Employee Benefits Strategies

Why Offer Benefits?

Considering the high cost of benefits, we should ask, why offer benefits at all?

Benefits are provided for several reasons:

1. Some benefits are required by law. Most employees are covered by a number of federal and state laws that require employers to provide a mandatory minimum level of benefits as a condition of employment.
2. Benefits are highly desired by employees and play an integral role in protecting the financial security of workers. Despite the fact that employees are often unaware of the true cost and extent of the benefits they receive, benefit programs are a major recruiting tool. Well-designed benefit programs have also been shown to lower turnover.
3. They may be demanded by unions. Benefits provide alternative bargaining chips in union negotiations when direct confrontation over wages is not feasible or desirable.
4. Benefits can fulfill needs that often cannot be accessed independently. Because employee benefits can be negotiated on a group basis, costs for various benefits can be much more reasonable than individual plans.
5. Benefits can contribute to a more productive work group. By reducing employee financial insecurity and stress, benefits can make the workforce more productive. Health insurance, paid time off, life insurance, wellness programs, and other employee benefits, contribute to the health of the employee. Physical and mental health is important in maintaining productivity. Acknowledgement of this fact has encouraged employer-sponsored athletic facilities, preventive care programs, counseling, and childcare programs in employee benefit packages.
6. Benefits can be a key driver of job satisfaction. With the aging of the population and other demographic changes, the needs of the employee work force have grown increasingly diverse, challenging employers to evaluate how best to retain workers. Benefits satisfaction can be the key to building loyalty to the employer.
7. Cost savings. When benefits are purchased on a group basis, costs are typically lower since they are calculated for the group as a whole, rather than on an individual basis.