Your people are the crucial system underpinning your organization’s ability to grow and thrive. Many organizations ponder, “Are employee benefits really necessary? Why?” The answer lies in their critical role in an organization’s strategy. So how crucial are employee benefits to achieving your company’s goals and objectives? They are extremely important.
The Importance of Providing Quality Employee Benefits in 2023
Providing competitive and comprehensive employee benefits is more important than ever in today’s tight labor market. With businesses across all industries struggling to attract and retain top talent employee benefits can be a key differentiator. In this article we’ll explore why employee benefits are so critical for recruitment, retention, productivity, and overall success.
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The past few years have brought immense change to the workplace and how we think about work. With new priorities shaped by the pandemic, employees today care more than ever about having a healthy work-life balance, flexibility, and robust benefits. At the same time, the labor market is the tightest it has been in decades. This combination of factors means that the employee benefits you offer could make or break your ability to hire and retain the talent your business needs to thrive.
In this comprehensive guide, we’ll dig into all the reasons why employee benefits are so important, from boosting recruitment and retention to increasing engagement and productivity. We’ll also explore the most attractive benefits to employees today and provide tips for crafting a competitive employee benefits package on any budget. By the end, you’ll understand why making employee benefits a priority is crucial for any successful business in 2023 and beyond.
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Benefits Help Attract Top Talent in a Tight Labor Market
- The US is experiencing a huge labor shortage, with 11 million job openings but only 6 million hires in October 2021. This makes attracting talent more competitive than ever.
- 58% of job seekers say benefits and perks are a top consideration when weighing job offers.
- The benefits you provide can be what convinces a candidate to choose your offer over another.
Benefits Increase Employee Retention and Reduce Turnover
- Replacing an employee costs 20% of their salary on average, making retention critical for controlling costs.
- Employees who are highly satisfied with their benefits are 2.5x more likely to be very satisfied with their job overall.
- 89% of workers at companies that support well-being say they plan to stay for at least the next year.
Benefits Boost Productivity and Performance
- Employees who are satisfied with their benefits are 1.5x more engaged at work based on Gallup data.
- 55% of employees feel they would be more productive at work if their benefit needs were met.
- Companies with high health and well-being scores have 17% higher productivity.
Benefits Can Reduce Total Compensation Costs
- Providing desired benefits like health insurance and retirement plans can offset the need for higher salaries.
- 48% of employees would sacrifice pay for better benefits. The average amount given up is 11% of salary.
- Companies that highly satisfy benefit needs spend $8k less in annual compensation per employee.
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Most Desired Employee Benefits
- Health insurance (medical, dental, vision)
- Retirement benefits
- Paid time off
- Flexible work options
- Professional development & education
- Work from home and flexible hours
- Additional health benefits (telehealth, gym discounts)
- Paid family and medical leave
- Tuition reimbursement and student loan repayment
- Mental health coverage and EAP programs
- Pet insurance and other voluntary benefits
Benefits to Provide by Company Size
Company Size
Recommended Benefits
Less than 50 employees
- Health insurance
- Paid time off
- Retirement plans like 401(k)
- Flexible schedules
- Remote work options
50-200 employees
- Health, dental, and vision insurance
- PTO and paid sick leave
- Life and disability insurance
- Retirement plans
- Flexible hours and remote work
- Professional development & tuition reimbursement
200-1000 employees
- Full insurance coverage (medical, dental, vision)
- PTO, parental leave, FMLA
- Robust retirement plans with matching
- Wellness programs and health incentives
- EAPs and mental health coverage
- Onsite amenities like gyms and cafeterias
Over 1000 employees
- All insurance offerings
- Generous PTO, leave, and work from home
- 401(k) matching and pension plans
- Stock options and profit sharing
- Childcare stipends and onsite childcare
- Free or subsidized meals, gyms, transportation
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Small businesses should start with offering basic health insurance, retirement plans, and paid time off to meet employee needs without overextending the budget. As the company grows, more comprehensive benefits can be added such as dental and vision insurance, disability coverage, flexible schedules, and remote work. The largest corporations have the resources to provide premium benefits like onsite gyms, cafeterias, generous leave policies, full healthcare coverage, and 6-figure retirement contributions.
Regardless of company size, today’s workforce expects at least baseline benefits coverage. While hiring budgets may be limited, remember that benefits often cost less than higher salaries while providing more value to employees. Get creative with building the best benefits package for your budgetary and hiring needs.
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Benefits are especially importan’t for small busines’s or startups aiming to lure talente away from big, established company’s that offer robust benefit’s. With limited budgets, small companies can get creativ and offer unique benefit’s like unlimited PTO, wok from anywhere policies, and flex-schedules. Combine these with the standard’s like healthcare, 401k’s, and paid leave to stand out verses the big guys. Candidates will appeciate the flex-ability and work-life balance benefit’s aimed at empowering employee’s and showing how much you value them’re wellbeing.
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When I first started my business, I didn’t think much about employee benefits beyond the legally required ones. But over time, I realized that benefits were almost as important as salary when it came to attracting and keeping great employees. As my company grew, I made it a priority to expand our benefits as much as possible within our budget.
Here are a few key benefits we provide that have been really popular with our team:
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We cover 100% of health insurance premiums for employees and 75% for dependents. This was big for retaining parents and workers with families.
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We match 100% of 401(k) contributions up to 5% of salary. This made our retirement package very competitive.
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We give everyone their birthday off as a paid day to celebrate. It was an easy perk that made employees feel valued.
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We allow flexible schedules and work from home when possible. Giving employees flexibility and balance has improved morale.
Offering these benefits has really paid off when it comes to recruitment and retention. We still can’t always match the big corporations, but by playing to our strengths and getting creative, we’ve built an attractive benefits package. When employees see how much we care about their wellbeing and future, they tend to stick around for the long-term.
How Personify Health optimizes your HR investments
In business, there is no one-size-fits-all when it comes to employee benefit initiatives and programs. Every organization and individual’s needs are different. By tailoring programs to engage employee interests and increasing awareness to drive program usage, organizations realize improved outcomes and increased business performance.
Personify Health’s modern, integrated platform creates a streamlined employee experience to maximize your HR investments and drive core business results.
What are employee benefits?
We often get asked – what are employee benefits? Employee benefits, also known as perks or fringe benefits, are provided to employees over and above salaries and wages. This leads us to consider, “What is the purpose of employee benefits?” Essentially, they are designed to enhance employee satisfaction and loyalty. These employee benefit packages may include overtime, medical insurance, vacation, profit sharing and retirement benefits, to name just a few.
Why Are Employee Benefits So Important?
Should you add benefits to your employees’ quality of life?
For all of the boost they provide to employees’ work/life balance, mental health, and well-being, and at a fraction of the cost of expensive benefits like health insurance, adding on benefits for your employees’ quality of life is a no-brainer.
Why are employee benefits important?
Employee benefits increase the value of working for a certain company and can improve your or your team members’ health and quality of life. When applying for jobs, candidates may look at the benefits each organization offers and take those into consideration along with salary when deciding where they want to work.
Why are benefits important?
Benefits help employees pay for healthcare, save for retirement and take time off work when needed. Understanding the importance of benefits packages can help managers provide more comprehensive packages to find and keep talented employees and help employees and candidates determine their priorities in a role.
What benefits does a company offer to employees?
Some of the most popular and important benefits to employees include: Healthcare: Companies can offer a range of health insurance packages, including preferred provider organization, point of service, health maintenance organization, indemnity and health savings account plans.
