Companies that provide employees with generous benefits, including contributing more to retirement funds and absorbing health insurance hikes, are often financially healthier because of it.
A study released Wednesday found employers that offered substantial programs focused on the long-term financial health of their workers saw a host of business dividends as a result, everything from lower turnover to better customer service.
Harvard Business Review Analytic Services surveyed 58 of the 100 companies named to “The Principal 10 Best” list over the past decade and also conducted interviews with executives from 20 employers included on the list. Three quarters of those polled reported that benefits contributed to employee retention and 72 percent said they impacted employee loyalty.
The survey was commissioned by the Principal Financial Group, although companies studied did not necessarily use Principal services.
Despite the tough economy in recent years, firms in the study said they had maintained or increased their benefits packages, including raising retirement contributions in some cases. While some did have their employees pay more for health insurance benefits, the majority ate the increased costs.
Virtually all the firms agreed that they have a "strong sense of responsibility when it comes to providing benefits that protect the financial well-being" of employees and their families. When asked to identify the most significant thing they are doing to impact employees’ financial security, nine out of 10 respondents mentioned retirement programs and cited generous employer contributions.
The majority of companies surveyed also provided one-on-one financial help for employees for retirement planning and have added wellness programs.
As a result of the generous benefits, the employers surveyed said they saw a host of benefits, including:
- Enhanced recruitment
- Committed, engaged employees
- Excellent retention
- Deep organizational expertise
- Safe workplace practices
- Strong customer relationships
The question of whether these employers are more likely to have lucrative benefits because they’re successful, or they’re successful because they provide such perks, wasn’t answered by the study, said Luke Vandermillen, senior vice president of retirement & investor services with the Principal Financial Group. However, he said there is “a paternalistic feeling that cuts across these companies.”
The Harvard study shows great benefits are "not only good for employees, but good for those companies that provide well-rounded broad and deep benefit programs," he said.