What’s the importance of employee benefits? What types of benefits do employees deserve?
Jason Fried and David Heinemeier Hansson recommend supplying your team with generous benefits to make them want to stay at your company for the long haul. Retaining your current employees by offering them benefits is more effective than replacing them.
Check out the reasons why it’s better to offer more benefits than replace employees.
Supply Generous Benefits
The first reason that explains the importance of employee benefits is that high employee turnover is expensive for your company. Second, every time you hire someone new, your team has to divert time and attention away from serving your customers to conduct interviews and get the new employees up to speed (a long, arduous process).
(Shortform note: Some business experts argue that the high cost of employee turnover is a worthwhile expense. In No Rules Rules, Reed Hastings reveals that Netflix encourages its managers to fire any employee they wouldn’t actively fight to keep. Their rationale is that if everyone in the company is an elite-level performer, it motivates the entire organization to maintain high standards. Netflix seeks to soften the blow of frequent firings by providing generous severance packages.)
Many companies entice employees with benefits that seem generous but that incentivize them to spend too much time at work instead of cultivating work-life balance. For example, they deck out the office with ping-pong tables or on-campus workout facilities that are free for employees to use but encourage them to stay at the workplace instead of going home.
In contrast, Fried and Hansson recommend offering employees generous benefits that genuinely support employees—especially their lives outside of work. For instance, Fried and Hansson pay for their employees to take three weeks of vacation every year and even cover the costs of travel and accommodation for their workers.
| Counterpoint: Excessive Employee Benefits Are Demotivating In contrast to Fried and Hansson, Daniel H. Pink argues in Drive that excessive employee benefits of any kind will demotivate workers. Pink asserts that any sources of external motivation (like employee benefits) reduce employees’ subjective sense of autonomy by making them feel like the work is something they have to do to get more rewards. This makes the job itself less appealing and consequently demotivates workers. Instead, Pink recommends fostering your employees’ internal motivation by giving them more autonomy at work—for instance, by letting them work on projects of their own devising for 20% of their time at work. However, this doesn’t mean that businesses should scrap all employee benefits. Pink explains that workers need a certain baseline of external incentives to feel motivated; otherwise, they’ll be demoralized by how unfair their situation is. For instance, employees in many industries expect a certain amount of paid vacation. They may not expect you to cover the costs of their trip as Fried and Hansson do, but if you demand that they never take time off, they’ll feel cheated and won’t build a sense of intrinsic motivation. |
