The power of better benefits: 8 reasons they’re worth the extra cost

Are your business-owning clients talking about how difficult it has been to find new employees and retain good employees? Have they been complaining hiring is more like an auction and turnover is high? Have they considered improving their benefits package?

Let us look at eight reasons improving the company’s benefits package makes sense.

1. Pay is not the only consideration. The size of the salary is often the lure for getting a good candidate to accept your job offer instead of another. A 2023 study by Allison Cole and Bledi Taska found a better 401(k) match is twice as effective as the same amount in salary. The reason is likely a dollar after taxes is much smaller after you take out Social Security and other deductions.
2. Vesting periods can increase retention. The Bureau of Labor Statistics (BLS) reports the average American worker stays in a job 4.1 years. They might have lots of reasons for leaving, but do they have plenty of reasons for staying with your firm? If you have a graduated vesting period for the firm’s 401(k) matching funds, your employee must weigh the advantages of moving to another company with the disadvantage of leaving money on the table at their previous firm because they left before those funds vested.
3. Time off builds company culture. A firm needs to encourage employees to take vacation time. According to StaffingStrong.com, every 40 hours of personal time off (PTO) taken by employees keeps them at the firm by an additional eight months. This is a boost to retention.
4. Increased vacation time supports retention. You might think granting additional vacation time encourages people to stick around and build their career at the firm. That makes sense. Worktolive.info reports granting more vacation time at the outset pays off with a better work/life balance. The report indicates most firms start employees off with one or two weeks. If you start them with three, the retention benefits kick in. The report indicates people getting three to four weeks of vacation time do not want to work anyplace else. How do they justify the expense? They compare it to the cost of hiring and training a replacement employee, which can be 90% of their annual salary.
5. Working from home is here to stay. Before the pandemic, working from home was not an option. According to Forbes, 68% of Americans want to work from home. There are losses in areas like company identity and interacting with fellow employees, but there are benefits like the elimination of the time and expense involved in commuting. You can still bring employees together from time to time.
6. Paid family leave needs to be promoted. This is required by law in some states, yet it might be a benefit employees know little about. One of the scary factors when taking family leave is knowing if your job will be waiting for you upon your return. Another concern is knowing what qualifies and what doesn’t. Maternity leave has been the familiar example, but the category is now broader. Here is a list of requirements, state by state. Do you offer the same or better? Do your employees know?
7. A great health care plan needs to first and foremost. Seventy percent of American employees have access to health care at work. How many of your employees take advantage of the plan on offer? The BLS reports 47% do. This might be influenced by other factors like the health plan offered by the spouse’s employer. A 2018 study by the Society for Human Resource Management showed 56% of US employees surveyed said satisfaction or dissatisfaction with the plan is a key factor in determining if they will stay at the firm, and 46% the health care plan was a positive factor in determining if they will take a job.
8. Childcare benefits are impressive. Childcare benefits might sound expensive, but, according to powertofly.com, these benefits can reduce absenteeism by about 30% and reduce turnover by 60%. Do you offer this benefit?

Related: These impactful benefits solutions can help address trending employer concerns

Once you realize benefits can help increase morale and reduce turnover, you see it is money well spent. It makes hiring away one of your employees much more expensive for a competitor.

Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor” is available on Amazon.