There’s a strong argument that the “carrot” (reward) is better than the “stick” (penalty). Studies show that people respond better and end up being more productive in the long run if they are rewarded proportionately for achievements rather than getting penalized for any mistakes. The same principle applies to employee benefits. Setting up generic benefits just doesn’t cut it anymore. As Doug Conant, the CEO of Campbell’s Soup stated, “To win in the marketplace, you must first win in the workplace.”
Busting Employee Benefits Myths
Before we get to busting some myths surrounding employee benefits, some examples of employee benefits that companies provide are various forms of insurance (health, life, dental, etc), gym memberships or discounts, or transportation subsidies. On paper, many of these more generic benefits are satisfactory for a majority of employees in any given company.
Myth #1: Employee Benefits = Insurance
There’s the misconception that employee benefits means employees getting insurance coverage from schemes set up by their employers. This is patently untrue, because as mentioned before, there are other types of benefits that many people might not know about. Offering insurance schemes as a benefit also might not be the best as many might not even get full usage of the coverage. In fact, insurance packages offered to employees might have limited coverage, less specialists on their panels and prescribe generic instead of brand name drugs. Another downside is a core attribute of insurance schemes: the more you use it, the higher the price when you get it renewed. If you’re an employer, this is something to take note of.
Myth #2: Employee Benefits = Time Consuming & Expensive
Employee benefits are part of a company’s business expenses, and some companies reimburse their employees as a benefit for certain things such as parking charges to keep costs low. While that might work for businesses with lower headcounts, it doesn’t scale that well when it’s a larger company, and it can appear that benefits are eating into the budget a little too much. That’s not necessarily true should more employers take advantage of technology and digitization.
Furthermore, consolidating all the data becomes a real pain, especially when the data is needed to generate HR and Management Information System reports. The whole process can become very time consuming. Also, there is almost little to no privacy and with poor built-in controls for such sensitive information like payroll.
Why are Employee Benefits Important?
Keeping Employees Engaged
A meta study of 1.8 million employees across 230 organisations in 49 industries and 73 countries, conducted by Gallup showed that there is a tangible cost to employee disengagement. Companies spend up to $2.6 million per year to replace disengaged employees. Conversely, having highly engaged employees translates to a wide array of positives for the company. Up to 30% higher sales, 21% higher profitability, 115% growth in earnings-per-share, 41% lower absenteeism, 59% lower people churn, 70% fewer safety incidents, and 40% fewer mistakes made.
Increase Employee Motivation
It ain’t rocket science: poor motivation breeds poor work. A survey by Market Tools found that 76% of employees were dissatisfied with the level of reward and recognition they received from their employers, and a study by Bersin Group revealed that 8 out of 10 employees say that the way their performance is managed results in low motivation to work well. If your employees feel appreciated at work through great benefits, they’ll produce a higher volume of work that is of better quality.
Decrease in Financial Stress
Financially stressed employees are 5 times more likely to be distracted by finances at work. Employees in general spend an average of 13 hours per month worrying about personal finances at work, and these losses in productivity ultimately culminates in about 5% of total payroll costs. With benefits that suit the employees in your organisation, they more often than not will be more financially healthy, are less distracted at work and are 60% more likely to stay at a job.
What Can Employers Do About Employee Benefits?
A one-size-fits-all approach is a double-edged sword; generic benefits might satisfy a majority of employees in a company, or it might alienate a statistically significant portion of the same. Instead of providing all employees with the same benefits, a more holistic approach is to provide meaningful, varied benefits that suit the need of the hour. For example, employers can use a digital platform like Xoxoday as a unified solution to implement employee benefits and give them a diverse choice of benefits like a discount on gym memberships, at selected supermarkets for cheaper grocery shopping, at selected F&B outlets and even for subscriptions to services like Netflix. These perks can help extend employees’ paychecks.
This brings us to benefits that are directly related to the financial wellness of employees. What is financial wellness? It is the health of one’s finances, with the ability to establish short-term and long-term financial plans, to spend money smartly, understanding the concept of investments and savings and the ability to absorb unexpected financial shock. Financial wellness is fundamental for the retention rates of employees, and to improve their productivity at work. How can financial wellness be integrated into employee benefits? There are several ways, such as paid-for financial literacy courses and workshops, setting up different salary schemes, like having commission schedules, bonus being paid in equity, and even extending financial loans should employees need it.
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