Many small and mid-sized companies in the U.S. believe that a recession is likely in 2023. However, most are continuing to invest in their employees. According to the latest Principal Well-Being Index (WBI), businesses are choosing to increase cash reserves (29 percent), reduce operating expenses (29 percent), and increase prices of products and services (26 percent) rather than reduce employee salaries or benefits.
Today, many employers understand the importance of retaining happy, healthy and skilled workers. Unfortunately, this becomes a bigger challenge during a recession as employees feel greater financial stress. Investing in employee benefits is an effective way to retain employees and boost morale by offering attractive benefits and building a positive work culture.
Employees Need Their Benefits During a Recession
Employees are a business’s greatest asset. During a recession, it becomes essential to retain workers and avoid the extravagant cost of employee turnover. Offering a great benefits package helps make employees happy and healthy, which can have a direct impact on their performance at work.
During a recession, employees are more likely to experience financial strain, and without access to suitable benefits, some employees may choose to seek better job opportunities elsewhere. In turn, employers are forced to recruit, hire and train new staff, a process that can be costly and time-consuming.
While it is understandable for businesses to attempt to cut costs during a recession, employee benefits should remain unchanged whenever possible. Offering employee benefits shows workers that the company is invested not only in their current health and happiness but also in their future.
The Benefits of Living Stability and Emotional Confidence
The importance of a great employee benefits package cannot be understated. Employees want to feel rewarded for their efforts in the workplace and are often in need of extra support. A comprehensive benefits package can make employees feel appreciated and provide the support that employees need to care for their health, family and financial future.
Employee wellness has remained in the spotlight over the last few years, especially since the COVID-19 pandemic. More so than ever before, employees require a variety of benefits that help them stay productive, maintain morale and retain the emotional confidence they need to do their best in and out of the workplace. In turn, confident employees help to keep the business running smoothly.
Attracting Top Talent During Economic Uncertainty
Companies are facing new challenges when attempting to attract top talent in an unstable economy. Inflation has reached all-time highs, resulting in raising interest rates, and much of the U.S. is still recovering from the dramatic shifts brought on by the pandemic. In turn, many employees are facing increased levels of stress and burnout.
Approximately 22 million people quit their job in the U.S. in 2022, according to Zippia. To combat high turnover rates, many employers are revamping their retention strategies to determine the best ways to attract and retain talent.
It is important for companies to understand what motivates job seekers. The current economic climate has many talented individuals entering the market in search of better opportunities. Recruiting fresh talent is paramount, and an enticing salary and benefits package must be provided to draw them in.
The Most Important Employee Benefits to Have During a Recession
While having an attractive employee benefits plan during a recession is important, not all benefits offer the same value. It is critical to choose benefits that employees appreciate while also being cost-efficient and necessary.
Some considerations for employers include if the benefits allow employees to feel stable during times of economic uncertainty and if the benefits offered will help employees achieve their life goals, such as saving for their children’s college, paying off debt or retiring comfortably.
Employee benefits should also provide for a proper employee work/life balance. While all employees want to maintain financial stability, modern employees also want the time and energy to enjoy life outside of work. Keep this in mind when choosing benefits.
Some of the most important employee benefits to offer during a recession include:
Health and Wellness Benefits
Many employees consider health and wellness benefits to be of the utmost importance. According to an Employee Benefit Research Institute (EBRI) Workplace Wellness Survey, 63 percent of respondents said that they were very satisfied or extremely satisfied with their health plan. Just over 60 percent of respondents said that they were content with their health benefit offerings and would not trade benefits for higher wages.
Some of the top health and wellness benefits that employees look for include:
- Medical Insurance: Adding healthcare coverage encourages new hires, boosts employee engagement, reduces absenteeism and increases retention.
- Mental Health Insurance: Many adults today experience high levels of stress. Companies that offer mental health insurance often see a return on their investment.
- Dental and Vision: Both dental and vision insurance can help raise employee health and morale.
- Health Savings Accounts: An HSA enables employees to save pre-tax earnings to cover out-of-pocket medical expenses.
Other health and wellness benefits to consider adding to your employee benefits package include wellness apps, local gym memberships or discounts, telemedicine services, reduced prescription drug costs and resilience training.
Financial Benefits
Employees want to feel financially stable, especially in a world where costs are rising at a concerning rate. To obtain this stability, many employees are on the lookout for jobs that offer financial benefits over non-financial benefits like vacation time or free snacks in the break room.
Some financial benefits to consider include:
- Financial Wellness Program: This type of program can help employees learn basic financial concepts.
- Integrated Savings Accounts: Also referred to as sidecar savings accounts, these are financial accounts that grow via payroll deductions.
- Short-Term Employee Loans: A short-term employee loan can help employees pay for important expenses in the event of an emergency.
- Student Loan Repayment Assistance: This benefit can help employees pay off their student loans faster.
Moreover, invaluable financial advantages can be taken advantage of during a recession, like savings match accounts, child care help and discounts from local businesses.
Work/Life Benefits
Maintaining a healthy work/life balance should be a priority for all businesses. Employees that have a good work/life balance are often more focused, productive, healthier and less likely to experience burnout.
Some work/life balance benefits to add to an employee benefits package include:
Paid Time Off: Many companies now offer their employees unlimited PTO that goes beyond traditional sick days and paid vacation.- Remote Options: Following the pandemic, it was revealed that many employees would prefer to work from home, at least part-time.
- Flex Hours: Many employees want the ability to choose when they work. A flex schedule gives workers more freedom over their work schedules.
- Family Leave: When important family events occur, employees want to know that they can be there for their families without consequences.
Other work/life benefits that can help businesses develop an attractive benefits package include paid volunteer hours, extra holiday time off, matching gift programs for charitable contributions and a home office stipend.
Retirement Savings
COVID-19, along with a looming recession, has many aging adults concerned about their financial future. According to The Motley Fool, 40 percent of Americans are concerned that they will not be able to retire due to financial setbacks related to the pandemic.
Retirement savings benefits provide employees with the opportunity to build up their retirement savings faster than would be possible on their own. This is especially true for employees that work for companies that match their contributions. Employers can make it easy for employees to save for retirement by implementing automatic payroll deductions and these deductions can reduce taxable income.
Leadership Development
From now until 2023, approximately 10,000 Baby Boomers will reach retirement age each day, according to SeniorLiving.org. This means that companies must work harder to attract and retain talent to replace these workers. Leadership development is an essential benefit designed to help existing employees become leaders that will benefit the company in the long term.
Honing and developing good leadership is a critical component of any leader’s job. Over time, employees can develop the skills needed to perform optimal roles in leadership positions. Leadership coaching is a tailored approach to helping employees reach these important goals by offering one-on-one guidance and support.
Prepping Your Benefits for a Recession
In today’s shaky economy, many employers are focused on developing strategies to mitigate their financial risks to combat the effects of a potential recession. There are several ways that employers can prepare for a recession, such as by offering pre-tax benefits.
Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs) and similar pre-tax benefits allow employees to use a portion of their pre-tax income to pay for health-related expenses. Employers can begin preparing for a recession by reassessing their current benefits, as well as other methods.
Some employees may not be taking advantage of existing benefits or may be unaware of what benefits are available to them. Also, consider offering benefits that employees are looking for, such as more wellness benefits like employee assistance programs, gym memberships and telehealth services.
Protect Your Business with an Employee Benefits Plan by New City
With a possible recession in the near future, it is more important than ever before for businesses to invest in employee benefits. At New City Insurance, we help businesses plan for the unknown by helping them build strong and well-structured employee benefits plans that cost half of the national average without limiting access to benefits or networks. To learn more about New City’s benefits consulting services, call New City at 888.210.2765 or request a consultation.