PeopleKeep offers three different HRAs, which include:
- Qualified small employer HRA (QSEHRA)
- Individual coverage HRA (ICHRA)
- Group coverage HRA (GCHRA), also known as an integrated HRA
Retirement benefits, such as a 401(k) or defined benefits plan, are increasingly important in recruiting and retaining employees.
Like health insurance, improving retirement benefits positively impacts employee satisfaction.
Our Benefits Survey Report shows that 87% of employees value retirement benefits, while 54% of employers off them.
Yet retirement benefits face many of the same problems as health benefits. When organizations face tighter margins, they look for ways to trim costs. As a result, both 401(k)s and defined benefits plans have felt the pinch.
Employees at organizations that don't offer a 401(k) match retirement plan in their benefits package are less likely to want to stay at that company until retirement.
One benefit consideration that will become more important than ever is remote work. The Bureau of Labor Statistics5 found that 11.1% of workers were fully remote in December 2021. While that may not seem like a large number, it accounts for 17.3 million workers in the U.S.
At the same time, prospective employees are looking for remote work, with 9% of job postings on Indeed being for remote positions. Businesses like Twitter, Slack, Salesforce, and Microsoft allow employees to work remotely. That's because 97% of employees, as Forbes6 reports, don't want to return to the office full-time.
Allowing employees to work remotely full-time or on a hybrid model will keep employees happy. By eliminating commute times, transit and gas costs, and allowing employees to live where they want, they'll be more productive7 and dedicated to their work.
While remote work is a perk, don't forget to offer additional employee benefits to teleworkers. When employees work from home, they often use their own internet connection and cell phone for work purposes. Sometimes, employees can't afford to subscribe to a faster internet bandwidth to increase productivity.
As TechRadar8 reports, 67% of respondents on a HighSpeedInternet survey wished their employer covered their internet costs while working from home. Furthermore, an Oxford Economics survey9 in 2018 found that 89% of businesses provide a stipend for mobile phone expenses to employees who use their devices for work.
Offering a remote work stipend helps employees pay for their internet and phone bills when they work remotely. This will help ensure that employees are adequately equipped to work from home with a stable internet connection.
Education benefits and professional development
Due to recent technological advances, there's a seemingly unlimited amount of free learning resources from content curators like YouTube and other online course providers.
However, the need for university or continued education hasn't gone away. In today's job market, pursuing higher education to qualify for executive-level positions is still valuable.
The education benefits associated with the highest degrees of employee satisfaction are tuition reimbursement programs and paid job training. According to Harvard, 40% of employees say paid job training is “very important” to their satisfaction, and 92% of companies10 have some type of educational benefit program or tuition reimbursement in place.
Additionally, our 2022 Employee Benefits Survey Report found that 61% of small to medium size business (SMB) employees value professional development benefits in the workplace. However, only 40% of SMBs provide them.
Other benefits that attract and retain workers
The benefits and stipends mentioned above aren't the only ways to attract and retain workers. Other considerations for your business include offering life insurance, disability insurance, and parental leave.
Paid time off (PTO) is necessary for any benefit plan. Providing a PTO/sick leave system or unlimited PTO helps establish a company culture that prioritizes employees taking time for themselves and their wellbeing. This work-life balance helps boost retention, productivity, and employee morale.
A flexible work schedule is another desirable perk for your current and future workers. Younger generations especially value flexibility in the workplace. To satisfy these workers, you'll need to establish flexible working hours or flex days.
Together, these additional offerings help create a competitive benefits package that current workers and prospective employees can get behind.
If you aren't sure which benefits to offer your workers, you should conduct an employee survey. That way, you can better understand what benefits your employees value the most.
In summary, each employee benefit listed above can contribute to employee satisfaction and increase the likelihood of retention. Though wage increases and gift cards can be a simple way to provide a perk, they're often not considered an actual benefit by workers.
Providing an employee benefits program is a great way to attract new talent and retain employees while improving employee experiences.
Retirement and health benefits are essential tools for employee retention and creating a positive company culture. Likewise, wellness perks can help improve employee engagement and productivity while staying easy to manage for HR professionals.
Work-from-home flexibility has become an expected part of many positions. Providing the option to work from home and offering a remote work reimbursement is a way to make your business stand out to new hires.
The most valued benefit among employees is a health benefit. While traditional group health plans are a good option for some, HRAs are an affordable health benefit option that allows employers to control their budget enough to consider additional benefits.
Finding out which benefits to offer and how to manage them can be a headache. With PeopleKeep's industry-leading benefits administration software for HRAs and employee stipends, you can easily manage personalized, low-cost benefits and allowances for your employees.
This blog article was originally published on August 8, 2017. It was last updated on September 22, 2022.