By Iris Dorbian.
It’s a dilemma that has plagued many small business owners: Should they offer employees a benefits package? And, if so, what should they offer that would both meet the needs of employees without incurring undue financial liability on the business?
While some business owners have, in the wake of the recent recession, opted to either slash or cut benefits entirely, giving employees the responsibility of finding insurance courtesy of the Affordable Care Act, this could be a flawed strategy.
According to a recent survey conducted by the insurance company Aflac, 57 percent of workers said they would likely accept a job with lower pay but better benefits. This is a finding that reinforces the importance of small business owners offering employees a benefits program to stem workforce attrition.
Below are some tips to help build an employee benefits package that’s the right fit for your business.
Work with a benefits broker
Just as the title indicates, a benefits broker can help you design an employee benefits package that will not only be fair to your finances but to your employees’ needs as well. He or she can help you understand how much of an insurance premium you can afford to get the coverage you feel is right for your employees. They can also help you explain to your workers the value of the benefits you’re offering.
Karen LaCroix, founder and president of SuperiorHR, a Dallas-based human resources solutions provider for small to medium-sized companies, believes in the value of this advice. But she does note that there is “marked difference in the insurance products available to companies with fewer than 50 employees,” as opposed to larger firms.
However, if a small business wants to be competitive in the workplace and attract top-notch talent, it would be wise to develop a benefits package that rivals what its competitors are offering.
Identify all the pieces
Few would argue that health insurance is the most critical element of an employee benefits package.
“Health insurance provides a safety net that protects an individual or family from the high cost of a catastrophic health event,” says LaCroix.
She also suggests that small businesses consider including long-term disability coverage as a benefits option. “Again, this is protection from lost income should an employee be disabled for a long period of time,” notes LaCroix.
Mick Hewitt, CEO and co-founder of MasteryConnect, a five-year-old educational technology firm in Salt Lake City, says in his company’s sector—the tech startup culture—the typical benefits package is constantly in flux and evolving.
Because of this, he says, “When we put together our benefits, we looked at the extremely competitive tech talent hunt and decided that we couldn't afford to offer anything less than the best health care. So we opted to pay the entire family premium for our employees' health and dental care. We view it as an essential investment into recruitment and retention.
The less time and energy an employee has to spend worrying about health care, the more time and energy he or she can pour into innovating for our company.”
Solicit employee feedback
When building an employee benefits package, it’s a good idea to consult employees about what they would like included. In addition to health insurance, some workers might view wellness programs as critical to their needs.
Tom Giddens, executive vice president and director of sales at Aflac, works with many small businesses and champions this tip.
“Offering the right benefits package is a matter of understanding what today’s employees want and need,” he says. “To gain insight, employers can hold town hall meetings, create idea boxes where employees can submit their benefits-related requests or even conduct employee surveys. All are easy ways for employers to start benefits conversations with their workforces and ensure they offer the most appropriate, competitive and cost-effective packages for their businesses and workers.”
This tactic also gives workers more of a proactive and less passive role in customizing a benefits package conductive to their needs.
Decide whether you need to offer benefits
If you operate a business that relies on seasonal, part-time or even contractor help, you might not need to offer benefits. Be realistic with what you can—or cannot—afford.
For uninsured workers, the ACHA’s Health Insurance Marketplace, provides a range of options. Plus, depending on their income, workers might qualify for a subsidy that can reduce their monthly premiums, thus making insurance affordable and accessible within their means.
But small businesses might be subject to penalties if they opt out of offering full-time employees health insurance.
Hewitt of MasteryConnect, has 35 employees, and says small businesses need to carefully consider the repercussions of not offering employee benefits.
“Companies have to weigh the cost of those penalties versus the cost of providing insurance,” he says. “If you neglect to offer a good health plan, you've got problems beyond financial penalties: No one will want to work for you. In our case, the AHCA ended up being a non-issue because we would never consider eliminating those benefits.”