The Importance of Employee Benefits

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Knowing the importance of employee benefits is essential, whether you’re in charge of hiring for a large firm, looking for staff to run your newly purchased business or taking your online business to the next level. While challenging jobs with a competitive salary are always in demand, today’s employee also expects more from a prospective employer.

You may be surprised at the variety of programmes and perks that fall under the umbrella of employee benefits. Whatever you choose to offer requires a substantial investment from the company, so it’s important to consider what you’ll get in return.

We’ve created this handy guide to help you figure it all out. Read on to learn about the different types of employee benefits and how they affect workers, employers and the overall success of your company.

What are employee benefits?

Employee benefits are any form of compensation given to employees above their regular salary or wages. Most people are familiar with commonly offered benefits like paid time off for sick leave or vacation days, and health insurance and disability insurance.

Many companies offer some or all these additional benefits for free or for a reduced price that is withdrawn from the employee’s paycheque at regular intervals. They include:

  • Life insurance
  • Dental insurance
  • Vision insurance
  • Retirement benefits
  • Maternity and paternity leave
  • Tuition reimbursement
  • Profit sharing
  • Childcare benefits
  • Employee assistance
  • Business expenses
  • Commuting/travel assistance
  • Free or discounted products or services

In recent years, companies have become more competitive and wide-ranging in their benefit offerings. The most popular startups offer employees flexible work schedules, telecommuting options, gym memberships, free meals or snacks and student loan repayment assistance.

Why should my company offer employee benefits?

There are many positive outcomes from offering benefits to employees in addition to their salary. While benefits have simple tangible effects like easing healthcare costs or increasing income for employees, they can also have more far-reaching effects on mental health, motivation and productivity.

Here are 10 ways that employee benefits can contribute to your company’s success.

1. You can attract better employees

Job candidates with impeccable credentials and extensive experience typically have several options for employment. While your mission statement and success can do a lot to attract top-level prospects, offering both essential benefits and bonus perks is an excellent way to set yourself further above the competition.

Modern employees are especially interested in flexible time and remote work benefits. They also look for any on-site health and recreation offerings that make long hours at the office more bearable.

2. It helps with employee retention

A recent CareerAddict study explored the reasons why employees quit and discovered that 77% of respondents would consider leaving due to poor benefits. It’s not unusual for a worker to leave for a similar job with a comparable salary at another company just to land better health insurance or bonus opportunities. Investigate what other businesses in your industry are offering and aim to be competitive.

3. It improves morale

Most employers know that good workplace morale is important for productivity, teamwork and the overall success of the company. It’s also important for each worker’s wellbeing. The American Psychological Association reports that unhappy employees are almost twice as likely to be diagnosed with depression. The increased stress levels at work also put them at greater risk of heart disease and other health problems.

Offering a comprehensive benefits package boosts morale in several ways. Employees feel more secure and stable in their work and personal life when they know they have enough sick days, vacation time and good medical coverage. They feel valued when their hard work is rewarded with bonuses and other perks. Additional benefits like health club memberships and a robust employee assistance programme directly help staff members maintain both physical and mental health. The better the benefits, the happier and healthier your employees will be.

4. Employees are more willing to problem-solve

Just as workers are more likely to leave a job with poor benefits, they’re also more likely to strive to hold on to a job with good benefits.

If there’s a feeling of mutual respect with management, employees will problem-solve their way through a variety of workplace issues. If your employees don’t feel valued, however, they’re more likely to let a minor problem snowball or quit over a disagreement with management or issue with a difficult coworker.

5. It improves employee engagement

A workplace with good morale, where employees are happy to be at work and to collaborate with their colleagues, is essential to company success. A workplace with high employee engagement is even better.

Employees who are engaged in their work are more focused and motivated and they feel like there’s a purpose to what they’re doing. They’re willing to go the extra mile to get the job done.

This is where employee benefits like flexible schedules, remote work, and on-site childcare come in. Acknowledging a worker’s individual needs makes them feel appreciated. It also addresses problems that might otherwise lead to tardiness, missed days and distraction at work. Even smaller perks can affect employees, like offering free lunches with healthy and vegetarian options in containers made with recycled materials. Employees are more inspired to work for companies that share their values.

6. Your company will earn more positive employee reviews

Social media and jobhunting sites offer ample opportunities for ex-employees to dish dirt on their former employers. Even workers who left on good terms, to relocate or pursue a different career, can reveal the negative aspects of the job.

Desirable candidates seeking new opportunities at your firm may read reviews that make them think twice about applying. Customers may also question doing business with a company that reportedly treats its workers poorly.

A solid benefits package will help your reputation. Peruse online company reviews and you’ll see immediately that employees list the benefits and perks they most appreciated, even if they didn’t like other aspects of the job. Workers who enjoyed ample paid leave, bonuses and travel expenses are also more likely to leave glowing reviews. It can even inspire current employees to post positive comments.

7. It helps build trust

One of the essential ways to increase employee happiness and engagement is by establishing a relationship of trust. Workers who trust their employer are much more open to trying new procedures, taking risks and being innovative on projects, and readily adapting to changes in their job role.

If you’re not offering your workers essential benefits, they won’t trust that you have their best interests at heart. They’ll see management as only concerned with profits and not the wellbeing of their staff. Offering employee benefits that support them and reward their hard work is a simple first step to building that necessary trust.

8. Employees won’t come to work when sick

Sometimes company owners or managers assume that limiting sick days will result in a full staff operating at peak productivity each day. Unfortunately, it just means that workers are forced to come to work sick. Their diminished health negatively affects their job performance and they may infect others, causing a cascade of ill and unproductive workers. This is bad news at all times, but is even more devastating during a worldwide pandemic like COVID-19.

This is why paid sick leave and personal days are such essential employee benefits. Companies like Netflix and Virgin Group believe in this so strongly that they’ve instituted unlimited paid time off programmes. Employees have less stress about requesting leave and can address their health and wellness concerns as needed.

So far, results are promising. Employees don’t come to work sick and are more engaged and enthusiastic when they return from leave.

9. You’ll have financially stable employees

Many modern companies conduct background checks of prospective employees. Hiring managers are often wary of workers with bankruptcy issues because those employees may be more susceptible to theft, bribery or other damaging behaviour. They may also be less productive due to distractions from their financial situation. These same issues are just as relevant with current employees, and offering good benefits can help them avoid financial difficulties.

As CNBC reports, 66.5% of 2018 bankruptcies filed in the US were due to medical issues. This often includes a combination of insurmountable healthcare costs and missed time from work. Providing employees with good medical coverage and ample paid leave helps them stay financially solvent. Smaller companies should consider a shared pool for paid time off, allowing employees to take the time they need without added expense for the company.

10. Employees are more invested in the company’s success

While health coverage, sick days and maternity leave are vital benefits, there are other important employee perks that can contribute to your company’s success.

Many businesses offer investment opportunities like profit sharing or stock options, including companies that are entirely employee-owned. Employees benefit financially, above their salary, and employers typically receive tax benefits from sharing the wealth with their workers.

Employees who receive a share of the company’s profits are naturally more invested in the company’s success. In fact, studies from the National Bureau of Economic Research have shown that those workers identify with the company more, perceive management more favourably and exhibit more commitment and loyalty than those on fixed-pay arrangements. Employees who have an actual stake in the company even subtly police their coworkers to keep them on task and productive.

As you can see, there are many ways that offering employee benefits is good idea for your business. Protecting and investing in your workers creates an environment of trust, engagement and loyalty that will greatly contribute to your company’s success.

What benefits does your company offer, and how has it affected employee recruitment and retention? Join the discussion below and let us know!