Once you have a team of employees working with you, how do you keep them motivated, and reduce the chances they will leave your business?
Obviously, this is not a simple answer, but one way you can entice employees to stay is by offering them a good benefits package.
Many business owners don’t realize that offering benefits to employees is optional. In fact, there are many additional benefits that can be offered to those who work for you business.
These can include:
- Retirement plans
- Health plans
- Dental or vision plans
- Life insurance plans
- Paid vacations, holidays or sick leave
None of these benefits are compulsory, but not offering them can cause a lot of issues to your business.
The Hidden Rewards of Offering Employee Benefits
Many small-business owners mistakenly believe they cannot afford or don’t need to offer additional benefits to their employees.
While not offering employee benefits may boost your bottom line in the short run, it can limit your business success for long-term prosperity.
Recent studies show that six out of ten employees rate health benefits as a very important contributor to job satisfaction.
So if you’re not already offering them, here are three reasons to consider it.
Health Benefits are vital for attracting the right talent to your company and keeping it there. Retention is especially important when you consider that employers typically spend about 20% of an employee’s salary to replace a team member who leaves.
For example, an employee earning $50,000 a year, it potentially costs about $10,000 to replace him or her. Compare that cost with an average annual health premium of $6,690 (of which the employee also typically pays a portion) and you can see that it makes sense to retain people by offering health plans.
When companies do not offer group insurance, employees will often ask for a higher salary.
Many small business owners overlook the fact that contributing to their employee’s health insurance plans can be potentially more cost-effective than raising an employee’s salary.
Why is it more cost-effective? Because health insurance contributions are tax-deductible to the employer and tax-exempt for the employee. Plus, studies have shown that 79% of workers would choose new or additional benefits over a pay raise.
When workers are stressed about how they’re going to pay for or handle a medical problem, they’re less motivated and distracted. Highly stressed employees are less engaged, less productive, and tend to be absent from work more than those who aren’t stressed.
Offering employee health benefits can help workers prioritize their health, keeping them well, and on the job. It also makes them value being part of the team more, and more motivated to help the business succeed.
Sharing The Cost of Employee Benefits
Fewer companies are footing the entire bill for employee benefits these days. According to a survey of California companies, 91% of employers require employee contributions toward health insurance or the cost of insuring dependants.
The size of the individual employee contributions can vary from a few dollars per pay period to several hundred dollars monthly, but one plus of any co-payment plan is it eliminates employees who don’t need coverage.
Keep in mind that many employees are covered under other policies (e.g., a parent’s or spouses), so if you offer insurance for free, they’ll take it. But even small co-pay requirements may persuade many to skip it, saving your business money.
Finally, keep in mind that there are some financial benefits to your business for offering health insurance plans, so be sure to check with the Department of Labor to see what is available to you.