Employee benefits are forms of compensation that are above a salary or wages and are paid by employers to their employees. Employee benefit plans are often one of the greatest expenses of a company’s operations. As a result, their worth can be falsely questioned and financial decision makers within businesses often seek to find a cheaper way out. Though they are a large expense, the downfall of cheapening your employee benefit plan is far greater. Employee satisfaction can be costly up front but losing an essential member of your team to a competitor because of a lack of benefits will cost you more in the long run. For the sake of successful employee recruitment and retention, an employee benefit plan can be translated as priceless.
Benefits such as workers’ compensation and unpaid medical leave are required by law to ensure an employee’s fair treatment by an employer. On the other hand, common benefits not required by law that potential candidates and existing employees may consider nonnegotiable include retirement plans, life insurance, and paid leave. Though not mandated, most companies do offer these types of compensation to remain competitive with other businesses because of the various profits.
Top 3 Reasons to Offer Employee Benefits
- Increased Appeal. Chances are, your competitors are offering their employees a great benefits package. You don’t want to be the one that doesn’t offer one, especially when highly skilled personnel are at stake. Your employees are the foundation of your company and they need more than the bare minimum. The most experienced workers will expect to be taken care of by their employer.
- Lower Turnover. 22% of employees that quit their jobs claim that it was because of a lack of benefits from their previous employer. Progress is nearly impossible when employees are convinced to join but never convinced to stay long-term. View your benefit plan as a way of investing in your team for years to come.
- Boosted Morale and Productivity. Offering your employees benefits takes a lot of weight off of their shoulders at work and at home. When your people know that you are investing in their life and wellness outside of the workplace, they will invest more of themselves into the company. They will experience a sense of loyalty to your company when they know they are being cared for.
After weighing the importance of an employee benefit plan, you must decide which benefits your employees will be offered.
Four Main Types of Employee Benefits:
- Medical Insurance. Possibly the most sought-after benefit a business can offer employees, medical insurance is fundamental to consider. With the addition of a medical insurance plan, your employees will be satisfied and better health means less sick days.
- Life Insurance. Life insurance plans are one of the best ways to show your employees that you want to take care of them and give them a peace of mind even in the most difficult times. Group life insurance premiums are also much more affordable than you think when linked with medical insurance.
- Disability Insurance. Situations such as maternity leave and a cancer diagnosis would need this type of insurance whether it is short-term or long-term. If an employee is diagnosed with cancer, you do not want to be the one that cuts their wages in a difficult time. As an employer who cares, disability insurance needs to be considered in these events.
- Retirement Plans. As a business owner, choosing to offer a retirement plan to your employees will allow you to also reap the benefits in your own retirement. In an attempt from Congress to encourage employers to provide these benefits to employees, you may receive significant tax advantages from a group retirement plan. Employee motivation and productivity is also enhanced by this benefit as they strive for their day of retirement.
Though these are the four main types of employee benefits, they are not where the incentives have to end or begin. Seasonal bonuses, free lunches, and simple notes of encouragement are additional options to show your employees that you care. Without hardworking and loyal employees, your business has close to nothing to build upon. Don’t allow a lack of benefits to be the reason your business isn’t progressing. As overwhelming as a benefit plan can seem, it is always the best idea to meet with your accountant to go over which plan meets your needs. SME CPAs is always there for your business to discuss what is best for you and for your people.