3 Reasons Better Benefits Packages Are Critical to Business Success
With 29 percent of workers planning to leave their jobs in 2019, according to a survey from the American Institute of CPAs (AICPA), employers need to understand how to get employees to stay.
One key to retention: benefits.
The AICPA survey found that 80 percent of people would choose a job with better benefits over a job with better pay but no benefits.
In the midst of a tightening talent market, here are three reasons why companies must improve their benefits packages today:
1. You Can Attract and Retain Talented Employees
Replacing an employee isn’t cheap, costing on average 21 percent of the departed worker’s salary. These expenses stem largely from learning-curve losses and expensive training, which sets employers back millions of dollars annually.
To prevent turnover and increase employee satisfaction, employers can offer better benefits packages through self-insured plans, in which the employer fully pays for employees’ health care rather than splitting the costs with an insurer. Fully-insured plans are typically more expensive, because employers are subject to insurance companies’ profit margins, plus their annual premium increases. By comparison, a self-insured plan would eliminate those costs, saving an employer 10-25 percent while still allowing the company to offer the kind of robust benefits package that employees want.
For those concerned about the risk and extra work of a self-insured plan, third-party administrators (TPAs) will bear the burden of processing claims and performing other administrative tasks for a monthly fee. Employers can also protect themselves from unexpected and exorbitant costs with stop-loss insurance — coverage that is activated when claims exceed the employer’s budget.
2. You Can Create a Healthier, More Productive Workforce
In a study of the benefits valued most by employees, health insurance topped the list. This shouldn’t come as a surprise, especially considering that the largest generation in the workforce is currently aging out of its parents’ insurance plans en masse.
Fortunately, it pays to give employees the quality health benefits they want. Not only will workers take fewer sick days, but they will also perform better when they feel better.
Employers lose $1,684 worth of productivity per employee to sick days every year. Even when employees make it to work despite feeling under the weather, productivity suffers. Fifty-five percent of employees come to work even if they are ill, and while they may be physically present, they aren’t working to the same standard they normally would. This presenteeism drives productivity losses of $150 billion every year.
One way to prevent employees from getting sick is by moving away from the status quo fee-for-service care model — which pays providers for tests and procedures even if they aren’t needed — and toward a value-based one. A value-based care model rewards providers who treat patients effectively, encouraging them to really understand patient symptoms, lifestyles, and ongoing issues. By focusing on a patient’s overall well-being, physicians treat not only one-off illnesses, but also chronic issues like weight management, back pain, etc. This approach helps keep employees healthy, saving employers money through reduced need for care and increased ability to perform at work.
3. You Can Invest in the Local Community
Once they’ve mastered the art of attracting and keeping talented employees through affordable but comprehensive benefits, employers can use their newfound savings to fund philanthropic efforts. For example, hotelier Harris Rosen used portions of the money he saved on health care to pay for children in Florida’s Tangelo Park and Parramore neighborhoods to go to school for free. This helped raise high school graduation rates from 55 percent to nearly 100 percent. Rosen also pays for five-year employees’ in-state college tuition, plus the in-state tuition of three-year employees’ children.
The American dream has been stolen by today’s dysfunctional health care system. According to The Commonwealth Fund, 56 percent of Americans under 65 get their health insurance from employers, but because of increasing premiums — up 5.5 percent for family plans and 4.4 percent for singles in 2017 — employees still spend significant money to meet high deductibles. In 2017, employees contributed an average of $7,240 to their health care, and with median income growing at a slower pace than health care costs, middle-income families are having to sacrifice larger and larger portions of their pay. By investing in their communities — especially through education, which will help community members obtain gainful employment with high-quality health benefits — employers have the power to restore the American dream and revolutionize today’s ineffective health care system.
Not only are philanthropic efforts the right thing to do, but they’re also smart business decisions: Corporate social responsibility has been linked to both higher profits and the recruitment of better talent.
Basic and subpar benefits no longer cut it when it comes to attracting and retaining employees. To recruit capable employees and ensure they have reason to stay, employers must reimagine their benefits offerings. Through comprehensive value-based benefits, innovative employers can foster happier, healthier, and more productive workforces; save money; and make a difference in their communities.
Dave Chase is cofounder of Health Rosetta.