No matter the size or type of business you have, one thing is for certain—good talent is hard to find, and harder to keep. It’s no secret that offering your employees benefits is going to cost you some money upfront. The good thing is it’s a long-term investment, like setting up payroll software for your small business or or building a proper onboarding experience for new hires. Great employee benefits preventing you from losing your best employees and from having problems hiring in the future when it’s time to grow your business. Here are three ways keeping your employees happy will help your business.
You may think that salary is the only factor candidates consider when accepting (or declining) a job offer, but employee benefits may play a bigger role than you’d think.
When you consider that 30% of an employee’s compensation comes from benefits, it’s easier to understand why salary alone won’t get you the top talent for your business anymore. Employee benefits are a great way to attract new talent to work for your small business, or to keep your current employees loyal. Whether that means competitive health plans, commuter benefits, comprehensive workers' comp packages, flexible working hours, or the option to work remotely, it’s important to know who you’re looking for and what they’re looking for.
A 2017 study showed that 54% of millennials consider benefits a determining factor in deciding where they want to work. That means that if you’re not keeping current with what young people are looking for from their employers, you could be missing out on fresh, passionate and loyal talent. A strong benefits program can help you attract both local new hires and new hires across the country.
Recruiting not only helps you find the right people, but it can have a serious effect on your bottom line. If you’re looking to hire, you’ve probably realized your team is missing a specialized skill or you simply have too much work for your current staff. Not only will you be spending time (and consequently money) updating job postings, reading resumes, conducting interviews, and networking, but the longer you need to do it to find the right fit, the more it will cost you. With an attractive benefits plan, the right talent will find you, saving you time and money.
Employee turnover is a very high and often underestimated cost for your business. Not only does this cost include wages, but it includes the costs of recruitment, loss of productivity, new training, and more subtle expenses like the impact on team morale. Keeping your employees satisfied (and in turn, loyal) can prevent you from these unnecessary expenses.
Here are a few facts to help you understand the value of retention:
- Direct replacement costs can reach as high as 50 to 60 percent of an employee’s annual salary, and total costs associated with turnover range from 90 to 200 percent of annual salary
- Employers spend the equivalent of six to nine months of an employee’s salary to find and train a replacement
- The total cost to replace an employee earning $8/hour is $3,500
- Entry-level employees cost 30 to 50 percent of their annual salary to replace, middle-level employees cost 150 percent, and specialized or high-level employees cost up to 400 percent
Scary numbers, right? Well it’s easier to keep your staff from leaving to work for your competition if you cater their benefits to their interests and needs. For instance, your employees are more likely to decline higher salaries from your competitors if you’re offering them benefits that they value.
A 2015 study found that 40% of employees would decline a wage increase in order to maintain their current health insurance coverage. This means that keeping your staff satisfied with their benefits could help them say no to poachers.
But how do you keep them happy? By tailoring your benefit packages to their needs. This doesn’t mean simply providing them with medical or dental benefits, either. Do they believe it’s important to give back to the community? If so, offering them paid days off to spend time volunteering at their favourite charities is something they’d likely appreciate. Do they travel for work or think working for a green company is important? Then you might impress them with a commuter benefits program. Employees that prioritize mental and physical health would be interested in benefits that cover therapy, yoga, or gym subsidies.
A study on the importance of benefits and employee loyalty found that 71% of employees who are satisfied with their benefits are very loyal to their employers. People not only desire—but require—proper benefits to prevent them from leaving a company. And if you’re wondering if it’s too early for you to consider these things for your business, keep in mind that the smaller the business, the bigger the loss of an employee.
Happy, healthy people work harder. Employee engagement may seem like a “nice to have” but it can actually make or break a company, especially a startup or small business. A 2010 study found that lower job satisfaction foreshadowed poorer bottom-line performance: The estimated cost of employee disengagement in the U.S. was $300 billion in productivity losses annually.
Three. Hundred. Billion.
If your employees don’t care about your company, or think you don’t care about them, they show up less, produce less, and succeed less. And that means they cost you more. Companies with more engaged team members are 22% more profitable than those with unengaged employees. What this means is that your annual company baseball tournament, monthly massage perks, or summer hours could make a big impact on your company’s success.
So, happy employees are better workers, got it. But what about employees that are happy but…sick? Employees without health insurance probably won’t be as likely to get annual checkups. Or visit the doctor when they’re sick. Or get medication when their doctor prescribes it. Then what happens? They get sicker.
U.S. businesses lose between $150 billion and $225 billion each year due to employee illness. (That’s additional billions on top of the unhappy workers!) Revenue losses aren’t just based on absent employees, but also sick workers who show up and aren’t as productive or spread their illness to others. And this all affects smaller business with smaller margins much more. Chronic conditions, like stress, obesity, or substance abuse, can contribute to an estimated loss of 115 productive hours each year as well.
This is where your benefits package comes in. Invest in high-quality health insurance plans so they can stay healthy, stay happy, and stay productive.
Finding the right benefits for your employees is time-consuming at its best, and downright complicated at its worst. But before you go with the quickest, cheapest option, make sure you ask yourself if you’re truly giving your employees what they want or need. Providing them with the perks they value not only keeps them loyal, but it’s a long-term investment in your employees, and your business.
The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.