Managing Your Company's Benefits Program
Finding the right mix of the 'everyday' benefits for your employees.
Last issue, I focused on the importance of providing retirementplan benefits to your employees. One aspect of said benefits is to help tether your valuable employees to the organization. Retirement plans, however, are only a part of the benefits equation. Equally critical is the need to provide the "every day life" benefits, which may include: medical; dental; vision; short-term and long-term disability coverage; accidental death and dismemberment insurance; and life insurance. In addition, specific, in-depth benefits such as maternity and cancer coverage also are available (these are typically offered by third-party groups working directly with your employees).
The best mix
When deciding which benefits to offer, the possibilities are endless (as are the phone solicitations once you begin seeking information). I suggest taking the following steps to help you best choose the benefits mix that will provide your employees with a good package without putting a stake into the heart of your budget.
First, be sure that you solicit input from key employees. These employees are smart enough to know that you won't be able to offer anything and everything without crippling the company financially, and their input will provide you some solid insight. You may find that a particular benefit you had not even considered is actually so important to your employees that they will appreciate you offering it"?even at the exclusive cost of the employees.
Second, you should align yourself with a good third-party benefits broker. Choosing the right benefits broker for your company is one of the most critical things you can do when establishing or changing your benefits program. If the broker does its job, it will make your life much easier. Because benefits brokers are paid by commissions from the various insurance companies they represent, however, you need to be careful when deciding which company to hire. A few points to consider:
- Take your time evaluating companies that will suit your needs, and look at multiple companies"?not the first one that comes across your desk. After all, you'll work closely with these people in making benefits decisions that will affect your company for a long time; you need to trust that they will recommend decisions beneficial for you and your employees, not themselves. My suggestion is to interview them as thoroughly as you would any potential new employee.
- Choose a benefits company that will be objective when it comes to recommending insurance companies for your plan. It's important to closely evaluate which company you will be affiliated with"?it should have the resources to service you fully for multiple carriers.
Another difficult decision regarding your benefits plan deals with the level of participation that you, as the employer, will provide. It certainly isn't a news flash that insurance costs"?particularly health care and worker's compensation"?have increased in the past seven or eight years at an unbelievable pace. These expenses have become a major line item on corporate America's financial statement, and they have the ability to paralyze a company if they aren't well-managed.
While it's unrealistic to absorb 100% of your employees' healthcare premiums, it is equally unrealistic that your employees carry this burden all by themselves. If healthcare becomes too costly to your employees, you will find some of your employees will leave while others will elect to go without coverage. Both actions will prove to be damaging to your company. Your goal should be to maintain the best balance possible that will be fair to both parties.
One option, by the way, is to offer some of the less-expensive benefits free to your employees. For example, many employees "?particularly your younger (more "invincible") staff"?may not elect to pay for term life insurance. But your benefits broker may be able to find you a relatively inexpensive term-life insurance plan that provides $10,000 to $20,000 in coverage that you can afford to pay for. This type of perk can sweeten the pot a little for your employees without breaking the bank.
Each business needs to evaluate what's important for its own needs in terms of the type of benefits coverage, as well as the level of participation between the employee and the employer. I recognize that the company-benefits program is never a favorite issue to tackle. But ignoring it can be disastrous. Whether you address it semi-annually or annually, you must spend the time needed to determine the best possible plan for you and your employees.
Marty McGhie (firstname.lastname@example.org) is VP finance/ operations of Ferrari Color, a digital-imaging center with Salt Lake City, San Francisco, and Sacramento locations.