Benefits and ROI

Benefits and ROI

Protect Employees (and the Bottom Line)


Protecting Employees and the Bottom Life: Group Benefits and ROI

So often in the world of business, managers and decision makers find themselves in situations where they have to choose between doing the thing that’s morally “best” and doing the thing that is best for the business. The trade-off between morality and profitability can often be quite difficult to deal with.

Do we increase operating expenses for the sake of reducing our carbon footprint? Do we allocate capital to charity even though it will have a negative impact on our bottom line? Do we adopt a long-term financial strategy, even if this might upset some of our shorter-sighted shareholders?

These are the sorts of decisions that business owners and leaders are required to make on a daily basis. Usually, there will be a combination of both types of decisions, but the shareholder’s interests will typically dominate.

But what if, doing what’s “best” was good for both the company’s bottom line and good for others? What if there was an action that could make the company more profitable and also lead to happier employees?

While these win-win situations do not arise every day, one of the most obvious actions a business can take will be to increase benefits for its employees. With better benefits, the employees can enjoy a state of stronger financial security and peace of mind. At the same time, though the business might feel it is losing some money upfront, many benefit programs have been proven to increase a business’ long-term ROI.

Attracting the Most Productive Talent

Naturally, the first reason businesses offer desirable benefits packages is to help them attract the very best talent. These packages can include many different assets, including life insurance, health insurance, matching retirement funds, and many others. Even during periods of high unemployment, such as what we’ve seen in 2020, hiring can still be extremely competitive. If a competing business offers strong benefits, but your business does not, it will be very difficult to attract the sort of talent you need to succeed.

In fact, if anything, increased economic uncertainty and volatility has made the need for these sorts of benefits even more necessary than they were in the past. High salaries can be very valuable, but even a $10,000 pay increase can’t provide total financial security. On the other hand, by offering permanent and significant benefits, your employees can feel much more secure, knowing they can remain stable no matter what the future holds.

Keeping Your Employees

Employee turnover can be extremely expensive, even for small, entry-level businesses. For an entry-level position that pays above the minimum wage, finding a replacement employee will typically cost about 33 percent of that employee’s annual salary, according to Employee Benefit News. If the position is beyond entry level, such as mid-level or senior level, this figure may be as high as 150 percent of the annual salary, depending on your industry and current market conditions.

Studies have shown that individuals who receive strong benefits packages from their employer are more likely to remain with that employer than those that don’t, even if those without the benefits are receiving significantly higher salaries. If a mid-level employee is earning $60,000, the cost of finding someone to replace that employee—and to adequately train them to be at an equal level of production—could be as high as $90,000. Rather than risking assuming this sudden expense, most businesses would be much better off investing in their employees and creating conditions where they will actually want to stick around.

Increasing Workplace Productivity

There are quite a few reasons why offering generous benefits packages can result in an increase in workplace productivity. Workers who are experiencing a high degree of economic anxiety or financial uncertainty—which 64 percent of Americans regularly experience, at least occasionally—have measurably lower levels of work output, regardless of industry. As a result, the net value of hiring the employee will decrease, which will inevitably be reflected on the company’s final bottom line.

Additionally, benefits will create a sense of loyalty and respect for the company that can often translate to increased productivity. Benefits are one of the easiest and most cost-effective methods for convincing your employees that what they are doing is more than just a job, but an actual career.

Perhaps most importantly, employees with benefits such as health insurance are more likely to see a doctor and get the preventative care they need to be healthy. According to the Wall Street Journal, “Workers who joined employer-sponsored health programs increased their productivity by an average [of] 4 percent.” Healthy employees are productive employees, which is why, once again, investing in your employees can be easily justified. Managers will invest in maintaining their equipment without hesitation—doesn’t it make even more sense to invest in your employees, who are your most valuable asset?

Lucrative Tax Incentives

Because the Federal Government wants to encourage employers to give their employers benefits, there are currently many different tax incentives that can be accessed by both small and large businesses alike.

In some instances, employers can actually obtain tax credits for the benefits they offer. Because a tax credit offsets your tax obligations by 100 percent of the corresponding expenses, this means that, at the very least, offering benefits such as life insurance and health insurance will have zero negative impact on your total bottom line. In other situations, only tax deductions will be available, but these can still help your business save thousands or even millions of dollars each year. Because group plans are usually more affordable than piecemeal individual plans, choosing to offer a group benefits package can help improve your financial situation even further.

Even Better Than Cash

Most financially savvy employees will not only consider the base salary that you are offering them, but they will consider the value of the entire package. Employee benefits, particularly when done using group benefits packages, are almost always worth more than the amount of cash required to pay for them. This means that by paying a small sum of money, you can add an even greater degree of value to the employee’s total compensation package.

In other words, benefits packages are even more valuable than cash. While no employee will want to be paid with only life insurance or only health insurance, incorporating both of these benefits into their total compensation scheme will help you maximize the value your business can offer them. As a result, it will be much easier to attract, retain, and build fruitful relationships with today’s most valuable workers.


Win-win situations are rare in the world of business, but when they do come along, it will be up to managers and other key decision-makers to take advantage of them. By offering a robust compensation package, your business will not only be able to offer your employees the sort of care, respect, and compensation they deserve—you’ll also be able to enjoy a better bottom line.

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