Weighing the Pros and Cons of Offering Employee Benefits

In today’s competitive business market, it’s vital that companies do all that they can to recruit the best talent available to them. That includes making themselves as attractive as possible to potential candidates. If you happen to run a small business, you’re often at a disadvantage in this regard, especially when it comes to attracting qualified applicants away from your larger competitors. While the roles and responsibilities of the jobs you have to offer may not vastly differ from those of larger companies in your industry, those organizations will typically have the resources to outbid you when it comes to salary or benefit packages.

The decision to offer employee benefits goes beyond simply looking at dollars and cents (though that aspect certainly does factor into it). Rather, it requires carefully weighing the pros and cons of all of the elements involved in the decision and going from there.

Detailing the Advantages and Disadvantages

With that in mind, here is a list of a few of the top reasons why offering a benefit package to your employees would be advantageous to your company:

• Cost-savings through a reduction in initial salary: A common misconception that many have is that job candidates will automatically favor the companies that offer the highest salaries. However, salary advantages mean little if all of that extra money is going towards paying for insurance or saving for retirement. Today’s job applicants are well aware of that fact and thus are often willing to accept a lower initial salary if you’re able to offer them a solid benefit package.

• Tax advantages: You’re able to deduct the cost of contributions to employee benefits plans, including those that offer health, dental, and life insurance, and employee pensions. This tax savings helps to offset the cost of paying for such benefits.

• Improved employee morale: Studies have shown that employees who have access to employer-sponsored benefits miss less time from work and have a better overall sense of morale. This is due in large part to the fact their having insurance allows them to seek preventative care more often, which helps improve their overall health and decrease the risk of suffering from chronic conditions that could keep them office.

Despite the potential value that offering employee benefits may bring, implementing a benefit program in your organization does not come without challenges. Here a few of the cons associated with such a decision:

• Increased potential for litigation: If you do offer employee benefits and those benefits are denied by your benefit provider, then you could potentially be included in any litigation proceedings if your employee decided to sue.

• The pressure of meeting regulatory compliance: Companies that do offer benefits are subject to a unique set of standards at both the industry and federal levels. Keeping your organization in compliance with those standards can come at a high cost.

• Cost: in the end, the decision of whether or not to offer benefits typically comes down to money. As a small business, you’re likely to pay more for benefits than your larger competitors, who often enjoy discounted rates due to their high numbers of plan enrollees. Plus, your plan options may be limited due to the high administrative costs associated with them.

You should also remember that traditional benefits are not the only way to attract traditional employees. Offering employee assistance programs such as health insurance reimbursement programs may prove to be just as attractive to potential new hires.

The potential disparity in resources between your company and your competitors can be made up for when it comes to recruiting new employees; you simply need to out think them when it comes to offering employee benefits. This includes whether you decide it’s worth it to offer new hires traditional benefits, or if you choose to look for other ways to provide additional employee incentives. You just have to remain committed to staying out in front of your competitors in terms of luring in the top applicants. The decision to do so will no doubt pay in the value that such candidates can contribute to your organization.

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