By JT Ripton
Businesses are constantly looking to cut costs, and owners oftentimes look to trim the benefits package. However, cutting perks like the number of vacation days or opting for a cheaper healthcare package is penny smart but dollar dumb. The money you save in the short run will pale in comparison to what you lose in the long run. Here is why a strong benefits package is worth it.
There’s a strong correlation between healthy employees and productivity. While companies like Google, MTV, and Nike offer vending machines full of fruit and free on-site yoga classes, you don’t have to be a Fortune 500 company to help your employees lead healthier lifestyles.
Adding small options like smoking cessation coverage to your healthcare benefits can add up significantly. Tobacco use accounts for $96.8 billion per year in lost productivity because of sickness, and that doesn’t even count the time spent on cigarette breaks throughout the day. An employee that takes four 10-minute cigarette breaks a day loses more than three hours of productivity each week. Small add-ons like smoking cessation along with improvements in healthcare technology will make your employees healthier and more productive.
Older generations took pride that there was only one business on their resumes. It meant they were loyal to a company and the company wanted them on the payroll. Now, having only one name on a resume means you have no experience. Employees jump around to learn from different offices and grow their skills. There’s also the belief in many industries that the only way to get a raise is to go work for a different company.
A strong benefits package can keep employees from leaving – at least for a bit longer. On average, it costs six to nine months worth of salary to replace an employee, and management has to factor in productivity lost while waiting for the new employee to reach the rate of the old one and errors made because of inexperience. A high turnover rate will have significant costs to your company, which you can lower with solid benefits.
As we mentioned, a strong benefits package will only extend the time your employees work for you, but it won’t keep them there for life, so it’s important to recruit top talent. An article by the Wall Street Journal found that the economy has moved to favor the job seeker. In 2013, 84 percent of MBA grads from Harvard had been offered a job, but only 74 percent had accepted. They wanted to wait and see if they were getting the best deal.
If your company has a strong benefits package, then yours could be the business recruits say yes to. When you recruit the top talent, you save on time spent onboarding and training. You also have a higher probability of hitting a home run on the first try instead of firing a dud and starting over.
Some businesses choose a model of high turnover and low benefits. It works wonders for the fast food industry. However, in other industries, it pays in the long run to keep your employees happy with a solid benefits package.
JT Ripton is a freelance writer out of Tampa, who focuses on topics relating to business and technology. Follow him at @JTRipton.