A great paycheck is often a keystone in retaining employees, so it’s not surprising that many employers offer competitive salaries. However, more and more companies are starting to use benefits as a core employee retention strategy. Should you?
How Important are Benefits to Employees?
The Society for Human Resources found that 33 percent of companies used benefits as a retention strategy for employees at all levels of the business (vs 18% in 2012.) Benefits are becoming more and more important to employees. In a Monster.com survey, 32 percent of job hunters said that health insurance was their top priority, compared with 15 percent who said a higher salary was most important.
What makes a benefits package a valuable employee retention tool? Well, despite the growing importance of benefits to employees, only 49 percent of employees are satisfied with their current benefits. That means the average employer can make benefits better for 51 percent of their employees, resulting in greater retention.
Why are benefits so important to employees and what can you do to improve your benefits package, even on a budget? Here are some tips to get you started.
Health Care is Really Important
People like to stay healthy. When they find doctors and dentists they like, changing them is not only time-consuming but sometimes close to impossible. Moving to a new company almost certainly means changing health care plans and, as a result, health care providers. Employees who are satisfied with the health care plans at their current company are loath to have to start the process over again.
Health Care Isn’t the Only Important Benefit
While health and dental care are the most important benefits, other things matter as well. For example, an employee-assistance program (EAP) can save lives, families and finances. A good EAP helps employees and their families obtain help when they need it, from finding a therapist for counseling to choosing a lawyer when the homeowners’ association threatens to sue over a miscolored play set. This is a low-cost benefit (the per-employee cost can be as low as $12 per year) that can add tremendous value to an employee’s benefits package.
Do you offer a 401(k) or other retirement plan? How about with a match? What about a match that takes five years to vest? Talk about a retention tool. Employees are keenly aware that retirement saving is critical to their future. They see 401(k) matches as “free money,” but, if there’s a vesting period, that match is earned over five years.
A small business may not be able to offer the daily complimentary meals, stocked fridges, free transportation and other perks that large corporations are able to provide their employees. But you can still offer other benefits that your employees will value without breaking the bank.
Give your employees something to look forward to, such as providing a company-sponsored lunch on Fridays. Or, consider letting your employees work from home a couple days a week. A flexible work schedule is often highly valued and can be important when it comes to retaining employees. Set core business hours (often from 10 a.m. to 2 p.m.) and then let employees work their eight hours around that. Your early birds can come in at 6 a.m., while your night owls can come in at 10 a.m., but stay long after the early birds leave. Everyone works the hours that fit their lifestyle the best.
Employees Leave Jobs When Their Managers Don’t Care
What does that have to do with benefits? Well, in a Fortune 500 company, probably not much. But in a small-to-medium-sized business? Everything. When you know the person who made the benefits decisions, you’re going to take the impact of those decisions personally. A CEO who saves money by purchasing the cheapest legal benefits may be seen as not caring about the well-being of the staff. Do you want to show your employees you care about them? Think benefits.
Let’s Talk About Costs
Do these benefits have to cost a fortune? Surprisingly, no. First of all, turnover is very expensive, so anything you can do to help retain employees is a cost saver. While health care costs can be daunting, not offering good health care will make it difficult to hire new people and keep the people you already have on staff. Some benefits, such as flexible schedules and telecommuting, can be almost free and sometimes can even save you money.
When you’re looking at pay and benefits, remember that benefits can be a dealmaker or dealbreaker for many employees. Don’t forget this important part of the compensation equation.