Employers often struggle with the decision of whether to offer their employees benefits, such as health insurance, pensions, and paid time off. Providing these types of benefits is not required by law and many small businesses simply cannot afford to do so. However, employers who can offer benefits beyond those that are legally required stand to gain several significant rewards from doing so.
Attract more talent: Offering an enticing benefits package can attract more quality employees. When deciding where to work, 54 percent of millennials look to benefits as a deciding factor, according to a recent study. It is important to stay competitive with other employers who are offering increasingly generous employee benefits.
Retain loyal employees: Catering to your employees’ specific needs can help with employee retention. Employees are more likely to be loyal to a company that provides comprehensive, employee-tailored benefits. According to a recent survey, 40 percent of employees said they would turn down a higher salary offer to maintain their current level of health insurance coverage.
Increased productivity: When employees are happy, they perform better. One study concluded that happiness increased productivity by 12 percent. Another found that employees’ negative perceptions of work conditions, since the 2008 financial crisis, led to approximately $300 billion in lost productivity per year. Companies that have engaged employees are reportedly 22 percent more profitable than those with unengaged employees.
Reduced losses: Providing employees with quality health insurance plans can also reduce revenue losses due to sick days. According to a 2011 Gallup study, unhealthy employees cost companies around $153 billion each year, not including the losses that occur when employees are present at work but are less productive due to poor health. In addition to physical health problems, mental health and chronic conditions, like stress, also contribute to reduced employee productivity.
Monetary advantages: Employers can deduct health insurance, life insurance, pension plans, and other plan contributions when filing their taxes. Also, employers may be able to obtain personal benefits under the plan that are cheaper than obtaining them privately. Employees may be willing to accept a lower salary if they are presented with a higher-quality benefits package.
High cost: Providing benefits can be expensive, especially for small businesses. The costs of administration must be factored in, resulting in less choices for employers when designing benefits packages. As the cost of health insurance continues to rise, businesses may find it difficult to make financial plans in the upcoming years.
Legal exposure: Companies that offer benefits must comply with certain legal obligations as noncompliance or mistakes made in benefits plans can lead to legal liability, fees, and fines. This increased exposure under state and federal employment laws may dissuade employers from providing employee benefits.
For more information regarding employee benefits, contact an experienced Pennsylvania employment lawyer at MacMain, Connell & Leinhauser by filling out an online inquiry form or call us today at 484-318-7106. From our office in West Chester, we serve clients throughout New Jersey and Pennsylvania.