In today’s competitive job market, offering a strong and robust employee benefits package is crucial not only for attracting but also for retaining top talent. A comprehensive employee benefits package goes beyond just a paycheck and can significantly contribute to employee satisfaction, engagement, and loyalty. Here we explore the reasons why investing in a good employee benefits package is key to retaining your company’s top talent.
Importance of Employee Benefits Package
1. Attracting Top Talent:
The monthly Job Openings and Labor Turnover Survey indicates that as of July 2023, the US job market continues to be competitive, with unemployment at a record low but resignations remaining high; placing employees in good bargaining positions when it comes to compensation. According to the Pew Research Center, adequate compensation and an attractive benefits package are more important to employees than ever before; 43% of those surveyed cited poor benefits as key factor in their decision to resign. Now as employers across the country compete to hire and retain the country’s top talent, it’s clear that a comprehensive benefits package can help employers stand out from the crowd and signal to prospective employees that value is placed on remuneration and a benefits package commensurate to their experience and potential.
2. Benefits vs. Salary:
It’s difficult to overestimate how much worth employees attribute towards their employee benefits package; in a survey by Staples of 1,549 Americans, more than half (62.3%) of employees said they would accept a lower salary in exchange for better workplace benefits.
3. Employee Satisfaction and Morale:
Data from the same study substantiated the idea that a comprehensive benefits package – one which takes into consideration a variety of factors, leads to employees feeling more valued and supported and can have a direct impact on retention; enabling businesses to retain top performers and reduce turnover costs. We will consider the extent to which different benefits impact employee satisfaction and retention below:
Components of a Comprehensive Employee Benefits Package
A comprehensive employee benefits package should include a range of benefits that cater to the diverse needs of employees. Here are some essential components that contribute to a well-rounded employee benefits package:
1. Health Insurance:
Despite not being a federal requirement for businesses with less than 50 full-time employees, offering health insurance is a critical component of an employee benefits package, providing employees with access to medical care, helping to protect them against high medical costs, and promote overall well-being. Most employees expect to receive medical, dental, vision, life, STD/LTD and other supplemental benefits as standard, with most US companies now expanding their benefits schemes to include accidental insurances, commuting, critical illness and hospital indemnity coverage, pet insurance and counselling.
2. Retirement Plans:
Providing employees with retirement benefits, such as a 401(k) plan, helps them save for their future and ensures financial security. Employers can offer matching contributions or profit-sharing options to encourage employees to take advantage of these retirement plans. Employers also benefit from offering a 401(k) plan. Contributions made by employees to their 401(k) accounts reduce their taxable income. This results in potential savings on payroll taxes for the employer. Additionally, offering a 401(k) plan may qualify businesses for certain tax credits or incentives. By implementing a 401(k) plan, employers can potentially save on taxes while providing a valuable benefit to their employees.
3. Paid Time Off:
Although the USA has no national requirement for paid time off including vacation days, sick leave, and holidays, PTO is an essential benefit which contributes to work-life balance and employee well-being. According to The National Compensation Survey – Benefits, in 2021, more than one–third of private industry workers received 10 to 14 days of paid vacation after one year of service. After 10 years of service, 33 percent of private industry workers received between 15 and 19 days of paid vacation; this is in stark contrast to the European standard where the average is much higher and is often available to employees from their first day of service. In the UK alone, gov.uk states that the average British employee received 5.6 weeks off work each year. Offering a generous PTO policy demonstrates an employer’s commitment to the overall happiness and satisfaction of their employees.
4. Flexible and Remote Work Arrangements:
In today’s digital age, employees value flexibility with regards work arrangements. Offering options such as remote work, flexible hours, or compressed workweeks can improve work-life integration and contribute to higher employee retention rates. In the research from Staples, 17.1% of participants revealed that their ability to work remotely would have a direct impact on their decision to remain with their employer or seek a new role. 40% of those surveyed said that flexible hours were their main consideration, coming ahead of insurance premiums and paid family leave; and in research carried out by McKinsey and Company, 44% of 600 participants said that they had little to no interest in returning to traditional, office-based jobs in the next six months.
5. Employee Assistance Programs:
Employee assistance programs (EAPs) provide support and resources to employees facing personal or professional challenges. EAPs often include services such as counselling, financial planning, and legal assistance. These programs can help employees navigate difficult situations and enhance their overall well-being. You can read more about the benefits of EAPs for your employees here.
Additional Non-Mandatory Benefits
Compensation:
Recognition and employee engagement go hand in hand, which is just one of the reasons why offering various forms of compensation to your workforce is advisable. Company bonuses, performance bonuses, commissions, spot-bonuses, and gift cards provide a tangible and quantifiable way of signalling to your employees that you value employee contributions. A research study by Bayes Business School found that employees who received a financial reward for their performance in incentivised tasks temporarily put more effort into unincentivized tasks. The research showed that the increased motivation came not only from the expectation of potential monetary rewards in the future, but because it fostered a sense of togetherness and reciprocity between employee and employer.
Equipment:
While there is no federal law that mandates employers provide remote workers with equipment, some states or local jurisdictions may have specific regulations or guidelines regarding remote work, such as reimbursement for necessary expenses. California, for example, has specific requirements for reimbursing remote employees for work-related expenses. Labor Code Section 2802 states that remote workers must be reimbursed for the necessary expenses they incur in order to perform their work duties, regardless of who mandates the remote working. In 20202, an employee sued their employer, IBM claiming that he and other California employees should be reimbursed for the cost of, among other things, internet access, telephone service, a telephone headset, and a computer and accessories when they worked remotely in 2020. But beyond litigious concerns, there are several reasons why providing remote employees with the right equipment can benefit both employee and employer alike:
- Increased Productivity: Remote employees with access to proper workplace equipment are better equipped to perform their tasks efficiently. This can lead to increased productivity as they won’t be hindered by inadequate tools or technology.
- Enhanced Comfort: Having ergonomic office furniture and equipment, such as an ergonomic chair and adjustable desk, can improve employees’ physical comfort, reducing the risk of health issues like back pain or repetitive strain injuries.
- Reduced Stress: Employees who receive necessary equipment are less likely to worry about investing in their own resources. This can reduce financial stress and allow them to focus more on their work.
More on non-mandatory benefits and their impact on employee performance and retention, can be found here.
Bottom Line
A comprehensive, valuable employee benefits package is paramount to attracting and retaining top talent in the United States. By investing in an employee benefits package that prioritises employees’ needs and well-being, organizations can create a positive work environment, boost employee satisfaction, and reduce turnover, this not only provides a competitive advantage, but is also a strategic investment in the long-term success of any organization.
