The Hidden Paycheck:
Better Benefits Attract Talent
5/15/2020
The Hidden Paycheck: Better Benefits Attract Talent - 5/15/2020
In the wake of the COVID-19 fallout, the modern workplace has already experienced a number of significant changes. In some situations, work has quickly shifted to the digital space, which has dramatically altered the workplace dynamics for businesses across the world. In other situations, things haven’t been so easy, and many people have been forced to endure significant cutbacks.
In many ways, these recent changes have simply exacerbated already existing trends. Even before the outbreak, many employees were looking for increased flexibility and opportunities to work from home. Regardless, times such as these create opportunities for both employers and employees to ask themselves, what does the ideal workplace look like? What should employees reasonably ask for from their employers? Consequently, what should employers be reasonably expected to provide?
While money has long been the driving force behind workplace negotiations, employers are typically expected to provide much more. Even in the face of economic and structural uncertainty, the majority of full-time employees—both in the United States and elsewhere around the world—hope to receive a significant benefits package in exchange for their work.
In fact, a quick look at a 2016 study published by the Society for Human Resource Management reveals that benefit demands remain quite strong. In the study, the benefits cited by the majority of respondents as “important” include healthcare benefits (95 percent), retirement savings and planning (71 percent), and leave benefits (50 percent). Other benefits, including professional and career development, financial benefits, family-friendly benefits, and—especially—flexible work benefits are all expected to increase in importance over the next five years.
Using Comprehensive Benefits Packages to Create Synergy
Synergy occurs when the whole of a “package” is worth more than the sum of its parts which, undeniably, is how many benefits packages are viewed by prospective employees. By using the infrastructure and group power created by a business, employees can have access to significantly more benefits than they would be able to reach by themselves.
When designing a benefits packages, an employer might think to themselves, “rather than offering $10,000 worth of health insurance, why not just increase their salaries by $10,000 and let them provide the rest on their own?” At first, this may seem logical. But ultimately, the employee will discover that in order to access this same policy by themselves, they will need to pay significantly more (if they’re even able to independently qualify).
In this example, what was initially “worth” $10,000 might now cost $12,000, $20,000, or even more—the exact figure is not important. What is clear, however, is that the synergy of an organization—combined with various tax benefits—can help make the employee much better off without imposing any real additional costs for the employer. Because this sort of synergy is well-known, the modern employee will look for much more than just an annual raise; they’ll want to maximize the total value of their compensation package, rather than focus on just one component. As a result, expecting quality healthcare, retirement benefits, and valuable assets such as life insurance has become the norm in many professional settings.
Benefits: The Key to Attracting and Retaining Employees
A recent study published by The Ladders revealed that in 2015, 37 percent of professionals confirmed “I expect to postpone my retirement due to my financial situation”, but by 2019, that figure had risen to 52 percent. In 2020, with countless workers facing the stress of the economic downturn, this figure has likely become even higher.
For many professionals (especially younger professionals), what is even more important than maximizing their salary is establishing a state of financial security. Offering a 26-year-old college graduate an additional $5,000 per year will certainly elicit a positive response, but this raise will do little to increase their confidence in their ability to retire 40 years down the road. Not only is it extremely difficult for the young professional to forecast their future financial and medical needs this far in advance, but there are many other types of uncertainty—job security, family, economic, political—they will be facing as well.
An effective benefits package, on the other hand, can help employers ensure their employees that they can remain secure no matter what the future has in store. Unsurprisingly, about 6 in 10 employees claim that benefits were a “major” reason they selected a specific job and nearly 8 in 10 employers claimed that offering increased benefits has made their employees more productive.
The right benefits package will make it easier for employees to plan for the future and also protect themselves from risks and uncertainty. With a quality healthcare plan, the employee no longer has to worry about “what if” they were to have an accident or need expensive cancer treatment. With a quality life insurance plan, the employee no longer has to worry about “what if” they were to unexpectedly pass away—they can know their family will still be taken care of.
Having tangible, accessible answers to these many “what if” questions is worth significantly more than what a simple salary increase can provide. Offering benefits is one of the most effective ways for employers to distinguish themselves from their competitors and, furthermore, also help ensure that once their employees are on board, they will remain with the company for many years to come. In fact, in 2019, 72 percent of employees answered positively to the survey question “Having benefits customized to meet my needs would increase my loyalty to my employer.”
Conclusion
Creating a high-quality benefits package can be complicated, which is why many employers opt to simply offer higher salaries, when possible. But in an increasingly competitive workspace, employees are evolving their expectations. More than money, these professionals are expecting benefits that will give them security and opportunities for growth. Employers who fail to rise to the occasion and address these reasonable expectations will quickly feel themselves falling behind.