How Prioritizing Employee Welfare Improves Your Business Bottom Line
Companies that act in the best interest of their employees and that seek out ways to serve the community fare quite well.
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When employee wages, benefits, and wellness programs are discussed, the conversation often focuses on the cost of covering these items. The assumption is often that prioritizing employee welfare results in increased spending and loss of profitability. In reality, that simply is not true.
Companies that act in the best interest of their employees and that seek out ways to serve the community fare quite well. Here are a few examples of how your "generosity" as a business owner can have a positive impact on your business profits.
Paying a living wage can create goodwill and maintain a healthy profit
In 2016, a study was conducted that showed that increases in the minimum wage had no negative impact on employment rates. That's not all, several companies are very well known for going above and beyond paying the federal or state minimum wage required of them, and pay a living wage. Not only are they very profitable, they have stellar reputations among their employees and customers.
One of them is Costco.com. Their current entry-level wage is US$13 dollars per hour. That is very high and more than the minimum wage for everywhere around the world. Other companies that pay close to the living wage standard of $15 dollars per hour are Aldi, Trader Joe's, and Amazon, which recently pledged to up fulfillment workers wages to $14.75 per hour. Not only are these companies profitable, they are growing. They also have no difficulty attracting workers.
In fact, paying a living wage has such a positive impact that companies are using a living wage accreditation as a selling point directed at both potential customers and employees. People don't simply want to work at places that pay living wages. They also want to give these businesses their money.
Taking care of employees improves reputation and draws in good candidates
The cost of replacing an employee is quite high. In fact, it can reach to 1.5–2.0x the employee's annual salary for top candidates. It is much less expensive to keep employees than it is to find and onboard new ones.
When employees know that their employers are invested in their growth and training in a tangible way, that's meaningful to them and they are less likely to leave the company. It's also why companies like Starbucks that offer great tuition reimbursement programs are such sought after employers. Happy and motivated employees are also more likely to become advocates for their employers. In a world where potential job candidates are likely to read reviews on Glassdoor and other sites, earning positive feedback is key to attract new talent and retain the best personnel.
Focusing on employee well-being improves productivity and attendance
Companies that go a step beyond providing basic insurance with employee wellness plans aren't just being generous. They are helping to ensure better productivity, a reduction in both absenteeism and presenteeism. For instance, according to a recent survey conducted by Lancaster University Management School, the average cost of lost productivity was 7.85% of the wage bill.
The same study also indicates that companies with strong health and well-being cultures tend to have a 45% lower cost of lost productivity compared with those lagging in the well-being department.
Even something as simple as offering free influenza vaccines on site can have a positive impact. Workers who are physically and mentally healthier tend to miss less days and to be more productive as well. Beyond that, consider the additional benefits of comprehensive employee wellness programmes:
• When employees are healthier overall, there are fewer health insurance claims. This is especially true when wellness programs include yearly screenings and other preventative care. Even being involved in diet and fitness initiatives can make a difference. This is especially helpful for employers who either subsidize or self insure.
• If more companies would take these initiatives, healthcare spending overall would drop significantly. These drops would occur specifically in the area of preventable diseases and other conditions.
• Employee wellness initiatives can be used as team building activities. These might include organized walks during lunch, brown bag health and wellness seminars, and group yoga or Zumba classes. Employees can team up to challenge and support one another in fitness and wellness initiatives.
• Many insurance companies will offer discounted premiums to employees that take part in wellness programs. In many cases, workers do not have to meet any benchmarks to qualify. They simply must take part in the wellness programs and preventative initiatives.
Paying a living wage, offering free training and tuition reimbursement, and sponsoring wellness programs may initially seem like expensive stuff. It is true that you will shell out money for these. However, the positive results that they produce can mean higher profits, better productivity, reduced employee turnover, and better reputation. Each of these can improve your bottom line as well as goodwill within your organization.
Related: Stressed Employees? Why Financial Wellness Programs Can Help