According to the 2016 SHRM Employee Engagement and Benefits Survey, employees desire three key factors in order to experience happiness at work. Firstly, they value being treated with respect at all levels. Secondly, they seek attractive compensation/pay. Lastly, they appreciate having extended employee benefits.
However, the majority is of the opinion that having additional benefits alongside pay is the most important.
“60% of employees consider benefits to be a very significant contributor towards job satisfaction.” (Miller, 2019)
As businesses recoup amid the socio-economic uncertainty, and waves of the Big Quit settle; employees are returning to work with higher expectations. On the other side, organizations are also investing heavily in employee happiness and well-being.
The most common employee benefits range from medical insurance, 401(k) plans, paid time off, flexible working hours, and mental health benefits to newer financial wellness benefits that include on-demand pay or wages on-demand solutions. (Charaba, 2022)
In this article, we discuss how benefits are related to improved employee satisfaction and how businesses can leverage it by offering benefits to their workforce.
The Relationship Between Benefits and Job Satisfaction
Employee benefits and satisfaction at work are strongly related. It is a no-brainer that employees feel more productive, less stressed, and valued at work if they know their employers care for them. (Nectar, n.d.)
“72% of surveyed professionals say having more benefits at work would increase their job satisfaction” (Ivana V., 2022)
The uncertain COVID-19 times and recent waves of inflation have left employees insecure and expecting more from their employers in order to feel safe; both mentally and financially. Whereas shifting business models and the changing state of work have led employers to prioritize the mental and financial well-being of employees. That’s when extended employee benefits come in.
Extended employee benefits go beyond the traditional work perks such as 401(k) retirement plans or health insurance. Rather, they are more focused on equipping employees with financial freedom and giving them more control over their earnings.
For example, companies that can’t afford to raise employee paychecks can work towards adjusting their pay cadence and opting for on-demand pay as an extended benefit.
“83% of US workers surveyed said that they’d like to have access to their earned wages by the end of each workday” (Rist, 2021)
There’s no one-size-fits-all approach, and not every company can afford to pay higher wages to employees to increase their job satisfaction. However, they can certainly transform their existing employee incentives and cadence of paying employees.
“89% of employees would stay in a company longer if they are provided on-demand pay” ( Lee, 2021)
Read further as we explore the significance of having benefits that not only improve employee happiness and satisfaction at work but give employers a hiring and retention edge improving the company’s bottom line.
How Do Employee Benefits Impact the Bottom Line?
Employee benefits are becoming more and more popular as companies look to attract, retain, and motivate employees. Besides being an important recruitment tool, employee benefits are important for various other reasons.
Firstly, they can make employees feel appreciated and valued. Secondly, they can help reduce stress among employees which in turn leads to better engagement levels. Thirdly, they can lead to increased productivity as employees feel less stressed and satisfied with their work environment.
Many companies now offer wellness benefits such as flexible working hours, paid time off, or on-demand pay. This is done with the intention of improving the employee’s mental, physical, and emotional well-being which in turn improves their productivity.
The more perks that the company offers, the more satisfied the employees will be with their job, positively impacting the bottom line. Here’s how additional benefits at work are proving good for companies.
It increases employee productivity
“Employees who were given happiness shocks (added benefits) are 20 times more productive as compared to those who weren’t.” (Marzullo, 2019)
It is a determined fact that happy employees are productive employees. They will not only work harder but also stay with the company for a longer period of time.
Let’s take a group of employee A and a group of employee B as an example.
Employee A will be much more focused and productive at work if they know they can have access to their wages at the end of a work day. On the flip side, employee B would be distracted at work if they had a car repair or an emergency expense ahead but knew their paycheck was weeks away.
With 72% of the American workforce financially stressed (Manning, 2022), it’d be thoughtful to add benefits like on-demand pay to your suite and ensure greater employee productivity and satisfaction at work.
It improves the engagement levels of employees
“Employees who are satisfied with their benefits are 25.3% more engaged at work than those who aren’t satisfied or aren’t getting any benefits.” (Benify, 2019)
A happy employee is more likely to actively participate in work and other activities as compared to an unhappy employee. It is known that the engagement levels of employees are directly associated with their job satisfaction.
Let’s bring in the example of Group A and Group B employees again.
Group A employees would show a keen interest in taking on new projects if their financial or health needs are taken care of. However, group B employees would rather choose to remain silent and not actively participate or go out of their way to assist their employers if they feel that the employer is not willing to make an extra effort toward their well-being.
Adding suitable employee benefits can encourage employees to go above and beyond for the company ultimately improving the company's bottom line.
It can turn employees into great brand ambassadors
“Employees who are satisfied with benefits at work are 21.5% more likely to turn into brand ambassadors for the employer.” (Benify, 2019)
Employees are the backbone of any company. If they are satisfied, they will be loyal and happy to work for a company. Offering benefits to employees can turn them into loyal brand ambassadors who will go out of their way to promote the company and its products/services to other people in order to attract new customers and make sure that current customers stay satisfied.
It significantly reduces turnover costs
“Average cost to replace an hourly employee is $1500 and is 100 to 150% of the salary for technical positions.” (Charaba, 2022)
It is important to note that turnover costs include the cost of training, recruitment, onboarding, lost productivity, and lost institutional knowledge. Some of these can be covered, but not all. However, a study found that when employees are offered health benefits, they are more likely to be productive and less likely to quit their jobs.
Employee benefits are not just a way to attract new employees. They provide a way to retain existing employees and boost their productivity, significantly reducing the costs associated with losing a capable resource.
“92% of employees say they are more likely to stay with a company that offers competitive benefits like health care insurance and retirement savings plans.” (Roepe, 2021)
The cost of hiring new employees is high and so it makes sense for companies to invest in their existing workforce by offering benefits that will improve their job satisfaction levels and make them more productive at work.
It promotes a healthy work environment
Unhappy and financially stressed employees are 2x times more likely to quit for better opportunities. The higher churn rate among employees can impact the overall working culture and environment of the organization. It can also lead to low morale among employees, leading to toxicity around them.
However, promoting a healthy working culture is the present and future of work. Adding benefits besides the usual paycheck can significantly increase the satisfaction levels of employees. It allows them to have a positive word of mouth for the company and prevent prevalent negativity around.
Are You Offering the Right Benefits To Your Employees?
“Happy Employees Impact the bottom line”
Companies are now equally aware of adding employee benefits along with their standard compensation to prioritize employee satisfaction levels and have a hiring and retention edge.
Not having the right benefits that are well-suited to the needs of your employees can cause dissatisfaction among your workforce.
This lack of satisfaction can stem from several factors. Firstly, some employees may feel that the benefits offered by their company do not sufficiently contribute to their overall happiness or enable them to maintain a healthy work-life balance. Secondly, certain individuals may struggle to afford the costs associated with health insurance coverage or child care. Thirdly, there are those who may feel unhappy because they are unable to take advantage of the perks offered by their companies.
Hence, it is important to consider adding benefits that your employees find valuable and are best suited to your company’s budget and quota. Conduct employee surveys and get feedback from employees regarding the benefits they’d like to have.
Focus on getting to the root source of employee happiness. Because certainly, the investments made towards employee satisfaction are less than the costs induced by employees who are less engaged, not satisfied at work, or are likely to switch jobs for better benefits.