Employers spend millions of dollars on the benefits they offer their employees, but many still struggle to measure the value those benefits provide to their organization. While some are exploring novel approaches, like tracking changes in employee health behavior or specific health outcomes, others have focused on more general measures like employee satisfaction.
Our research focuses on an essential aspect of any organization—talent—to assess the value of 49 employee benefits. Can the benefits you offer make a difference in your ability to attract and retain employees in a strong labor market? The answer is not a simple yes or no. Our survey of employers’ benefits offerings reveals both the depths and the limits to leveraging your benefits as a recruitment and retention tool.
- Offering more (and more) benefits consistently points to better success recruiting talent.
- The number of benefits offered has limited impact on how well companies retain employees.
- A select handful of benefits consistently stand out from the crowd as especially valuable.
How we gathered the information
To explore the connection between benefits offerings, recruitment, and retention, Fidelity Thought Leadership surveyed more than 1,100 employers represented by human resources and benefits professionals directly involved in the design of benefits strategy and programs for their organization. We looked to understand the value of 49 different benefits, across five self-defined categories: Health and Wellness, Protection, Financial, Work-Life, and Time Off. We asked employers which benefits they offer, as well as the percentage of employees using each benefit. Employers also reported annual recruitment and retention rates. The illustrative charts reflect the average percentage of employees recruited and retained when controlling for the number of benefits-eligible employees, company’s average employee age, education level, health, and financial wellness.
What we uncovered
Offering more benefits can help you win new talent
More is better—that’s the message when it comes to the number of benefits employers offer and how well that predicts success recruiting new employees. Among companies offering the most benefits, nearly 70% of the job offers they extended during the past year were accepted.
Taking a closer look at the benefit groupings, the effect was primarily reflected in the Health and Wellness, and Time Off benefit categories. It’s understandable that a benefit like health insurance would predict a higher rate of recruitment, considering it’s offered by nearly every company (93%) surveyed. The absence of such a universal perk in a benefits package would handcuff even the most gifted talent acquisition professionals.
What’s more surprising is the strong link between recruiting success and the impact of offering less popular benefits like flex time (60% of employers surveyed) and tuition reimbursement (47%).
Other benefit categories followed the more-is-better trend, but only to a point. For example, there’s minimal upside to offering more than a few financial benefits, the most valuable being a defined contribution plan.
Offering more benefits is no guarantee when it comes to retention
The story around retention is less straightforward. On the one hand, companies that offered up to 18 benefits reported significantly higher retention than their peers who offered only a few. But the value diminishes quickly just beyond that point. In fact, a quick glance at the data might suggest that offering more than 20 benefits will spur an exodus of employees. We can’t draw that conclusion—although we doubt it’s true—as this study is designed to measure the relationship between benefits offerings and changes in company performance, not what causes those changes.
It’s clear that the simple correlation between benefits and recruitment does not play out for retention. Companies offering around 18 benefits show higher retention than those offering only a few, but companies offering the most benefits have the lowest retention rate.
Most valuable benefits for retention and recruitment
There’s more than meets the eye when assessing the value of benefits programs.
Getting employees to change their financial or health habits is hard work, and seeing those changes reflected in measures like blood pressure and cholesterol can take years. Meanwhile, success recruiting and retaining employees is typically a good sign of a happier workforce. And a happy workforce means a healthy, productive workplace.
What does this mean for employers?
Employers should consider the following as they review benefits strategies
- For recruitment, volume matters. Don’t skimp on the table-stakes benefits that are most likely being offered by your competitors—that’s shooting yourself in the foot. Our research suggests that prospective candidates expect those benefits and more, especially in a tight labor market. Know where the opportunities lie to add those less common perks, but don’t sacrifice the basics in the process.
- Understand deeply what keeps people at your company, or turns them away. Offering the optimal amount of benefits may persuade people to stay, but many other factors come into play once people join your organization. A great commute–or a horrible boss–can outweigh even your most popular benefits. Take a data-based approach to figure out what’s truly resonating with your employees’ experience at work, and determine where the opportunities lie.
- Pay attention to utilization of your benefits, but don’t obsess over it. Our data make it clear that beyond certain core benefits like health insurance and defined contribution plans, most benefits are used at about the same rate. Instead, spend time figuring out what benefits matter most to associates, and build a benefits strategy that allows for smart risk-taking.
Fidelity’s Health Solutions Thought Leadership team is dedicated to educating and supporting employers in empowering their employees to successfully navigate their health care benefits.
“Fidelity Employer Value of Benefits Survey, 2019.” Data represent Fidelity Employer Value of Benefits online survey of 1,600 American employer representatives in HR, benefits, and compensation. ResearchNow, an independent third-party research firm, conducted the survey in August, 2018, on behalf of Fidelity. ResearchNow and Fidelity Investments are independent entities and are not legally affiliated.
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