A recent survey from Clutch discovered that 32% of today’s job-seekers began their search in pursuit of better pay and benefits.
With a surging job market, employers must reevaluate their employee benefits packages to retain current employees and competitively recruit talent.
Small businesses struggle with limited budgets and the ability to match compensation of larger companies.
Though comprehensive benefits packages come with cost, the money and value they earn from providing them equals and outweighs the investment.
In this article, we explore the reasons why providing a comprehensive benefits plan is worth the cost for small businesses.
Use this article to decide how to structure your small business’ employee benefits package.
Benefits Help Attract Qualified Candidates and Avoid Bad Hires
Another Clutch survey from 2018 indicates that 70% of job-seekers are voluntarily looking for new positions and can afford to be selective about who they work for.
Attractive benefits packages can help your small businesses lure candidates who have multiple job offers.
Companies not offering comprehensive benefits risk losing potential candidates.
“I’m interviewing tons of candidates who say they left positions or they are leaving positions because the ‘perks’ they were supposed to be getting weren’t what they thought they were,” said Bethany Holliday, director of human resources for Cornerstone Insurance Group & Employer Solutions, in Clutch’s survey.
Currently, only about half of small businesses provide employee benefits. The most common benefits they do offer are:
- Retirement and 401(k) plans
- Family leave
- Paid time off
According to a report by Recruiter Box, the average cost of hiring a new employee for a manufacturing, publishing, or a professional trade is between $4,400-$5,500.
The cost of hiring a new employee rises when businesses make poor hiring decisions. Hiring an ineffective employee results in additional expenses, both direct and indirect. These include:
- Loss of productivity
- Time to re-recruit, onboard, and train new employees
- Negative effect on employee morale
- Jeopardized customer service and client management
A 2017 CareerBuilder survey estimated an average loss of $14,900 for a bad hire, an expense nearly three-fourths (74%) of employers have incurred.
Comprehensive benefits packages can help employers avoid bad hiring decisions because the additional perks help attract qualified candidates and give companies more negotiating power.
Additionally, recruiting companies are less likely to compromise on job requirements or select high-risk candidates when they can offer an attractive benefits package.
Candidates Desire Health and Savings Benefits
Most job-seekers expect to receive healthcare and retirement benefits. Employees also value paid time off (PTO), which employers can provide fairly simply.
Increasingly, employers combine sick, personal, and vacation days into one package, offering a flat-rate number of days off per year. This provides more flexibility for employees and a more straightforward way for employers to compensate for time off.
Student loan repayment is another perk candidates are looking at more closely, given that approximately 20% of American adults now carry some form of student debt.
There are many strategies to create benefits packages that attract high-quality job candidates. Research other companies in your area or industry to ensure your benefits are competitive enough to attract the right candidates.
Providing Comprehensive Benefits Helps Retain Employees
Many small businesses neglect investing in employee benefits to cut costs, but this strategy is shortsighted.
In fact, retaining current employees is less expensive than replacing them. When a business replaces a salaried employee, the cost of recruiting and training their replacement is equivalent to 6 to 9 months of salary.
For example, replacing a single employee with a $40,000 annual salary can cost employers $20,000 to $30,000 to replace, an amount many times more than you would spend on that individual’s benefits.
Businesses should weigh financial costs and benefits when deciding which benefits to provide to their employees. Comprehensive employee benefits can:
- Develop company loyalty
- Reduce turnover
- Boost or maintain high employee morale
- Help workers remain focused on their jobs
Companies must also consider their employees’ desires when expanding their benefits packages. Already, 30% of small businesses planning to offer new benefits in 2019 are doing so in response to employee requests.
Employers planning to offer new benefits are most likely to add PTO, and also are considering offering health care, in-office benefits such as snacks, allowing pets, and standing desks, and family leave.
Offering a comprehensive benefits package to existing employees mitigates turnover and provides a significant return on investment for any organization.
Offering Comprehensive Benefits Helps Small Businesses
Comprehensive benefits plans are an excellent investment for small businesses. Benefits attract and retain qualified employees and help ensure a healthy, productive, and profitable work environment.
Small businesses should review their options for employee benefits packages and consider the money they will save from engaged and satisfied employees with comprehensive benefits packages compared the cost of bad hires or training new employees that can result from high turnover.
Bio: Seamus Roddy is a Content Writer for Clutch, a B2B research, ratings, and reviews agency in Washington, D.C. His research focuses on HR services and trends.