The Importance of Building a Competitive Benefits Package
In an event known as the Great Resignation, 4.3 million employees quit their jobs in January 2022. These employees aren’t quitting so they can stay at home and relax. Instead, workers are leaving their current positions in droves to seek better opportunities, looking for higher pay and more competitive benefits. The sky-high resignation level signifies a strong labor market, but it has become harder for employers to recruit and retain top talent.
With over 11.3 million job openings in January 2022, employers need to stand out from the crowd to fill these openings. High labor demand has prompted employers to offer higher salaries, luring workers away from their current jobs. So what can you do to attract strong candidates without paying an arm and a leg?
Employers must offer high wages and a competitive benefits package to attract strong candidates and retain talented employees. What should you include? Detailing which perks to include and exploring how these measures reduce turnover rates, read on to learn how a competitive benefits package can help retain employees and attract new talent.
How (and Why) to Build a Competitive Benefits Package
To recruit and retain workers in the current job market, you need more than a high salary. Offering a competitive benefits package helps you stand out from the crowd, ensuring that your company values align with your actions. But to build a benefits package that’s a cut above the rest, you’ll need to follow these steps:
Do Your Research & Plan Ahead
Offering generous benefits takes considerable financial planning because many of these perks can put a dent in your wallet. Additionally, the cost of benefits will likely increase exponentially as your business grows, making benefits packages more costly to maintain over time. Once you offer a benefit to your employees, it can be awkward to take it away if you don’t have the funds to sustain it. This means that research and planning ahead are crucial when building a competitive benefits package. You not only need to allocate funds for benefits planning, but you also need to weigh to pros and cons of each potential benefit.
To understand what employees want out of a benefits plan, consider surveying your current employees to see how they feel about your current package. Not only will this help you identify any weaknesses, but employees may offer suggestions for improvement. So listen closely and take notes because whichever benefits your current employees are requesting are probably perks that new hires want.
You should also research which benefits your competitors offer to stay one step ahead of the competition. Conduct independent research online or talk to your local benefits broker to learn from their insight. A benefits broker or professional employer organization can provide valuable information about which benefits your competition may be offering.
Though it all may sound expensive and daunting, the benefits of building a competitive benefits package outweigh the risks, especially in the current job market. If you want to recruit and retain the best employees on the market, you need to set yourself and your company apart from the herd. If your business gets a reputation for offering stellar benefits and investing in its workers, it will be much easier to recruit top talent and convince them to stick around. Additionally, workers, customers, and the general public want to support companies doing good work and taking care of their team, so you may even see an uptick in sales.
Synergy between your company values and your benefits program is essential. For example, your benefits package should reflect that if you promote a healthy work-life balance and wellness in your missions statement. When your values and your support system are in harmony, you will not only keep your employees happy and productive; you will also attract new talent with ease.
Start with the Basics
When building an employee benefits package, you need to evaluate which benefits to offer. First, let’s start with the basics. While some benefits, like health insurance, are baseline perks offered by many organizations, adding on dental or vision insurance will help you stand out from the crowd. Benefits such as paid time off and retirement plans are more unique, grabbing candidates’ attention and piquing their interest. However, no matter how hard you try, you will not be able to include every benefit in your package, so it’s essential to weigh your options carefully and choose wisely.
Healthcare is the foundation of any competitive benefits package. However, knowing which plan to choose with rapidly rising premiums can be challenging. While health maintenance organizations (HMOs) are the most common option, allowing employees to choose their primary care physician who can refer them to other physicians in the HMO network it’s not the most impressive or cost-effective. On the other hand, preferred provider organizations (PPOs) are the most expensive, offering a more comprehensive selection of physicians and hospitals not limited by a network.
However, point-of-service plans are a happy medium, allowing workers to choose their primary care doctor who can then refer them to others within or without the network. Another popular option for newer companies with younger workforces is high-deductible health plans. Offering a high-deductible plan and a health savings account helps employees pay for medical necessities while maintaining low premiums. This option works well for younger workers who require less frequent medical attention. However, employers still need to leverage other benefits (such as dental or vision insurance) to create a diversified benefits package.
But no matter which plans you choose, remember that healthcare is only one facet of a competitive benefits package. Due to the Patient Protection and Affordable Care Act, many employers are required by law to insure their employees. While accessible healthcare is a noble goal, it also means that businesses need to work harder to make their benefits packages stand out. Offering only health insurance in your benefits plan is not enough in the current market. Read on to learn what other benefits you should consider.
Though not required by law, dental insurance is a popular benefit that helps employees save money. Without dental insurance, workers must pay out of pocket for their annual checkups and oral procedures, costing a minimum of $260 per year. According to the CDC, 47.2% of adults suffer from gum disease. While regular checkups can prevent gum disease and other issues, many Americans let their dental health fall by the wayside. But when dental problems become too painful to ignore, employees take sick days to deal with these issues, leading to decreased productivity.
However, by offering a company-sponsored dental insurance plan, you can encourage your employees to look after their teeth without paying out-of-pocket. With company-sponsored dental insurance, the plan covers the cost of the checkup, teeth cleaning, and part of oral surgeries. In addition, you can choose between fully-funded or partially-funded employer plans, both of which are incredibly affordable. You can expect to pay between $24 and $26 per employee every month for fully-funded dental insurance. This means that dental insurance is a great way to impress employees and potential recruits without putting a big dent in your budget.
Vision insurance provides patients with more than new glasses – regular checkups with an optometrist can aid in the detection of a range of health problems, from heart disease to leukemia. This early detection is essential, especially for employees on a high-deductible plan who take fewer trips to the doctor.
However, vision insurance is more than a preventative measure – it can also treat the side effects of digital employment. For example, eye strain is a common side effect of long hours spent on the computer, so vision insurance is vital for tech-enhanced workspaces. Eye strain drives employees to distraction at work, losing up to 15 minutes of work time each day (totaling $2,000 per employee every year).
Offering vision insurance is the best way to cut down on eye strain and save money in the long run. Basic vision insurance costs only $5 to $10 per month for each employee, making it an easy and affordable addition to your benefits package. And if you want to impress your employees and new recruits, you can adopt a more comprehensive package that covers procedures like LASIK for only $15 to $20 per month per person.
2. Paid Time Off
Paid time off encourages work-life balance, creating a healthier work environment that employees want to stay in and potential recruits want to join. Paid time-off is a standard and relatively low-cost benefit, with most companies offering two weeks of paid vacation time per year. In addition, as employees accrue seniority, you can reward them with more paid time off, incentivizing them to stay with the company longer.
When creating a paid time off program, there are a few key things to consider. How far in advance should an employee give before taking a vacation? If employees don’t use all of their vacation days by the end of the year, will they roll over or disappear? Should you require employees to use all their vacation days to reduce burnout? You should answer these questions before adding PTO to your benefits package.
3. Retirement Plans
As an employer, you should not only provide for your employees in the present but also look out for their future with retirement plans. Employees in the current job market expect retirement plans as part of their benefits package. In addition, retirement plans aid in recruitment and retention and offer tax relief for employees, allowing them to use pre-tax funds to contribute to their 401 (k).
However, employees are not the only ones who get tax benefits from a 401(k) – businesses do, too. Contributing to your employee’s retirement allows you to deduct contributions on your business’s federal income tax return (within federal limits), saving you money and keeping employees happy and secure. In addition, most 401(k) plans offer investment options and retirement savings with company match, meaning that you can contribute directly to employees’ retirement funds as an employer. Company match is another way to make your retirement benefits even more attractive, showing new hires that you’re willing to invest in their future. Retirement benefits may also make current employees less likely to move to other companies.
Stand Out from the Crowd
Download: The Importance of Building a Competitive Benefits Package
In the current job market, you need to do everything to help your businesses stand out. When new candidates decide between two job offers, a competitive benefits package can be the difference between an acceptance or a rejection. But to make your benefits package truly singular, consider adding these less-common benefits to your plan.
Relocation insurance is when an employer pays for a new hire to relocate to a new city for their position. These services can include packing assistance, moving company fees, real estate assistance, temporary housing, and house-hunting expenses.
Including relocation insurance in your benefits package helps you stand out to employees in your area and helps you reach employees beyond your immediate environs. This means that you can recruit top talent from across the country, and all you have to do is pay for their moving costs. Moving can be a strenuous and expensive process, so employees appreciate relocation assistance. This goodwill starts you off on the right foot with your new hire, cultivating a higher retention rate and attracting top talent.
Flexible scheduling is a low-cost benefit that is attractive to employees, especially those with families to care for or other time-consuming commitments. Offering flexible scheduling also improves employee health and wellness, reducing burnout and increasing job satisfaction.
Flexible scheduling is an attractive benefit and a business-improving tool. When employees can work the hours they prefer while still meeting their goals, it will increase productivity, engagement, and customer service. However, flexible scheduling requires strong management. If employees’ schedules don’t align, it can threaten productivity, and scheduling meetings become a nightmare. However, with extra work upfront, you can coordinate everyone’s schedules while still accommodating employees’ diverse needs.
Work-from-home options give employees a greater degree of flexibility. Remote work options can include flexible work locations, allowing employees to choose between at-home or in-office work. And because remote work doesn’t require an office, you can hire top talent from across the country without worrying about relocation costs.
Additionally, remote work helps you save on office rent, utilities, maintenance, cleaning services, and other in-office necessities. Remote work can also reduce absenteeism, allowing employees to work from the comfort of their room if they’re a little under the weather. Additionally, working from home makes it easier for employees to schedule appointments without missing a full day of work, increasing productivity.