As a small business owner, you undoubtedly know that employee benefits don’t come cheap. Many experts estimate the average cost of benefits for employers to be nearly half of an employee’s salary, basically making the average salary something like 150 percent of pre-tax take home pay. So, why then, do employers offer so much in benefits, and why not trim back this number to decrease labor costs? Simply put: Benefits have their own benefits.
The Unseen Benefits of Health Insurance
By offering a comprehensive, competitive health insurance package, you can compete on par with much larger companies. For instance: Here in Fort Collins, there are some very large employers, medium-sized companies, start-ups, and small businesses all competing for the wave of top talent moving in and graduating from local state university, Colorado State University; in this climate, without an appealing suite of pay, benefits, and work culture, your business has little chance of attracting the best employees. Health insurance, specifically the employer-paid portion, is a big part of that.
When you create an appealing environment for prospective employees to gladly enter into, you will enjoy a tremendous boost in production, employee longevity, and even work culture. When you hear people reference “top talent,” and the importance of attracting it, what they really mean is reaping the benefits of hitting the sweet spot with a given employee, or wave of employees. According to a recent study in Personnel Psychology, hiring a top performer, star player, or top talent individual you stand to gain a potential 400 percent increase in productivity over an average worker.
Cost of Benefits < Cost of Turnover
Consider this: Turnover, on average, has been estimated to cost employers six to nine months of a given employee’s salary in recruiting and training costs alone, not including any long-term losses in production or quality-of-work. If a given employee has a salary of $50,000, then you can expect to pay upwards of $35,000 just to replace them. Imagine the costs associated with turning over multiple positions per year at varying levels throughout your company, and you can quickly see why employers gladly shell out an additional 50 percent in payroll for benefits.
As mentioned prior, if your benefits package is strong enough to attract top talent, then it is also strong enough to keep people willing and wanting to work for your company. Looking for a job that pays a bit more, mixes things up, or even just seems more desirable is a lot more difficult when the individual in question knows they are giving up a great benefits package for themselves and their family. Often, this can retain employees through periods of disillusionment, giving you more time to win back their loyalty. If the given employee is a top talent individual, that can mean not losing a 400 percent producing rock star on your team, while saving you six to nine months of their costs in trying to replace them.
Get Group Health Insurance
The largest benefit in any benefits package is health insurance. Often, when people refer to employer benefits they exclusively mean health insurance. Ameri Quote is proud to offer the most competitive suite of major providers’ group health insurance plans in Fort Collins.