How Your Benefits Package Impacts Hiring, Retention and Morale

A bad benefits package can cost your company far more than the price of the benefits themselves. Poor benefits can increase turnover, make recruiting more difficult and erode employee morale and productivity. For employers competing for talent, investing in the right benefits package may be one of the most cost-effective business decisions they can make.

What Counts as a Bad Benefits Package?

A bad benefits package is one that doesn’t meet the needs of your workforce. This often comes down to three common problems:

• A robust, well-rounded benefits package is better suited to meet the needs of a diverse workforce.
• It’s not just the number of benefits available. You also need the right benefits. For example, fertility benefits and retirement plans can be very popular, but they might not appeal to a college-age workforce.
• Bloomberg warns that more workers are choosing to opt out of their employee health plan due to cost. If the premiums or out-of-pocket costs are too high, employees won’t get any value out of their benefits.

The Business Impact of Poor Benefits

To see how bad employee benefits can cost your company, just think about the goals that companies are trying to achieve through their benefits program, and then consider how the wrong benefits could undermine those goals.

Employee benefits can:

• Attract high-quality job applicants – or drive them away. The benefits package is an essential tool in talent recruitment. Workers are attracted to benefits packages that meet their needs, and the top candidates often have multiple employment options. If you’re not offering strong benefits, you’re likely missing out on these job applicants. As more states pass pay transparency laws that require compensation information in job ads, strong benefits are increasingly important.
• Inspire worker loyalty – or give your workers another reason to leave. Workers often switch jobs to secure better compensation, and employee benefits are an important part of the total compensation package. If you’re not offering good benefits, your employees may leave in search of better benefits. On the other hand, if you offer great benefits, your workers may think twice before giving them up.
• Promote worker satisfaction – or become a drain on worker well-being and productivity. Employee benefits should help workers solve the various problems that can interfere with work, but a poor benefits package may not provide the support workers need. Consider a worker who avoids going to the doctor due to a lack of health insurance. Over time, the worker develops health issues that could be treated easily, but without treatment, they get worse. The worker sleeps poorly, misses work frequently and struggles to concentrate. Productivity drops, and so does workplace morale. A health plan could improve the situation, supporting worker well-being and boosting morale and productivity in the process.

The cost can be significant. According to SafetyCulture. workers lose around seven hours a month in the form of unproductive downtime, errors, and absenteeism as a result of dissatisfaction. Businesses lose a total of around $196 billion every year as a result.

When employees quit, the costs can soar even higher. According to Express Employment Professionals, the average cost of turnover has reached $45,236, and 32% of employers attribute higher turnover rates to employees leaving for better pay and benefits.

Employee benefits are a strategic investment that affects hiring success, retention costs and workforce performance, so it makes sense to optimize your benefits package.

How to Strengthen Your Benefits Package

If your employee benefits package isn’t supporting your company’s goals, the sooner you implement changes, the sooner you can stop losing money to bad benefits.

• Leverage Benchmarking. Your workers are comparing your benefits package to the benefits offered by other companies, so it only makes sense for you to do the same. Benchmarking lets you see how your benefits stack up.
• Elicit Feedback. Employee surveys can provide insights into how your benefits are really perceived and what employees want.
• Expand Benefit Options. Adding voluntary benefits is a cost-effective way to create flexible benefit options, allowing workers to select the benefits that matter to them.
• Raise Awareness. Employees may need regular reminders about the benefits available to them.
• Highlight the Value. If your employees are taking benefits for granted, help them see the value by providing a total rewards statement that details the value of all their benefits.
• Monitor Participation. A low participation rate is a clear sign that something has gone wrong. Monitor participation, and if it’s low or falling, investigate to see why employees aren’t enrolling in the benefits offered.

Heffernan Insurance Brokers can help you evaluate your current offerings and build a benefits package aligned with your employees’ needs and your business goals. Learn about our benefit advisory services.