Recruiting and retaining high-quality employees is essential to helping your business thrive, but it’s also one of the top challenges for small and mid-sized business owners. And the negative impacts of employee turnover can be significant, including costs to recruit and hire a replacement, the loss of institutional knowledge, productivity dips as colleagues take on extra work to fill the gaps, and if turnover is high, employee morale can suffer as well.
When a business offers competitive employee benefits, however, retention often improves. That’s because benefits are an effective way to make your company more attractive to potential employees and to show your current workers how much you value them.
In this article, we’ll explore how employee benefits and retention are closely connected, the importance of a competitive benefits package, and what type of benefits help improve retention.
Why is having a competitive benefits package important?
A competitive benefits package makes your company more attractive to potential job candidates and helps you retain your own employees – employees who may otherwise be recruited by companies with better benefits.
As part of your strategy for hiring and employee retention, it’s important to consider the benefits package you’re offering.
A benefits package is part of an employee’s total compensation and can include health insurance and other wellness benefits, retirement savings plans, paid time off, life and disability insurance, and work-life balance incentives. When job candidates evaluate job offers, they often consider the benefits package in addition to salary.
In fact, a Gallup poll found that 64% of U.S. workers name income or benefits as “very important” when considering a new job offer, and 61% consider better work-life balance and personal well-being.
So, how does a competitive benefits package impact your current employees? When you meet the needs of your existing employees, they are less likely to look elsewhere and more likely to stay with your company – something that is crucial for your business’s health and bottom line. Valuing the health and wellness of your employees by offering a comprehensive benefits package can also result in higher morale, improved employee engagement, and a team more motivated to do well.
How do employee benefits provide a competitive advantage to employers?
There are more than 33 million small businesses in the U.S., employing 61.7 million Americans, according to the U.S. Small Business Administration. Yet many small and mid-sized businesses don’t offer benefits to employees.
When you choose to offer benefits to attract and retain employees, you position your business to:
- Stand out among other smaller businesses in your region and industry
- Compete with larger companies for top talent
- Enhance your reputation as an employer of choice
In addition, a comprehensive benefits package that emphasizes overall employee well-being can reduce absenteeism and improve productivity, ultimately making your team more competitive and contributing to overall growth.
How do benefits increase employee retention?
Employee benefits and retention go hand in hand. When employees have access to medical care, paid time off, and programs that promote work-life balance, they feel valued. That sense of value can increase loyalty, improve productivity, and reduce absenteeism, leading to a boost in employee morale and improved company culture.
In addition, employees with access to medical care may be more likely to seek care when ill or schedule preventative care, further reducing absenteeism. And offering paid time off gives employees time to recharge, potentially reducing burnout. Both can also lead to improved employee engagement.
A McKinsey Employer Health Benefits Survey in 2021 revealed an increase in the number of employers who reported that benefits are “very important” in talent management. Business leaders are recognizing the role of comprehensive benefits in supporting their employees, who in turn feel a sense of loyalty and keep the business growing and flourishing.
What types of employee benefits improve retention?
When you consider which benefits to adopt to improve employee retention, take time to understand the needs of your workforce, which varies for every company.
The current workforce spans five generations – from the Silent Generation born before 1946 to Generation Z, born after 2000 – so it’s ideal to offer a wide range of benefits to meet these varying needs. It’s also important to understand current trends and the standards in your industry and region.
At a minimum, ensure you’re offering what’s mandated by federal, state, and local laws, such as worker’s compensation, health insurance, retirement, or disability plans. This, of course, keeps your company in compliance but is also foundational for morale in the workplace.
Some options to consider as you’re building a comprehensive benefits package:
- Affordable healthcare coverage
- Dental and vision insurance
- Life insurance
- Short and long-term disability
- Health Savings Account and/or Flexible Spending Account
- Telehealth services
- Paid time off for health-related appointments
- Employee assistance programs (EAPs)
- Tuition reimbursement
- Retirement savings plan
- Paid leave
Don’t overlook no- or low-cost options, such as:
- Flexible scheduling
- Remote/hybrid work options
- Access to discounts for travel, phone service, and more
- Paid volunteer days
- Wellness classes
How G&A Can Help
The HR experts at G&A Partners can help you build a benefits solution that fits your company’s unique needs and budget. We know that your time and your team are your most valuable assets, and we’re ready to help you offer a benefits package that offers value to your employees and, in turn, fosters loyalty and a more productive workplace.
To learn more, schedule a consultation with one of our knowledgeable business advisors.
