Why Offering Benefits Is a Game-Changer in Today’s Job Market

While a competitive salary remains crucial, job seekers in 2024 are looking beyond the paycheck, placing increasing importance on the benefits package offered by potential employers.

“If the Great Resignation climate has taught us anything, it’s that employee benefits are more important now than they’ve ever been,” wrote small business expert Katherine Haan in Forbes.

In today's fiercely competitive job market, attracting and retaining top talent has become more challenging as the talent acquisition landscape has evolved significantly.

“In an increasingly competitive job market, a crucial component of a company’s recruitment efforts is the benefits offered to both prospective and current employees,” wrote the Forbes Business Council. “Rather than sticking to the same-old perks that have become standard across many industries, offering unique company perks can help businesses capture the attention of promising candidates while also retaining their current workforce.

This shift in priorities has made benefits a game-changer in the hiring process, influencing candidates' decisions and shaping the success of businesses in attracting the best and brightest.

The Evolving Expectations of Job Seekers

Gone are the days when a hefty salary alone could sway a candidate's decision.

Today's workforce is looking for more comprehensive compensation packages that address their overall well-being and future security. This paradigm shift has placed benefits at the forefront of job considerations.

The role of benefits in attracting top talent cannot be overstated. In a recent Harris Poll of 1,170 employed adults in the U.S., when asked to rank the top three factors when considering a new job, 80 percent had salary in the top three followed by healthcare benefits (56 percent) and paid time off/vacation policy (49 percent).

And that survey found that nearly half of American workers (48 percent) said they would “rather have more paid days off than a higher salary” with that number even higher for:

• Upper management: 57 percent.
• C-Suite: 56 percent.
• Millennials: 56 percent.
• South, Urban: 53 percent.

A robust benefits package can be the deciding factor for a candidate choosing between multiple job offers. It demonstrates that an employer values their employees' health, work-life balance, and long-term financial security.

This, in turn, creates a positive perception of the company culture and can significantly enhance an organization's ability to attract high-caliber professionals.

Key Benefits That Matter Most to Employees

Understanding what benefits are most valued by employees is crucial for creating an attractive package. While preferences may vary based on factors such as age, industry, and personal circumstances, several key benefits consistently rank high on job seekers' priority lists:

• Health Insurance: Comprehensive health coverage remains a top priority for most employees. This includes medical, dental, and vision insurance. In some surveys, more than 2 out of 3 employees ranked employer-covered health benefits as the top benefit.
• Retirement Plans: 401(k) plans, especially those with employer matching, are highly valued as they help employees secure their financial future.
• Paid Time Off and Work-Life Balance: Generous vacation time, sick leave, and policies that promote work-life balance are increasingly important to today's workforce.
• Professional Development Opportunities: Employees value companies that invest in their growth through training programs, tuition reimbursement, and career advancement opportunities.

Other benefits that can make a significant impact include:

• Flexible work arrangements.
• Parental leave.
• Wellness programs, including mental health assistance.
• Employee assistance programs.
• Stock options or profit-sharing plans.
• Life insurance.

By offering a mix of these benefits, employers can create a package that appeals to a wide range of candidates and addresses diverse needs.

The Impact of Strong Benefits Packages on Recruitment

A comprehensive benefits package can dramatically improve a company's recruitment efforts in several ways, including attracting a wider pool of candidates and standing out in a competitive job market.

“Benefits and perks can be a dealmaker or a dealbreaker in the final stages of the hiring process,” says international recruiting agency Remote. “When a top candidate compares offers from different employers, a superior benefits package may give your business the edge. But all too often, businesses take benefits for granted, focusing instead on salary

When a company offers attractive benefits, it opens the door to a broader range of qualified candidates. This includes passive job seekers who might not be actively looking for a new position but would consider a move for the right opportunity.

A strong benefits package can be that catalyst, encouraging these high-value candidates to consider your company.

In industries where competition for talent is fierce, a robust benefits package can be a key differentiator. It sends a clear message that your company values its employees and is willing to invest in their well-being.

“The war for talent is real, and small businesses are feeling the pinch,” writes small business CEO Adam Povlitz in Forbes. “In today's competitive job market, it's more important than ever for small businesses to have a strong employer brand and offer competitive benefits and compensation.”

Benefits and Employee Retention

The importance of benefits extends beyond the hiring process. They play a crucial role in employee retention, which is equally important for long-term business success.

There's a strong link between comprehensive benefits and job satisfaction. Employees who feel well-supported by their benefits package are more likely to be engaged, productive, and loyal to their employer. This satisfaction translates into lower turnover rates, which can result in significant cost savings for businesses.

Consider the following:

• The cost of replacing an employee can range from 50 to 200 percent of their annual salary, depending on their role and seniority.
• High turnover can negatively impact team morale and productivity.
• Long-term employees often have valuable institutional knowledge that is lost when they leave.

By investing in a strong benefits package, companies can create a more stable, satisfied workforce, reducing these turnover-related costs and challenges.

Tailoring Benefits to Your Workforce

One size does not fit all when it comes to benefits. To maximize the impact of your benefits package, it's essential to understand and cater to the specific needs of your workforce.

Different generations may prioritize benefits differently:

• Baby Boomers might place higher value on robust health insurance and retirement plans.
• Gen X employees may prioritize work-life balance and flexible working arrangements.
• Millennials and Gen Z often seek professional development opportunities and student loan assistance.

Offering flexible benefit options or a cafeteria plan can allow employees to customize their benefits package to their individual needs. This approach recognizes the diversity of your workforce and can increase overall satisfaction with the benefits offered.

The Role of PEOs in Offering Competitive Benefits

For small and medium-sized businesses, offering a competitive benefits package can be challenging due to cost and administrative complexities. This is where Professional Employer Organizations (PEOs) can play a crucial role.

PEOs provide access to better benefit options by leveraging their scale. By pooling employees from multiple small businesses, PEOs can negotiate rates and plans typically only available to large corporations. This allows smaller companies to offer benefits packages that can compete with larger employers, leveling the playing field in talent acquisition.

Moreover, PEOs offer cost-effective solutions by:

• Sharing the administrative burden of benefits management.
• Providing expertise in compliance and risk management.
• Offering streamlined processes for benefits administration.

These advantages allow businesses to focus on their core operations while still providing attractive benefits to their employees.

Implementing a Strong Benefits Strategy: Six Steps

To create and implement a strong benefits strategy, consider the following six steps:

1. Assess your current benefits package and identify gaps.
2. Survey your employees to understand their priorities and needs.
3. Research industry standards and competitor offerings.
4. Consider partnering with a PEO to access better options and reduce administrative burden.
5. Develop a comprehensive benefits package that aligns with your budget and employee needs.
6. Clearly communicate the value of your benefits package to current and prospective employees.

Remember, the importance of clear communication about benefits cannot be overstated.

Many employees may not fully understand or appreciate the value of their benefits package. Regular education and reminders about available benefits can increase utilization and appreciation, maximizing the return on your investment.

PEO by Design: Helping You Make the Right Choice

The importance of benefits when hiring cannot be underestimated in today's competitive job market. A strong benefits package is no longer a nice-to-have; it's a must-have for businesses looking to attract and retain top talent.

By offering comprehensive benefits, companies can differentiate themselves, improve employee satisfaction, and create a more stable and productive workforce.

At PEO by Design, we understand the critical role that benefits play in your hiring and retention efforts. With our extensive experience in the PEO industry, we're uniquely positioned to help you evaluate and implement a benefits strategy that will give you a competitive edge.

Contact PEO by Design today to learn how we can help you make the right choice when looking for a PEO provider. We have the experience to guide you through the PEO maze, and find a solution that meets your organization’s needs.