What makes a company an excellent place to work?
The answer to this question tends to change with each new cohort of talented employees.
Fifty years ago, most Americans might have considered a secure pension plan enough to make them happy. When the dot com bubble began to inflate in the 1990s, everything changed. Suddenly, the popular understanding of what drew top employees to a company was less about financial security and more about making work feel like a constant party.
You’ve probably seen the movies where a band of scrappy coders rides around the office on razor scooters and spends their day playing Call of Duty and pranking each other. There may have been a brief moment in the 1990s in Silicon Valley when a ping pong table and an indoor paintball course might have been considered viable job benefits.
After the burst of the dot com bubble, and then the mortgage crisis in the 2000s, the cold hard reality of adulthood and financial responsibility brought conversations about meaningful benefits back into focus.
Modern workers today are looking for more from their employers than free snacks and a ping pong table in the break room. But they’re not looking for the same things they wanted before the dot com era either.
Developing an effective employee retention strategy today means recognizing the unique needs of individual employees and placing emphasis on long-term benefits that support personal development.
The Changing Conversation About Workplace Benefits
Interest in valuable, long-term benefits is nothing new for workers. Employees have faced the challenge of adulting since the concept of jobs was invented.
But two things have changed in the past couple of decades that make today’s workforce more proactive in seeking the kinds of benefits that support a happy, healthy adult life.
Where previous generations may have discussed employment offers with close friends and family, young people entering the job market today can and do communicate with the entire workforce about their status, pay-rate, and benefits. There are even websites dedicated to exposing what you should expect from your employer in every imaginable type of job.
For better or worse (probably better), this open communication has led to a hiring pool that is more informed and more empowered than ever.
In addition to their growing self-awareness, skilled workers in today’s economy are in high demand due to the ever-increasing global skills gap.
The number of highly-skilled workers is falling short of the demand for their services like never before. This tilts the job market heavily in favor of job-seekers and means that companies are under more pressure than ever to go the extra mile in retaining staff.
Research shows that what young people value in the workplace runs much deeper than a paycheck. The most important job benefits for today’s workers still include old standards like health insurance, retirement plans, and paid vacation. But younger workers are also looking for things that support their overall well-being:
- Flexible scheduling
- Work-life balance
- Personal development and lifelong learning
- A sense of purpose beyond profit
Simply outbidding other companies’ salary offers during the hiring process might be enough to land and keep the best talent, but you’ll need to do more to keep that talent.
To retain the best talent, you need to offer a meaningful benefits package that satisfies the more profound demands of today’s workers.
Why is it important to retain staff?
You might be thinking, “Oh well, nobody sticks around anymore anyway, so why bother fighting to retain employees?”
Many people have pushed the idea that loyalty is dead, and companies should adjust to a new normal of fluidity in hiring and staff retention.
That mentality costs companies money and exacerbates the talent shortage by making it harder for employees to develop new skills once they’re hired.
How a Good Employee Retention Strategy Saves You Money
Some adverse effects of high employee turnover are obvious:
- Direct costs of recruiting
- Costs and productivity-loss during training
- Added burden on HR
The list goes on.
It costs around $4,000 to hire a new employee, according to the Society for Human Resources Management, and it takes companies an average of 42 days to fill vacant positions. That means, on top of the direct financial costs, productivity may suffer for well over a month during the process of replacing a departing employee.
But what about the less obvious costs of turnover?
In the long term, turnover can have a severe negative impact on creativity and consistency of product. When teams are constantly gaining and losing members, cohesiveness becomes difficult, if not impossible, to maintain.
The real cost of employee turnover, then, might be the less-measurable, but potentially much more impactful, loss of future innovation and development.
In the highly competitive environment of today’s industries, any negative pressure on innovation can be seriously harmful.
Staff Retention Helps Build a Strong Culture and Vice-Versa
If staff retention is so crucial to the success of your company, what does it take to keep the best talent?
A robust benefits package, including both long-term and short-term offers, is essential to maintaining the morale and positive work-life balance of your employees. When employees feel good at work, they’re more likely to stay.
What’s the difference between a benefit and a perk?
Perks are usually thought of as added value to the work experience. Remember our ’90s tech office with the ping pong table and the game console in the break room?
While offering perks can sweeten the deal for prospective hires, what keeps people happy in the long-run are more substantial benefits.
Benefits are tangible supplements to salary.
Traditional examples of benefits include health insurance, 401(K) plans, and stock options. As with everything else in today’s industries, what counts as a benefit has changed as well to include a broader range of offerings that support an employee’s financial, emotional, or physical well-being.
There are tons of different kinds of benefits you can offer your employees, but they all can generally be grouped into short- and long-term varieties.
Short-Term Benefits Help Boost Morale
Short-term benefits provide an immediate reward and don’t necessarily contribute to future development. These types of benefits are typically offered as rewards for excellent performance, loyalty, and other achievements.
Here are three of the top short-term benefits that employees look for.
1. More money
Regular salary increases, performance-based or otherwise, are a vital element of any employee retention plan. No benefits package is going to help you keep an employee who isn’t being paid what they’re worth, especially if they have offers for more money somewhere else (they probably do if they’re talented).
2. Performance Bonuses
Rewarding performance is one of the most obvious short-term benefits. Employees who feel their work is appreciated are much more likely to be happy and continue to be productive.
Paid time off is so standard that many people may not even think of it as a benefit. PTO is usually offered as a form of loyalty bonus, being granted only after a specific pre-defined time working for the company.
The morale boost associated with these immediate rewards can be quite substantial, but it is short-lived.
Even salary increases have only a short-term effect on employee satisfaction. More money is always appreciated, but research has shown that salary is most important at transitional moments like hiring and when a promotion is offered. It has a decreasing impact on morale over the long term.
In other words, a competitive salary will get talent in the door, but you’ll need to provide something else to keep that talent.
If building a happy and loyal workforce is your goal, the way to do it is by providing long-term benefits.
Long-Term Benefits Support Employee’s Health, Well-Being, and Personal Development
The benefits that matter most to employees support long-term personal development, well-being, and health.
Here are eight examples of long-term benefits that promote employees’ personal well-being and lifelong learning.
1. Flexible Work Schedule
Once you get past the “big three”: salary, health insurance, and paid vacation, many younger workers would say their next most significant concern is flexibility.
Whether it comes in the form of remote working, a personalized schedule, or some other way of making the work experience less rigid, today’s workers thrive in a more fluid work environment.
2. Lifelong Learning and Self-Directed Training Programs
Concern has grown in recent years about an increasing shortage of highly-skilled workers to perform future jobs.
Education institutions have largely failed to keep pace with changes in technology. As a result, educators are starting to see traditional schools as a place to learn STEM basics and soft skills (like communication, team-work, and problem-solving). Specialized hard skills, then, would be tackled on the job via technology-driven training programs.
Long gone are the days when formal education ended at graduation. The best companies to work for today provide employees with innovative, personalized, and skills-based lifelong learning experiences.
3. Tuition Reimbursement
Despite the inability of universities to prepare students for future jobs, the standard in most industries is still to require a college degree as a prerequisite for skilled positions. As a result, student debt in the United States is overwhelming.
The burden of student debt forces young workers to make career choices driven by their need to pay off loans rather than by their interests and abilities.
One of the most valuable ways to support the personal development of workers who have student debt is to offer them services to help deal with their student loans.
4. Financial Planning Assistance
Helping workers with debt doesn’t necessarily mean providing direct financial assistance. There are many ways companies can help employees deal with financial strain:
- Providing access to financial planning services
- Offering health and retirement savings plans
- Hosting financial education workshops
5. Gym Membership or Wellness Plans
When they’re not stressing over debt, Millennials pay more attention to their physical fitness and health than young people from perhaps any other generation.
Providing paid gym memberships and wellness programs like yoga, meditation, and company sports teams is a great way to support an employee’s efforts to be healthy. These programs provide the added benefit of creating a space to grow interpersonal relationships and foster a strong company culture.
6. Mental Health Services
If you’ve picked up a paper, read a magazine, or glanced at a screen recently, you may have noticed that mental health is on a lot of peoples’ minds at the moment.
In the last few years, the dramatically increased awareness of issues surrounding mental health has led to a revolution in openness and accommodations for people with mental disorders.
Many companies today list employees’ mental health among their top priorities.
If you’re like most people, the image that comes to mind when you hear people talk about mental health services is a stereotypical psychotherapy session. However, those are just two of the countless ways that people take care of their mental and emotional well-being.
Some other ways that companies can support the mental health of their employees include:
- Creating awareness programs and support groups.
- Providing space and time during the day for naps and other forms of rest.
- Sponsoring access to mindfulness, meditation, and other mental health-related wellness programs.
7. Pet-Friendly Benefits
This one might sound like a bit of a stretch, but consider the emotional role that animal companions play in the lives of pet owners.
Pets are viewed as members of the family by 77% of dog and cat owners, and family bonds are often the most important social relationships in a person’s life.
Access to pet insurance plans, paid leave for time to take animals to the vet, dog-friendly workspaces. These are all ways to show employees that you value them and care about their personal relationships.
8. Paid Volunteer Hours
Millennials, and younger workers in general, want a sense of purpose in their work.
While not every company can quickly pivot to a humanitarian mission, what you can do is offer what’s now known as VTO (Volunteer Time Off). Giving employees paid leave to volunteer for causes is a powerful way to support their individual development and to show that your company cares about corporate responsibility.
This concept has become increasingly popular and is now offered as a benefit by 1 in 4 companies.
How to Build an Effective Benefits Package for Your Company
The best companies to work for today are those that emphasize the well-being, personal development, and work-life balance of their employees.
Building an effective strategy for employee development based on a well-planned mix of short-term and long-term benefits will naturally lead your company to an improvement in employee morale.
Better morale ultimately leads to a boost in recruitment and staff retention.
For your small to mid-sized business, the burden of competing with large corporations and government regulations can often be an obstacle to recruiting and retaining the talent you need to drive your company forward.
The highly-trained professionals at America’s Back Office use economies of scale and collective buying power to enable businesses just like yours to provide employees with world-class benefits packages.
Our HR solutions and benefit management services include:
- 401(K) Retirement Plan Management
- Coordination of Health Plans
- Group Vision and Dental Insurance Plans
- COBRA Administration
- ACA Compliance
- And much more.
To learn how you can build and maintain an industry-leading benefits package for your employees, visit America’s Back Office today.