Blog

Sept 7, 2020

Importance of Employee Benefits

Today, human resources are a key to growth in each and every business as hiring the right people gives you a competitive edge over other organizations. With low levels of unemployment, businesses are constantly in search of practical ways to attract and retain the top talent. Obviously, the first idea that appears in your mind is to offer better wages than your competitors do. However, you might get astonished at the fact that a great deal of employees find benefits more valuable than salary. Although benefits might consume up to 30 percent of the budget, there are some plausible reasons to include them into your success strategy.

According to a report published by SCORE, a business guidance network in the US, 88 percent of interviewees find flexible working time more essential than salary. In addition, about a half of them say that they want assistance with education. To top it off, over 20 percent of employees that participated in the survey said that they value benefits like gym memberships or food. 

The research also indicates how benefits affect staff satisfaction. Get this: 53 percent of employees state that benefits enhance their quality of life, and, according to 49 percent of the interviewed employees, benefits encourage the feeling of being appreciated by the employer. As you see, the importance of employee benefits is undoubtedly huge in creating the right environment in your company. In this article, we’ll explain the importance of employee benefits on employee retention, recruiting the top talent, boosting employee productivity and loyalty. Let’s jump right in.

Why Are Employee Benefits Important?

Competitive benefits ensure enhanced recruiting

Employers need to find attractive tools to win the talent because the competition for it is severe. By providing a competitive benefits package, you multiply your chances to attract and hire the top candidates. A well-tailored benefits package prioritizes the quality of life and improves a person's experience outside work, so people are more likely to apply for a job at an organization that offers better perks.

They boost employment loyalty

Employment loyalty is one of the most desirable features in the workforce. Needless to say that reliability of your staff members equals your business success. This is especially fair in the times of crisis, when employers need loyal employees to help them grow together. An elaborately tailored benefits package will give you an opportunity to address your employees’ needs and maximize loyalty in the workplace.

Benefits can positively affect employee retention

A smart benefits package makes employees feel valued and satisfied at work. Plus, competitive benefits ensure greater quality of life outside work as well. So if your competitors promise a more generous salary, it would be difficult for them to beat flexible working hours or a solid healthcare strategy. In other words, if you do your best to maintain your employees’ satisfaction, they will stay with you and help your company thrive. Without a doubt, benefits are an effective tool for ensuring employee retention.

Benefits and employee productivity

Benefits can boost employees' productivity in several ways. First off, if you offer relevant benefits to your workers, they will know that you value them, and feel more motivated. It’s a well-known fact that motivation is a key driver of productivity. That’s why creating the right benefits package is really rewarding: it will encourage your employees to achieve better results at work.

Secondly, it’s a no-brainer that personal problems can negatively affect your employees’ performance at work. Your staff members may feel worried about issues that can occur in their personal lives, like childcare, health problems or financial issues. Personal problems may interfere with employees’ performance at work, they distract people from doing their tasks and make them less concentrated. As an employer, you can assist your employees with handling at least a part of problems. Relevant benefits offer solutions to most common issues outside work. The scheme is straightforward: you create a benefits plan that relates to the employees’ needs and thus helps resolve their problems. As a result, your staff members feel less stressed at work, which boosts employee productivity.

Finally, benefits help fight absenteeism in the workplace, which undoubtedly produces a negative effect on productivity. So what’s the connection? Let’s say your staff members have to handle some financial issues. Proper benefits can greatly decrease this kind of cases. Or, for instance, some employees tend to be absent from work because of certain family errands. Some benefits, for instance, flexible working hours, provide a solution in this situation.

Likewise, do not underrate the importance and benefits of employee rewards and recognition. To motivate your team, you can use financial incentives, give your employees holiday rewards and bonuses or use technology and social media to publicise accomplishments.

A Competitive Benefits Package for Employees: What You Need to Know

Mandated Benefits

Mandated benefits are benefits regulated by law. A set of mandated benefits for employees may vary throughout different countries. However, they typically cover social security, health care, workers' compensation insurance and unemployment compensation contributions. 

  1. Social security benefits provide employees with income after they retire or in case they become disabled. 
  2. Health insurance programs are offered to people after they reach a certain age, and in some cases, to young people by reason of disabilities or medical conditions.
  3. With workers' compensation insurance, employees get medical care and treatment as well as rehabilitation and replacement income due to job related injuries and illnesses.
  4. Unemployment compensation provides employees with temporary and partial income when they have unwillingly lost their jobs. 

Optional supplemental benefits

Optional supplemental benefits are services that aren’t covered by the health insurance. They usually include fitness, dental and vision options.The enrollees can choose to buy or reject them. These services may be grouped or offered individually. 

Optional benefits

Beyond that, an employer can include some optional, non mandated benefits into the benefits package for employees. The choice of optional employee benefits may be really huge. Here’s the list of the most popular optional benefits:

  1. paid sick time
  2. disability insurance
  3. paid vacation time
  4. dental insurance
  5. vision insurance
  6. life insurance
  7. retirement plan options
  8. professional development reimbursement
  9. on-site childcare
  10. dental insurance
  11. parking passes
  12. food
  13. entertainment
  14. flexible working hours
  15. company-provided training

While selecting optional benefits for employees, remember to consider the demographics of your workforce. It’s fair enough that the millennials prefer entertainment or professional development reimbursement to retirement plans. 

Conclusions

All in all, the importance of employee benefits shouldn’t be underrated. By offering benefits that respond to employees’ needs, you’ll facilitate hiring the top talent and improve employee retention. Keep in mind that it's important to personalise the packages and employee loyalty programs, creating a sense of connection and understanding between your organization and its staff. Remember that a quality employee benefits package has to address your employees’ needs both at work and outside it.

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