Guideline for Creating an Employee Benefits Program - Part 1: Benefits That Cost

Wednesday, January 14 at 10:40 AM
Category: Personal Finance

Your total compensation plan must serve to attract, retain and motivate your employees. Wages and other forms of compensation that cost your company money will be the largest component. Together with the work environment, your benefit program may be the difference between having an effective, steady work force or a group of dissatisfied employees you are constantly replacing.

Why do employees choose to work for your business?
Financial rewards are an important part of the total benefits an employee receives. Yet, an employee’s decision to work for your company is probably based on additional factors, many of which you can control. In addition, there are some things that can increase employee satisfaction that do not cost additional money. The key is to make sure the total compensation an employee receives is adequate, known and appreciated.

Benefits that cost money
Along with wages, company contributions to a retirement plan and company-paid insurance are usually the most expensive parts of "total compensation." If your company has a qualified retirement plan, make sure the type you offer is economically effective. By that, make sure your employees are fully aware of it and recognize your contributions to it are part of what they get for working. You may also want to review other types of plans, such as SEPs, Simple IRAs and 401(k) options.

If you offer company-paid insurance plans, again make sure employees recognize you are paying for some or all of it. If insurance costs rise, you may want to consider having employees pay some portion of the cost. This can be effective if there are choices of health insurance plan options (deductibles and copays) that have varying costs.

Types of benefits to consider offering:

  • Retirement plans
  • Medical insurance
  • Disability and supplemental life insurance
  • Flexible spending accounts
  • Education reimbursement programs
  • Vacation and days-off policies

Summary
Employee benefits are important. Creating a program doesn’t have to be difficult or expensive. The trend is for more flexibility for employees to choose what is important to them and for employees to share in the total cost.  While most recruiting conversations center on salary levels, ongoing employee satisfaction is greatly influenced by what comes with the paycheck. 

Tags: Arvest Biz, Business Banking, Managing Employees
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