Offering a benefits package to your employees gives them extra incentive to work hard and want to stay with your company. In some cases, it could help a small company make up for an inability to pay a market salary or an inability to provide regular raises. If you are thinking about offering your employees benefits, what should you consider before settling on a benefits package?
Will Your People Use the Benefits You Offer Them?
A benefits package is simply a waste of money if your people won't use them. For instance, you could open an employee gym and spend a lot of money on equipment and trainers, but you can't force people to work out or take an interest in taking exercise classes at the facility. You should take the time to ask your people what they want ahead of time in case what they really want is affordable insurance or contributions to their retirement plan.
In many cases, employees would be willing to have $5 taken out of their paychecks each week for the right to work out before or after work. Employee discounts to local theme parks, sporting events and other attractions may also interest your people. The bottom line is whatever you offer, your people should want or need or they won't feel like you care about them or are working in their best interests.
Who Will Have Access to Those Benefits?
Once you determine what type of benefits to offer, you have to consider who will be able to use those benefits. If you offer a 401k, you could restrict it to those over 21 and have worked for the company for at least a year. Other benefits could be offered on a tiered basis depending on years of service or what title an individual has within the company.
Remember that there are certain benefits that you might have to offer to all employees if you offer them to any employees. For instance, if you offer profit sharing, all eligible employees may be entitled to an automatic contribution each year. As a general rule, you should offer all workers roughly the same benefits to make them feel part of the family. However, you should be able to offer executives or other important people additional perks without others thinking that you are playing favorites.
Are There Better Benefits in Certain Locations?
Certain states have preferred companies to obtain benefits through for the purpose of saving employers (and employees) money. For example, someone looking for dental insurance in Texas is going to be offered different packages at a different value than someone living in another state.
Are These Benefits Easy Enough to Administer?
If you offer benefits, you have to make sure that they are easy enough to administer in a cost-effective and timely manner. It may be necessary to use software or outsource this work to a third-party service provider. In some cases, you may need to maintain paperwork or report the benefits given to employees to the government. You also have to make sure that only those who have met the criteria to get those benefits actually receive them.
This may be done by attaching benefit levels to the number of hours employees work each pay period. Many electronic time clocks will keep track of benefits earned based on hours worked as well as whether or not benefits have been redeemed. For instance, if a worker has taken a week of accrued vacation, the program will record that and issue a paycheck accordingly. An automated process ensures that everyone gets what they have earned, which keeps your workers happy.
Your people are the most important resource that your company has. Therefore, it is important to treat them properly at all times. This can be partially done by offering benefits that they want and will use on a regular basis as these benefits could be worth thousands of dollars per year. When combined with their cash compensation, employees can feel better that they are being compensated at a fair market rate.
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Robert Cordray is a freelance writer for Income.com and expert in business and finances. With over 20 years of business experience, Robert is now retired and hopes others can benefit from his writing.