April 2, 2014, marks the 10th anniversary of National Employee Benefits Day. Although it may not be as widely recognized as other holidays, the International Foundation of Employee Benefit Plans created this holiday to celebrate one of the most dynamic portions of the employee-employer relationship.
According to the United States Department of Labor the average employee benefits program accounts for nearly 30% of total compensation, beyond salary and wages, for private sector employees. 30%! This is a significant cost to employers of all sizes.
Every company has a responsibility to their bottom line. Why then aren’t benefits a solid candidate to take some cuts?
Good question, and there is a very simple answer. You Can’t Afford Not To Offer Benefits!
Most employers say they offer employee benefits because “It’s the right thing to do” or “I want to take care of my employees.” These are both great, ethically centered reasons. Beyond the ever-important topic of business ethics, there are many more strategically oriented reasons that executives must consider when designing their employee benefits package.
Modern Day Employment Expectations
Employee benefits in the United States have been around as long as the Declaration of Independence itself. However, they didn’t become a widespread staple of the employment relationship until the early 1900s. As time progressed, more and more people became accustomed to having primitive health insurance plans, disability and income replacement plans, and many other benefits offered solely through their employer.
Now, employee benefits are consistently part of the interview process as people search for new employment opportunities. Looking forward, this trend is not slowing down anytime soon.
The enactment of the Patient Protection and Affordable Care Act puts an even greater emphasis on health insurance benefits, as all employers with 50 or more employees will have to offer benefits or be subject to a penalty in the next few years.
Essentially, employers who don’t offer benefits run the risk of losing their best employees to someone else who will.
Safe and Sound
Although this phrase typically refers to physical safety and security, when talking about employee benefits it’s about an employee’s personal finances. Health insurance, disability plans, and retirement contribution matching are all employee benefits to help safeguard the financial well being of employees. Employees burdened with financial worries have lower productivity and higher presenteeism. Presenteeism, by the way, is defined as the practice of coming to work despite illness, injury, or anxiety, often resulting in reduced productivity.
Although almost impossible to measure precisely, presenteeism leads to a less effective and efficient workforce.
Turnover – The Hidden Budget Destroyer
Some level of turnover is inevitable, but unusually high levels of turnover can be catastrophic to the financial well being of an organization. Just look at some of the hidden costs of employee turnover:
- Severance pay
- Substitute personnel
- Lost revenue
- Recruiting costs
- Human Resources time and wages
- Orientation and training
Many human resource professionals and benefit managers across the country work countless, thankless hours to help their employers recruit, support, and retain their employees. Employers must do a cost-benefit analysis on their benefits versus turnover to see what strategic moves make sense. Often, a simple addition in employee benefits may be enough to drop the turnover rate and improve the bottom line.
From our Benefits Team at Gibson to yours, Happy National Employee Benefits Day!