Private businesses walk a tight line between spending too much and not spending enough to find success. They quickly identify high employee turnover as a strain on the bottom line, but often they don’t consider spending more on employee benefits as a way to ultimately save money.
It might seem counterintuitive, but employers who invest in bonuses and benefits for their teams can see overall savings, even though the initial cost seems high.
Setting Aside a Pool of Money for Profit-Sharing Bonuses
Making as much profit as possible is important to business owners around the world,but having an unstable team in place can get in the way of profitability. The struggle is real when it comes to attracting and retaining the best talent for a home service business. So, the challenge becomes how to provide employeeswith an incentive to remain with your company, and at the same time continueyour growth. That is where sharing profits with your team is a benefit you canafford to offer.
Although giving away a portion is literally cutting into those profits, the long-term benefits to the bottom line make up for it. Some of ways you’ll save money by sharing include:
· Reduced turnover costs: One of the biggest expenses encountered by a business is hiring. Once you combine the cost of recruiting, onboarding and training, not to mention any sign-on bonus,replacing an experienced employee gets expensive fast. A profit-sharing program shows employees their value to the organization in an irrefutable way, which encourages them to stick around.
· Improved productivity: Tying a bonus from your profit-sharing pool to an employee’s total compensation serves as a great incentive for them to do their best job for the business. Setting performance-based goals against the opportunity to earn bonuses can significantly improve productivity and output.
· Achieving important goals: Attaining stretch goals that are outside your current team members’ job descriptions often involves hiring new employees or contractors, which can also add up. However,offering bonuses to your team for achieving these goals is an excellent way to engage your employees in new business or to incentivize the development of new skills.
Beyond the Monetary
There are other benefits not tied directly to profits that may cost money to implement but save money in the long run.
· Wellness programs: Benefits that provide wellness initiatives beyond health insurance can certainly be an expense, but the ROI on such aprogram is more valuable. According to a 2014 study by SHRM, companies that implement a comprehensive employee wellness program see an average ROI of $1.50 for every dollar spent.
· Financial saving options and familyassistance: Providing benefits to ease the everyday burdens of your employees is another investment worth making. Healthcare savings accounts,childcare credits or even pet sitting assistance can significantly lower the stress level of your team. People who aren’t stressed out are in general healthier with fewer medical issues, which improves their attendance and productivity and lowers overall healthcare costs for your company.
Spending Money to Save
It is never a mistake to invest in your employees when you’ve built a team who you know is able to move the business forward. Putting together comprehensive bonuses and benefits, beyond a base compensation, is going to cost you upfront, but you’re almost guaranteed sizeable savings and payoff in the long term.
To learn how investing in your employees to keep a high-performing team intact can build success for your business, check out the equity incentive programs from Reins.
