5 Reasons Enhanced Benefits Programs Are Good for Business
Meaningful, ongoing benefits are good for employees, team culture and your bottom line.
Opinions expressed by Entrepreneur contributors are their own.
Not all that long ago, employees were happy simply to get a paycheck. Benefits were nice, but they were just that -- benefits, not necessities. Today, employees expect health and dental insurance, retirement plans and more from their employers.
While providing benefits may seem expensive, a majority of executives rank benefits and paid time off as having the best ROI. Companies that invest in employees by offering health insurance, paid time off and flexible hours see increased productivity, improved morale and positive effects to the bottom line.
What if we took things a step further and offered additional benefits? In 16 years of running my own business, I've found that providing the "standard" benefits as well as other meaningful (but less expensive) perks can be a catalyst for employees to reach their full potential. Here are the top five reasons that an enhanced employee-benefits program is beneficial for your business.
1. It's profitable.
As business owners, our goal is to make money. While I am gratified by providing benefits that truly make a difference in my employees' lives, I always look at the bottom line. I've found happy employees make good employees, and good employees are great for business. The numbers back this up: A 2015 report from The Aberdeen Group revealed that companies with high employee engagement achieve higher annual revenue, receive more customer referrals and meet annual sales quotas more often than companies without.
My business employs about 20 full-time workers. Our expanded benefits package includes professional dog-walkers to exercise our employees' dogs, a personal trainer, massage and chiropractic sessions, a company-sponsored lunch every Friday and even free drinks at a local pub.
Takeaway: Perks such as these may not immediately produce ROI. But they will help your employees blow off steam, come to work refreshed and work at their highest level.
2. It increases employees' physical and mental health.
Regular exercise is proven to increase energy levels and overall mood, which enables them to perform at their peak. In fact, the American Psychological Association's 2016 Work and Well-Being Survey found that 91 percent of workers at companies with well-being programs are satisfied with their job and feel motivated to do their best. Even small programs can make a huge difference. Our twice-a-week personal-training sessions help employees maintain a healthy lifestyle and clear their heads during the work day.
Healthy employees are also present more often. Employees with health insurance are more likely to get regular check-ups and take preventative measures, decreasing overall sick days. Plus, insurance gives employees peace of mind. They don't have to worry about paying out-of-pocket for an illness or injury. I am very passionate about the security that health insurance provides. In fact, I pass on doing business with vendors if they don't offer their employees health insurance.
Takeaway: Keeping your employees in a healthy physical and mental state enables them to apply their brainpower to further your company's progress.
3. Recruiting is more expensive than retaining.
Many companies still think of benefits in antiquated ways. Instead of rewarding an exceptional employee with additional benefits, companies usually offer a small raise to try to keep the employee happy. These companies aren't listening to what their employees actually want. According to a 2015 study by Glassdoor, 79 percent of employees would prefer more benefits or perks to a raise.
Providing small raises may save a little money overall. But the expense of replacing an employee if he or she leaves for a better, benefit-laden job ultimately will cost you a lot more. In fact, it can cost 30 to 50 percent of an entry-level employee's salary to replace her or him. For mid-level employees, the expense is upward of 150 percent of salary. These turnover costs add up fast, especially considering the lost productivity inherent in training a new employee. Our business is based in a town of 5,000 people, so it's especially important for us to rewarding standout employees. We don't have a huge pool from which to draw workers, and that makes it critical for us to recognize and support the talent we hire.
Takeaway: It's crucial to retain your good workers by rewarding them with what they want, not what the status quo tells you is adequate.
4. It enhances corporate culture and fosters camaraderie.
Providing extensive perks and benefits creates office camaraderie and give employees the chance to connect away from work. The APA survey mentioned earlier found that 91 percent of workers at companies with well-being programs have a positive relationship with supervisors, and 93 percent of employees reported positive relationships with coworkers.
Many of my employees are friends outside of work. They'll go to the local pub once they're off, go to dog parks together and alert one another of upcoming social events. While this has no direct impact on my business, it does create cohesion among my employees and makes it less likely an employee will readily leave.
Takeaway: Investing in team-building will keep your company together, limit high (and expensive) turnover and create better teamwork among your employees.
5. It's just good business.
I find it odd that so many companies have a hard time justifying enhanced employee benefits, yet are quick to approve expensive company parties, trade-show dinners, questionable travel or other frivolous expenses. This sends mixed messages to your employees: "We can't give you health insurance, but we can spend several thousand dollars on this one trip."
It also shows how out-of-touch companies are with their employees' basic needs. Ongoing benefits resonate with employees over time, make them more secure in life and have a greater impact on business. No flashy event can accomplish all that.
Takeaway: For companies of all sizes, the message is clear: You must get smarter about your benefits plans if you want to hire and retain top employees.
As employers pursue A-list workers, they're competing not only against other companies but the needs of a changing workforce as well. While traditional executives may balk at these investments, taking good care of employees has proved effective in boosting the bottom line. If your company is truly focused on generating long-term profits, you need to show confidence in your employees. Offer them compensation and benefits packages that go above and beyond -- and they will, too.