Often, a job applicant would choose an employer with a better benefits package over another with a higher salary, but meagre benefits. That’s because a generous set of benefits is perceived emotionally, as they indicate how much employers value their employees. Therefore, even if their offer is lower, they can almost always win the highly qualified employees in the end.
But despite this, many companies still find providing better benefits a challenge. Even top companies can be pretty skimpy in their packages. But it isn’t necessarily because they’re inconsiderate of their employees. Instead, it’s the costs holding them back.
The annual study of the U.S. Chamber of Commerce revealed that benefit costs have grown to 42% of employee payroll, translating to $18,000 per employee yearly. Health benefits accounted for the biggest cost increase, rising to 12% annually for several years.
Hence, it’s no longer surprising why many employers, especially small ones, stick to the basics when it comes to their benefits package. However, this penny-wise philosophy overlooks the long-term effects of a generous benefits package. They’re missing the chance of having lower employee turnover rates, which would result in prosperity.
The law mandates employers to provide certain benefits, such as the following:
- Time off to vote, serve on a jury, or commit to military service
- Worker’s compensation
- FICA taxes, which should be deducted from the employees’ pay checks
- State and federal unemployment taxes
- Short-term disability programs
- Federal and family medical leave
You may be wondering where are health insurance, paid leaves, and retirement plans. Still, surprisingly, employers aren’t required to provide those, except in Hawaii, where health insurance is a mandated benefit.
Other benefits that aren’t required are dental and vision plans and life insurance plans. But even so, most companies still offer some non-compulsory benefits to stay competitive. Several employers allow paid holidays for Thanksgiving, Independence Day, Memorial Day, Christmas, New Year’s, and other special holidays. Many also permit their employees to use their vacation leaves to observe religious holidays.
Health Insurance: Essential but Denied
The pandemic has risen a global outcry for affordable healthcare services. Indeed, in some countries like the Philippines, testing is expensive, with private hospitals offering them for Php4,000 to Php13,000. Though the Philippine government has already tested many people for free, the high prices in private medical facilities still reflect how costly it is to receive high-quality healthcare if you’re not insured or a high income-earner.
Hence, regardless of your country, it’s extremely beneficial and advantageous to offer health insurance to your employees. In the U.S., 85% of the population has some form of health insurance, with roughly half of them getting it from their employer or their spouse’s employer. Though these numbers are favourable, it’s still concerning that there’s approximately another half without health insurance from their employer.
Providing health insurance presents multiple benefits for a company, one of them being reduced operating costs. Since applicants are more likely to accept a lower salary as long as there are health benefits, companies can decrease their expenses. The applicant can receive cheaper employee-sponsored coverage. It is a win-win situation for both.
Moreover, companies can declare the costs of health insurance as a business expense, allowing them a tax advantage from the government. If the company is incorporated, then the business owner’s insurance and the coverage paid for employees will be deductible.
The more employees are in a group insurance plan, the lower the health insurance costs will be for everyone. As a result, companies don’t only save money but also gain increased morale and productivity from their employees. With a healthy workforce, there will be fewer absences and lower risks of illness, such as COVID-19 developing and spreading.
Dental and Vision Plan: Another Advantageous Benefit to Provide
Thankfully, many employers include a dental and vision plan in their benefits package. But if your company isn’t one of those, here are the reasons you should consider adding it:
- It will improve your employees’ quality of life. When they meet their overall well-being needs, they can improve their work performance and have better relationships with their colleagues.
- It will boost their health. With dental and vision coverage, they can afford to seek preventive care, allowing them to have oral and vision problems treated early on.
- It will reduce absenteeism. If employees are given coverage for major dental procedures, such as wisdom tooth extraction, they can heal and return to work faster. Likewise, if they get their vision issues addressed immediately, there will be no time wasted looking for affordable eye clinics.
Design your benefits package right, and your startup may jump its way to success. Therefore, focus your workforce budget on exceptional perks, and the lower pay won’t be your disadvantage.