Best Employee Benefits Packages: What You Need to Know
How do smaller employers compete with large companies that seem to be able to offer high salaries and a wide variety of benefits? All companies, no matter how big or small should design an employee benefits package that will appeal to their employee population and target employment market. There are endless options when it comes to designing an employment package. Some more common benefits include paid time off, health insurance, dental insurance, retirement plans, tuition reimbursement, and childcare benefits. However, a small business benefits package can include a mix of perks that the company will pay for as well as some that are little-to-no cost to the employer.
Why financial benefits are so important for employees
A company benefits package is important to employees because they offer valuable services that are often expensive for individuals to purchase on their own but can offer cost savings when purchased as a group. In addition, many employers receive tax breaks for some employee benefits packages, such as health care and retirement programs. In the end, both employer and employee can realize cost savings with a company benefits package while employers remain competitive to recruit and retain talent.
A single benefit on its own may not be valued by all employees but the total package of benefits offered should support your company’s mission and goals. Some benefits are “must-haves” – for example, companies should consider a health care plan and paid time off as part of their offerings, but the actual plan should support your larger business strategy.
Employee benefits basics
A company benefits package includes any non-cash compensation. Whereas cash compensation typically includes base salary, bonuses, commissions, and any other form of cash that an employee may receive, “total rewards” includes all other perks from the company. This includes benefits, work-life balance programs (including time off), recognition, performance management, and talent development. We will focus on the benefits portion of the equation. Companies are increasingly finding it challenging to recruit and retain talent, so a benefits package is necessary to remain competitive.
How to create the best employee benefits package
Which benefits are most important to employees? There’s no best answer to this question. It’s critical to think about what’s important to your employee population and target employment market when designing benefits strategies. If a significant portion of your employee population has children, childcare benefits and flexibility to work from home when someone’s sick might be a good investment. If you have a younger population with college debt, help with paying student loans may be appreciated more than retirement plans, at least until student loans are paid off.
The company budget is another important consideration. You have a fixed number of dollars that you can spend on employees and you want to make those dollars go as far as possible. Some benefits, such as health plans, have tax advantages for employers. The Bureau of Labor Statistics tracks how much employers pay for different benefits, which can help you budget. VantagePoint helps employers build, administer, and simplify employee benefits packages.
Employee benefits that are worth the investment
There are a few common types of benefits that employees like to see as part of their employment package. This general list is not exhaustive, but it is a starting point for companies that want to start building a comprehensive benefits package.
Health care
Whether you offer a group health insurance or reimbursement for some healthcare costs, health insurance is often one of the first benefits that candidates will ask about. Some examples of health care benefits that help balance cost to the employer with benefits available to employees include health savings accounts, flexible savings accounts, and a qualified small employer reimbursement arrangement.
Retirement
Planning for the future may not be at the top of every candidate’s mind, but retirement plans are becoming a larger part of a small business benefits package. California recently passed legislation that will require all employers with at least five employees to provide a retirement plan or join the state plan. A retirement plan, such as a 401(k), helps employees save for retirement by automatically depositing a portion of the employee’s paycheck to the retirement account. When this is done through payroll deductions, employees will see a tax benefit because the retirement savings come from pre-tax income.
Flexibility
This is a benefits strategy that does not result in a large cost outlay from the employer. Flexibility can include work from home arrangements, flexible start and end times, or other reasonable requests from employees. Companies can be creative with the level of flexibility they offer. Some companies have specific days of the week where they require employees to come to the office for meetings, while others allow an employee to work one day per week from home. This benefit should be tailored to the unique needs of each department and job within the company. While your accounting department may be able to do a lot of work from home, your receptionist that greets guests must be in the office to do their job.
Wellness programs
Employees who are healthy are better workers. Wellness programs include things like gym memberships, smoking cessation programs, weight loss programs, and stress management offerings. You can also organize a group walk at lunch or fitness challenges to encourage employees to think about their health.
Tuition reimbursement
Employee development is another important perk that is part of a benefits strategy. This also benefits the company by having employees who are trained in newer tools and techniques. This might include paying for classes, offering employees access to online databases where they can find information that they want to self-study (for example, Lynda is offered by LinkedIn), and conferences. The company may want to set a budget for every employee or you can choose from top talent and invest in their development.
Benefit strategies for small businesses
As a small business, the first step is to look at the numbers. This should include everything that is a benefit to employees. While workers’ compensation is a legal requirement, it is a cost to the company and a benefit to those who require it when injured on the job. Accounting for all costs associated with maintaining an employee on payroll will show you the true investment you make as a company in employees. This will help you determine the cost of turnover when someone leaves, which may help your assessment of the cost of benefits.
The next step is to determine which benefits as “must-haves” for your employee population. This should be the most important 1-3 benefits that you need to offer in order to remain competitive when it comes to attracting and retaining talent. From there, you can begin to add low- and no-cost benefits to your offering. For example, do you allow dogs at work (no cost!) or do you offer a monthly fitness reimbursement? These small perks add up to many employees.
In conclusion, benefits form part of your overall HR strategy in order to attract and retain talent. At the same time, the cost associated with employees is a significant investment for the company and you want to ensure your dollars are spent in the areas where it will provide a return on investment. For human resources, the cost savings are often realized through a better workforce and lower turnover. An employee benefits package helps support this strategy.
If you want to redesign your employees’ benefits package so as to stay competitive and retain talents or if you are a small business and don’t know how to start with your benefits strategies, reach out to Vantage Point’s experienced consultants. They will offer you valuable advice, comprehensive benefits packages ideas and continuous support.
For more information please contact Mike Moncada: 516.599.2120 ext. 114 or mike@vantagepointbenefit.com.
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