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Managing costs effectively is crucial for the sustainability and growth of any company. One significant expense that often comes under scrutiny is employee benefits and insurance premiums.

Employee benefits, especially health insurance, represent a substantial portion of overall compensation costs. With the continuous rise in healthcare expenses, many businesses find it increasingly difficult to bear the full burden of premiums. Employers face the challenging decision of whether to absorb these costs entirely or to pass a portion of them onto their employees.

Passing on a portion of benefit premiums to employees can be an approach to cost management. This strategy has advantages like cost control, in that sharing the cost allows employers to better control their financial outlays. This can free up capital for other critical business investments and help maintain the financial health of the company.

However, it is essential to approach this strategy with sensitivity. Sudden or significant increases in employee contributions can lead to job dissatisfaction and decreased morale, potentially impacting productivity. This can also pose a problem when it comes to recruitment and employee retention.

Employees are continuing to prioritize the benefits they would receive from a company over higher salaries because benefits provide a better overall experience and help increase their job satisfaction. In fact, according to a survey, 80% of employees prefer additional benefits over a pay increase.

A recent Blue Cross study found that 80% of employees consider a company’s health benefits when considering a new job offer. Additionally, 73% of employees with comprehensive health benefits would choose to stay with their current employer, even if offered a higher salary elsewhere. 

The absence of health benefits can pose risks for businesses too, with 76% of employees without health benefits stating they would leave their current job for one with a better health benefits plan. Businesses without health benefits are also susceptible to decreased employee productivity and falling behind competitors.

“To remain competitive in an evolving employment landscape, businesses must deliver value to retain team members,” said Tim Bishop, managing director at Blue Cross. “More than half of employees feel underappreciated in the workplace and nearly one-quarter are actively searching for other job opportunities. Providing benefits can help mitigate quiet quitting and keep employees satisfied and engaged at work.” 

As inflation and affordability concerns remain top of mind, Canadians are seeking stability and security.  Offering health benefits can foster a healthier, more engaged workforce and provide employees with the reassurance that their health and the health of their loved ones is covered.

Bottom line? Put your money where it’s valued. Yes, managing the rising costs of employee benefits is a complex task for employers, and passing on a portion of benefit premiums to employees can provide immediate financial relief, but it can ultimately cost you more in the long run.

As we know, it’s more cost effective to retain a current employee than it is to hire a new one. By providing a stable and reliable benefits to your employees, you’re attracting and retaining better talent, ultimately recouping more costs than you might think.