Employee Benefits: 7 Types You Should Consider for Employee Retention
The right people can make a huge difference to your business. These 7 employee benefits will help you keep top talent and show them how much they are valued.
Success in business requires top talent.
A recent report from the Federal Reserve showed unemployment below the expected rate. This is known as full employment – a point in which everyone who wants a job is employed. It’s another sign of a tightening job market. Finding skilled and qualified workers is difficult, if not impossible, for many businesses.
Reducing employee turnover and keeping top talent is more important than ever. When an employee with a critical skill leaves, there is a shrinking pool of possible replacements in the job market. Finding the right skill set and experience is not only difficult, but expensive. With fewer potential workers, businesses need to boost their offerings to recruits.
Employee benefits is one method a company can use to attract top talent and improve employee satisfaction to reduce turnover. With the right benefits, you can be the first company new recruits look at, building a reputation as a great place to work.
We’ll look at the importance of employee retention for a successful business. You’ll discover top benefits you can offer recruits and employees and see how each can deliver increasing returns in attracting and keeping top talent for your business.
The High Cost of Employee Turnover
Employee turnover not only hurts productivity, it can be costly – with a direct impact on the bottom line.
A recent study by the Society for Human Resource Management (SHRM) identified the cost for replacing an employee at $4,129. The same study found the average time to fill a position was 42 days.
The costs and impact on the business from employee turnover escalate. Recruitment, interviewing, and training all add to the cost. In addition, the soft cost from the loss of experience, tribal knowledge, and best practices is difficult to quantify but can be devastating.
Another study from The Economist estimated that the cost of replacing a highly-skilled worker can be as much as $121,000. High turnover can lead to management that isn’t experienced or invested in the company. Efficiency is sacrificed as new employees are trained by people also learning their job. Often, a new employee is a source of errors and mistakes as they learn, leading to additional costs for the business.
Now, more than ever, it is important for businesses to invest in employee benefits to increase retention. This will not only ensure that you can attract the highly-skilled employees, but that you can keep them over the long-term. Both your employees and your employee retention program are critical business advantages that will lend stability and productivity to your company over time.
Using Employee Benefits to Increase Retention – 7 Top Tips
While wage and salary are typically the most important factor in job satisfaction, they shouldn’t be the only tool you use to find new employees. Employee benefits are also critical to attracting and keeping employees, and make a difference in the quality of new hires. A survey by SHRM found that benefits were the third most important factor in job satisfaction. It was rated as very important by 60% of the respondents.
Employee benefits are non-cash compensation offered to an employee. Some employee benefits are required, such as social security, workers compensation, and unemployment. Other benefits can vary from company to company. They can include health insurance, life insurance, disability compensation, vacation time, and paid time off.
Designing a competitive benefits package can be the difference between attracting and keeping top talent and struggling in the marketplace with a revolving door of temporary hires. Here are seven ways you can use employee benefits to increase retention and employee satisfaction:
1. Health Insurance
Health insurance is not only the largest component of most employee benefit packages, employees’ value it more than any other benefit.
Employees ranked health insurance as the most important benefit in a recent survey. It ranked higher than both vacation and performance bonuses. Many recruits will ask about health insurance early in the interview process and will only continue with employers that offer adequate insurance.
Health insurance is also important to employee retention. In another survey, 72% of employers increased health benefits to retain employees.
It is also important to consider the type of insurance being utilized. Many companies are now discovering that general group insurance policies don’t provide the value employees are looking for. Employees want plans that can be customized to meet their needs. If your plan leaves employees with limited options in health care, then you’ve reduced the perceived employee benefit. Limited choices can even be a negative factor for a potential recruit.
Other companies have chosen high-deductible policies that can force employees to seek other employment. Companies ask employees to share more of the costs for fewer benefits. This leaves employees less satisfied and less invested in the success of the company.
Give employees options when it comes to health benefits. Let them select the plan that is right for their family. Even if you can’t fully subsidize the plan, offering a choice of a traditional PPO plan rather than a single high deductible plan delivers more perceived value.
Also, by giving employees the option to share the cost, you can increase the perceived benefit of the health insurance you offer.
2. Retirement Benefits
Next to salary and health insurance benefits, retirement benefits are an important to attracting top talent and retaining employees. In fact, even for younger employees, a 401(k)-retirement plan was a significant factor in overall employee satisfaction. Better plans delivered a higher increase in satisfaction.
For many companies, especially smaller companies, the need to cut costs have led to a reduction in contributions to the 401(k) plan or eliminating retirement plans altogether. Without matching contributions or a retirement plan, employees are more likely to find alternative employment. As employees age and get closer to retirement, and are more experienced and valuable to the employer, they are more likely to find a company that can help them reach their retirement goals.
In many cases, the benefit to retaining employees can make up for the cost in matching contributions to the 401(k). Consider the cost of hiring and training a new employee, especially one that is experienced or highly-skilled. Providing a retirement plan is less costly than recruiting and training.
Also look at plan options for the employee. Providing less matching contribution but more plan options can increase the perceived value of the benefit.
3. Escalating Benefits
Smart companies are now using benefit programs to increase employee retention by offering benefits that grow and improve for tenured employees. It’s another way a company can build loyalty and reduce turnover.
For example, look at an escalating bonus. The bonus an employee receives is directly tied to their tenure with the company. A longer tenured employee will receive a larger bonus. Vacation time and paid time off can also be linked to tenure. Each year an employee is with the company, they receive additional paid time off.
Vesting 401(k) contributions against the length of time an employee is with the company is another tactic an employer can use to increase retention. To receive the full benefit of the 401(k) contribution an employee needs to reach a certain milestone in employment. You can also link the amount the company will match to the tenure of the employee. The matching funds from the employer will grow over time.
Not all escalating benefits have a high-cost. Look at perks and benefits that can be linked to tenure, like a new office or a preferred parking space. When an employee reaches a milestone, reward them for their loyalty with a new office chair or desk. Sometimes even a new title or an additional title can provide employee incentive.
Consider what benefits employees find valuable, and then look at turning the benefit into an escalating bonus that rewards your most experienced employees.
4. Flexible Scheduling
Flexible scheduling can cover a range of benefits for employees. Compressed work days, flexible hours around core work times, work from home, and telecommuting are all types of flexible scheduling employers can offer.
With flexible scheduling, there are benefits for both the employee and the employer. In addition to increased employee engagement and satisfaction, employers see reduced absenteeism and more employees reporting on time. Employees can work when they accomplish the most, increasing productivity. Many businesses can flex work requirements around the needs of employees, providing essential services even during off-hours.
Most importantly, the company is seen as a family-friendly employer with progressive and employee-focused policies. The flexible schedule becomes a core recruiting tool.
Employees benefit with the flexibility to meet obligations and family responsibilities. The reduced commuting time can give them more time for family and reduce stress and transportation costs. Employees have more control over their work and their life and are more loyal to the employer. Flexible scheduling keeps employees fresh and helps them avoid burnout.
There are challenges that need to be addressed before implementing a flexible schedule. The business requirements still need to be met. Strict guidelines for the flexible schedule should be set and communicated with employees to avoid problems. Not every employee can work with a flexible schedule, and the business needs to accommodate those employees.
When implemented with strict guidelines and clear expectations, a flexible schedule can be the core of a benefits package that attracts and retains employees. It can also deliver a morale boost to the office and increase productivity.
5. Continuing Education
Many employees today report that continuing education and educational assistance is important for job satisfaction. It also provides benefits to the employer.
Among millennials, 87% report that professional development is an important factor in choosing an employer. This includes paid job training as well as tuition reimbursement.
Forbes recommends that an employer offer training to the employee that would benefit the company, and present it as a benefit to the employee – which in truth it is. This way, it’s a win-win for everyone!
In addition to increasing job satisfaction, employee training provides benefits to the business as well. With the rapid pace of new technology changing the business landscape, and the changes in regulations, it is important that companies keep pace. It is easier to train a current employee rather than hire a new one with a critical skill.
Not all workplace continuing education programs deliver the same benefits. Many employees aren’t satisfied with programs that seem limiting or too costly to use.
When developing a continuing education program, look at providing options for the employee while minimizing their out-of-pocket costs. For example, make professional development and continuing education a business priority.
Provide opportunities for employees to engage in continuing education. Send out a survey asking employees what they want to learn, and then provide a “lunch and learn” for the training. Onsite professional development lets you target critical skills and increases employee morale and satisfaction.
Partnering with a local university is another way to provide continuing education for employees. You can often fund customized training classes for employees at a university for minimal cost.
Online education resources are another way to deliver continuing education for employees. There are many low-cost resources that provide tremendous benefit. WebCE, for example, or Udemy are great options for employees. They also let you track and record what training each employee has received.
6. Commuter Benefits
Commuting to work is more stressful and aggravating than ever before. It takes the average worker 26.6 minutes to get to work – a number that continues to increase. That is more than four hours a week spent traveling to and from work in what is often the worst traffic.
Traffic has gotten so bad in urban areas that some employees consider leaving a job to end the pain and stress of driving to work.
As bad as traffic has become, it does provide an opportunity for savvy businesses. Providing commuter relief, or a strategy for battling the stress of travel and traffic, can provide a valuable benefit to employees.
The U.S. Environmental Protection Agency reports that employees who work for businesses that minimize the stress of commuting are happier and more satisfied. Addressing the work commute in a benefits package can eliminate one of the worst stress factors on employees and improve retention rates. It shows the company cares and recognizes the grind of getting to work.
There are several ways to address commuting. A ride sharing board in the office, for example, when paired with a prime parking spot or a bonus for employees that car pool can increase satisfaction and boost morale.
A reimbursement for employees that use public transportation can show company commitment to commuters and reduce the stress of traveling to work. A flexible work schedule or telecommuting opportunities will also let employees avoid the worst traffic and still get work done.
While we’ve covered many of the most important employee benefits for improving retention, perks are also important. They can make a difference for a candidate in choosing a position with a new company.
While benefits can be seen as non-wage compensation, perks work a little differently. They are the additions to a benefit package that go beyond the typical benefits and add value for an employee.
Some companies offer unique, even exotic perks like a dog-walking service, free pet-sitting, maid services, or high-adventure team outings. Other companies offer practical perks like a free dry-cleaning service, child care, or a workplace wellness program. A weekly yoga class at lunch, for example, or a discounted gym membership are always welcome perks.
Dental and vision insurance is another common perk. Additionally, a gym, or workout room in the office are perks an employee will love. They can benefit the business as well, since wellness can improve employee absenteeism losses, as well as boost creativity and productivity.
Even free food and coffee can make a difference in how an employee perceives job satisfaction. A coffee or espresso machine can keep employees in the office and focused on work. Healthy snacks like fruit, vegetables, and granola can eliminate snack runs and prevent the lull that can happen when an employee comes off a post-lunch sugar-high.
Take the time to ask employees what they want in an office perk. While you may not be able to implement every suggestion, there are likely a few easy changes you can make that will have a positive impact on office morale.
A Final Word on Employee Benefits and Retention
One mistake many businesses make in designing an employee benefits package is not documenting or communicating how the benefits actually work.
Take time to calculate how much a package is worth to the employee and then communicate the benefits to employees. Include it in employee newsletters and discuss benefits during yearly reviews. Ask your employees what they want in the benefits package.
Employee benefits is also a great way to communicate the values of the business. When a company provides a benefit, it shows that leadership believes the benefit is important. Benefits helps define the company culture.
Take the time to make benefits a priority for your business. You’ll not only attract new talent for the company, but keep your current employees happy and productive.