The benefits of employee benefits
Cash is not enough today to recruit and retain top talent for your business. Providing an attractive compensation plan which includes an employee benefit plan and group retirement plan is just as important.
While the costs can be exorbitant and the choices overwhelming, you can and should find ways to build a benefits program that works for your company. Here's help.
Find a trusted advisor
It’s true that as an entrepreneur or manager, you can handle the process of obtaining pricing on an employee benefit plan. The products are somewhat simple and uniform if approached from a product purchase point of view. But as with any major investment for your organizations, strategy matters. Ensuring compliance with changing legislative pressures, continued downloading by government, increasing direct to consumer advertising, and swelling insurance company profits can leave organizations exposed to dramatic inflationary pressures. A trusted advisor can help navigate the product options, and design a solution to meet your current and future needs.
Find out what your employees want
It's critical to recognize just how important a competitive benefits package can be in recruiting the best staff possible. Gone are the days when salary in and of itself was lure enough. Competitive organizations, regardless of size, are able to attract your employees away – especially if you don’t provide the fundamental building blocks of compensation (salary, vacation, benefits, and reward systems). Benefits have become mandatory to compete for today’s workforce.
The next step in providing a winning benefits program is to find out what your group is looking for. It's possible that subsidized or free parking could be more important to them than life insurance.
Survey your employees; find out what they want, and what they value. Survey the marketplace, your nearest competitors and find out what they are offering, how will they try and lure your employees away. Source trade association data, what are the norms for your industry?
The two essentials for every plan
While you might be faced with a variety of requests, experts say that there are two essentials for every plan: medical coverage and a retirement plan. Other coverage such as dental, disability and life insurance often are considered extras.
Most people want to know that they are covered in case of serious illness or injury. Hospital room costs and prescription drug expenses can generate significant strain on personal budgets. Also, without financial assistance, preventative care may go unmanaged which can lead to more significant employer issues such as absenteeism, presenteeism, reduced productivity, and disruptive behavior.
Meanwhile, retirement plans offer an opportunity to hang onto valued employees. You should offer to match or contribute some additional portion to what your employees put in, with the stipulation that the money will mature over a certain period of time. The longer that people stay, the more likely they are to stay.
Who pays for all of this?
One way or another, someone has to foot the bill for your employee benefits. However, it doesn't have to be you who picks up the entire check. You can past part or all of the cost to your employees. It is important to note that the costs for some benefits are pooled with the insurer’s block of business, but other benefits (like Medical and Dental) are priced as a function of your claims plus the administration fees and risk charge of the insurer.
Here are three simple options:
High deductible plan. Offer to help the employees with medical cost up to a certain dollar amount, such a $2,000. Employees then pay for insurance to cover the costs above the deductible. This approach will cut down on the administration expenses and reduce the insurance “risk” cost of the plan. This method will also eliminate the variability of benefit cost for you as the employer.
Cafeteria-style benefits. Here, the company provides a core plan which is completely employer funded, employees they pay for the “voluntary” benefits that they want on a pretax basis.
Split the cost. Another effective strategy is sharing the cost of essentials -- such as medical care and retirement -- between the company and its employees. Sharing can include premiums, deductibles, annual maximums and co-pays. Extra coverage such as disability and life insurance are available at the employee's expense.
Communication matters, too
Once you've arrived at a plan that suits both you and your employees, let your people know about it. People need to know that you're spending money on these things. They need to realize that and know that it is a benefit for them even if they choose not to participate in it. By using tools like benefit statements, and annual compensation meetings, the path of communication will stay open and the relative value of the investment will stay in-tact.
