Benefits Pay Dividends for Employers, Research Shows

By SHRM Online staff May 17, 2012

Amid the challenges of a decade that began with the 9/11 attacks and closed with economic recession, "best" companies in the U.S. maintained or increased their employee benefits, according to a Harvard Business Review white paper, Commitment to the Future: 10 Years of The Principal 10 Best Companies, sponsored by the Principal Financial Group. Successful companies' commitment to their employees' well-being through generous benefits was rewarded with increased employee engagement, stronger customer relationships and deeper organizational expertise, the researchers found.

The Principal Financial Group's annual 10 Best Companies program has honored growing organizations for their commitment to employee financial security. Throughout the 10 years ending March 31, 2012, despite economic uncertainty, 98 of these 100 companies remained in business. The companies were publicly owned and privately held organizations and included service businesses and manufacturers ranging in size from 15 to nearly 1,000 employees.

The winning companies "realize an investment in their employees constitutes an investment in their own future well-being," said Luke Vandermillen, vice president at the Principal Financial Group. "The paper delivers more than best practices; it offers a way of thinking about employees and benefits that has consistently shown value time and again, even in some unexpected places like workplace safety."

Benefits Pay Off

The majority of 10 Best winners said investments in employees save the company money in the long run. Three-quarters said employee benefits programs had a significant impact on retention and recruitment. Retention translates to lower turnover costs, and 10 Best winners had, on average, voluntary turnover rates less than half of industry averages.

In addition, according to the companies, exemplary benefit programs lead to stronger employee morale, greater competitive advantage and excellent safety records. For example, Placid Refining Co., a Dallas-based oil and gas discovery business that manufactures products at extremely high temperatures, reported that they have had no serious on-the-job injuries, which they attribute to a policy of retraining skilled employees who have worked for the company for many years.

"As one HR director puts it, you can't have customer satisfaction without employee satisfaction. A good benefits program's connection to employee security, motivation and performance couldn't be more clear," said Angelia Herrin, research and special projects editor for Harvard Business Review.

The Decade Ahead

Respondents say the biggest issue on the horizon is managing benefits costs coupled with growing concern over health care reform. Harvard Business Review identified several key ideas, including:

Rising health care costs were noted as a universal concern, but a large majority of companies surveyed have added wellness programs as a way to help control those costs and improve employees' lives.

Financial professionals can help employees sift through options and identify opportunities to maximize benefit value. Most of the 10 Best companies provide their employees with one-on-one access to financial professionals.

Virtually all respondents reported placing a great deal of emphasis on employee communications including the value of benefits. As Karen Rhodes, director for Texarkana, Texas-based Red River Credit Union, put it, "a benefit not understood is not appreciated." ​

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