It is important for businesses in all industries to offer benefits to their employees. Benefits have been shown to boost worker productivity, employee retention rates, and can make your company appear more attractive to job seekers.
Despite the numerous gains that employee benefits provide, some businesses often find themselves in positions where they’re forced to cut employee benefits. It can be difficult to figure out which benefit to cut in such situations, so here are 3 signs to look out for.
1. Poor returns
Benefits are put in place to help employees, which in-turn benefits the business itself. Before providing a particular benefit, employers should weigh the cost of the investment against the potential returns the benefit could provide to their business.
Some businesses may see good returns initially after implementing a benefit, but over time they may find that the returns simply aren’t worth it anymore, and that providing the benefit is a net drain on company finances.
Businesses should avoid cutting essential benefits such as health insurance or life insurance, but other benefits such as wellness programs or workplace perks could be axed if they haven’t been shown to boost employee morale and productivity in any way.
It is important to crunch the numbers and make sure the benefit you’re cutting is in-fact providing poor returns. Businesses should look at the sunk cost of setting up the benefit, the cost of providing it on an on-going basis, and also compare worker morale and productivity before and after provision of the benefit, to determine if the benefit should be cut.
A benefit that doesn’t boost worker morale, productivity, or retention rates should be removed.
2. The benefit is rarely used
Many businesses implement wellness programs which include fitness activities or free/discounted gym memberships. However, these businesses may find that the vast majority of their employees are not utilizing these services, and that such benefits could be classified as non-essential.
If businesses are looking to save on costs, these non-essential benefits can be cut. It may be worth replacing the benefit with one that is more likely to be used by employees.
3. The benefit doesn’t fit your employees
Some benefits may not be applicable for all your employees. For example, employees without children may not require health insurance plans that provide coverage for dependents. This could be applicable for businesses where most of the employees are young and/or unmarried.
Providing such benefits could prove costly and feature little to no returns. So it may not be feasible to keep them around.
It’s important for businesses to look at their company’s data before axing any programs as it could affect the way their employees view the company. If a benefit has been proven to be a net waste, the business’s employees are less likely to resent the business for cutting it.
