How to Use Benefits to Attract and Retain Top Talent

The cost of losing a good employee is staggering. Studies consistently show that replacing an employee costs 50–200% of their annual salary when you factor in recruiting, onboarding, training, and lost productivity.

Benefits are one of the most powerful — and underutilized — tools for reducing turnover. Here's how to use them strategically.

Why Benefits Matter More Than Salary Alone

A 2025 SHRM survey found that 60% of employees said benefits were a major factor in their decision to stay with or leave an employer. For employees with families, health insurance and retirement benefits often outweigh a modest salary difference.

The math is simple: a $3,000 salary increase costs you $3,000 plus payroll taxes. A $3,000 improvement in your benefits package — through better health coverage, a stronger 401(k) match, or added dental/vision — often delivers more perceived value to the employee at a similar or lower cost to you.

The Benefits Employees Value Most

1. Health Insurance (Non-Negotiable)

Health insurance is the most valued benefit across virtually every demographic. Employees with families especially prioritize comprehensive health coverage. If your health plan has high deductibles, limited networks, or poor prescription coverage, it's a retention liability.

2. Retirement Benefits

A 401(k) with employer match signals long-term investment in your employees. Even a modest 3% match is highly valued — and it's tax-deductible for you.

3. Paid Time Off

Generous PTO policies are increasingly important, especially for younger workers. Unlimited PTO policies have mixed results; structured PTO with clear accrual and rollover policies tend to work better.

4. Disability Insurance

Employees rarely think about disability insurance until they need it — but when they do, they're deeply grateful it's there. Employer-paid short and long-term disability is a relatively low-cost benefit with high perceived value.

5. Mental Health Benefits

Mental health coverage has moved from "nice to have" to "expected." Ensure your health plan includes robust mental health benefits, and consider adding an Employee Assistance Program (EAP) if you haven't already.

6. Flexible Work Arrangements

While not a traditional "benefit," flexibility in where and when employees work has become one of the most valued aspects of employment. Where possible, build flexibility into your culture.

Benchmarking Your Benefits Package

Do you know how your benefits compare to other employers in your industry and region? If not, you may be losing candidates and employees without realizing it.

Your benefits broker should be able to provide benchmarking data that shows how your package compares on:

• Premium contribution levels (what % of the premium do you pay?)
• Plan richness (deductibles, copays, out-of-pocket maximums)
• Retirement match levels
• Ancillary benefits (dental, vision, life, disability)

If you're below market in key areas, that's a retention risk worth addressing.

Communicating Your Benefits Effectively

Many employers underinvest in communicating the value of their benefits. Employees who don't understand their benefits don't appreciate them.

Strategies to improve benefits communication:

• Total compensation statements: Show employees the full value of their compensation, including the employer's cost of benefits
• Annual benefits meetings: Walk employees through their options and any changes
• Year-round education: Don't limit benefits communication to open enrollment
• Manager training: Ensure managers can answer basic benefits questions

The ROI of Better Benefits

The return on investment from a strong benefits package is real:

• Reduced turnover: Even a 10% reduction in turnover can save a 50-person company $200,000+ annually
• Improved productivity: Employees who aren't worried about healthcare costs and financial security are more focused and productive
• Better recruiting: A strong benefits package expands your candidate pool and improves offer acceptance rates
• Tax efficiency: Many benefits are tax-deductible for employers and tax-advantaged for employees

Getting a Benefits Audit

If you haven't had an independent review of your benefits package in the last 2–3 years, now is a good time. An independent broker can assess your current coverage, benchmark it against the market, and identify opportunities to improve value while controlling costs.

Contact Anderson Financial Group for a complimentary benefits audit.

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Anderson Financial Group is an independent employee benefits advisor serving businesses nationwide.