Why are employee benefits important?
Often when you start to have the conversation about employee benefits, there isn’t a great deal of buy in. The first response of both companies and employees is usually that they’d prefer to have the extra cash in hand, rather than have it tied up in some intangible benefit. However, it’s good to remember that having financial security is not just about having a job that can provide for today’s needs. It is also about having a more secure financial future.
If ever we needed a reminder of how quickly things can change, 2020 demonstrated that. It has shown that having contingencies in place and making provision for future unknowns is necessary. It has also highlighted that employee benefits are not just about money. Compensation and financial benefits are certainly important, but so are career opportunities and prospects, the working environment and company culture. The simple truth is that employees are expecting more than just a pay cheque. If companies are looking to attract top employees, they need to be progressive and competitive in terms of employee benefits being offered.
Why should companies bother with employee benefits?
Aside from attracting better quality employees that will add more value to the organisation, there are definite financial and tax benefits for companies. By making a contribution to employee medical or life insurance policies or retirement plans. Companies can offset those payments as an expense and reduce the amount of corporate tax payable. Generally, companies can also get better rates on policies with better acceptance terms– which means that the value of the policies is greater than if employees were to apply for the same policies individually. This makes it a win for the company and good proposition when looking to attract high quality employees.
In 2020, when most companies transitioned to remote working, it demonstrated that flexibility can be achieved without a loss in productivity. In fact, studies show that by the last quarter of 2020, productivity had actually increased quite significantly. The ability to offer flexible working conditions is a real draw card for prospective employees. Many have families and have to commute to work. Being able to plan a day around home and work responsibility instead of being stuck in an office 9-5 can greatly reduce stress on employees. A company culture that is open and understanding generates better employee engagement and is seen as a real benefit. Companies that are proactive in creating better corporate cultures are the ones often cited as the best place to work. It not only raises the company profile in the eyes of prospective employees, it can also enable a competitive edge in the marketplace. Attracting top talent means companies can operate more effectively and more efficiently.
Many companies are realising that one of the most valuable assets are their employees. Looking after employees improves their wellbeing and engagement. Financially there are benefits too as it also helps to reduce absences and improve productivity. Increasingly companies are adopting Employee Value Propositions (EVP’s) which are made up of five core elements: Compensation (salary), benefits (medical / pension etc.), career progression, work environment and culture. This shows a progressive approach to hiring which can help position companies more competitively in the marketplace.
Content sourced from Gareth Carroll of Becketts Financial Services during a HR Huddle Webinar 2021.
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