The Positive Impact of Benefits
No matter which specific benefits your employees may want, you need to assess how they will positively impact the business. Obviously, if you offer popular benefits, such as generous time-off policies or health insurance, you're going to be able to attract more and better employees. But will it be worth the cost? That's a decision only you can make.
While each group of employees has different needs, the trend over the past few years has been pointing toward health insurance as the most important and highly valued benefit for employees. Health insurance is tax-deductible to the employer and tax-exempt for the employee, and you can often purchase it at a lower cost than the employee would ordinarily pay for an individual policy. Some employers have found a direct increase in productivity when they initiated health benefits, since insured employees are more likely to see a doctor, take medication, and get well rather than to take many days off trying to recover from an illness on their own.
Other benefits that are popular are time-off programs, such as vacation and personal leave, and retirement programs that employers contribute to and that allow employees to save money.
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Did You Know?
Employers continue to be generous with employee benefits despite the rising costs of doing so. According to the U.S. Chamber of Commerce's annual survey of its members, employers provided an average of $18,358 in benefits per employee in 2003, compared to $18,000 in 2002. Of that amount, nearly $5,653 was for medical benefits, $4,932 for paid time off, and $3,303 for retirement and savings.
Employee benefit costs represented 37.6 percent of payroll among the nearly 600 companies responding, according to the study. Manufacturing companies spent a higher amount compared to non-manufacturers, averaging 40.1 percent of payroll versus 37.1 percent. Medical benefits were the most expensive, accounting for 11.6 percent of payroll.
The most common benefits offered by employers continue to include health insurance, paid holidays and vacation, and retirement plan benefits.
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The key to giving employees what they want and need (and consequently reaping the benefits in productivity, loyalty, and reduced turnover) is communication. The best way to find out what your employees want is to ask them. You might have informal conversations with them or do a quick survey where you ask them to rank a list of benefits from most valuable to least valuable. You may be surprised with the results. For example, if you employ a lot of part-timers, health benefits may not be that important to them because they are getting health benefits from another source (from another full-time job, through a spouse's employer, or through a parent's health insurance). In that case, you might focus on offering other, less expensive benefits that would still be considered valuable by employees. Or, you may find that employees would prefer more cash compensation rather than any particular benefit.
Once you've determined which benefits you want for yourself and what your employees would prefer, figured out which benefits you can afford, and considered which benefits other employers offer, you're ready to begin the process of examining those benefits in detail. Check out our discussions on the following benefits once you've made your choices:
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