How important is it for employers to offer an attractive employee benefits program in today’s business climate? This important:
According to a survey conducted by The Harris Poll for the American Institute of CPAs (AICPA) conducted in 2018, 80% of the people who were polled said that they would choose a job with benefits over an identical job that had a 30% higher salary but no benefits.
It has become crystal clear that companies that don’t offer advanced and well-designed benefits plans to their staff members are fighting an uphill battle to attract top talent and retain their best employees.
Sure, there are some employee benefits that are mandated by law, but simply offering the benefits you’re legally required to offer is not going to cut it anymore. So, what are employees looking for from a benefits program? What benefits can your company offer to stand out and attract top-tier employees?
In the broadest possible terms of classification, companies can offer a combination of monetary and non-monetary benefits. Monetary ones are easy and are usually offered as a series of bonuses and monetary incentives that reward employees for jobs well done.
However, getting the non-monetary benefits right will be the bread and butter of your employee benefits program. This entails picking the right services to offer and properly recognizing what benefits your employees would appreciate and benefit from most.
This is why designing a proper employee benefits program is not easy. But the reality is that investing in such a program is absolutely vital, as it can represent and define your organizational foundation and company values.
Let’s take a look at the steps any business needs to take when striving to put together the best possible benefits program for its employees.
Developing a comprehensive employee benefits plan that aligns with your company’s budget and goals can be a challenging process. However, with careful planning and research, you can create a benefits package that attracts and retains top talent while staying within your financial constraints.
Here are eight key steps to follow when designing an effective employee benefits plan:
1. Determine Your Goals
Before evaluating specific benefits options, take time to identify your objectives for the plan. Common goals include
- Attracting skilled candidates in a competitive hiring market
- Increasing employee retention rates
- Improving employee satisfaction and engagement
- Supporting workforce health and wellness
- Controlling rising benefits costs
Without clear goals, it will be difficult to prioritize benefits, allocate resources, and measure the success of your plan. Make sure to get input from key stakeholders like HR, finance, and executives when defining your aims.
2. Determine Your Budget
Conduct a thorough analysis to estimate the budget you have available for benefits spending over the next 1-3 years. Look at past benefits expenses, projected costs, and growth assumptions. Benchmark competitor benefits packages and average industry spending as well.
This will give you a realistic sense of what is financially feasible Remember, you can always start with a core offering and phase in more benefits over time Prioritizing high-impact, affordable benefits first allows room to expand your offerings down the road.
3. Ask Employees for Input
Your people are your best resource when researching benefit options. Survey employees to find out their needs, preferences, and pain points with current benefits. This direct feedback will reveal benefits gaps you may not have considered otherwise.
Key questions to ask include
- What benefits do you currently use and value most?
- What benefits would you like to see added or improved?
- What benefits do you find unnecessary?
- How satisfied are you with our current benefits package?
Anonymous surveys generally elicit more honest input. You can also conduct focus groups or meetings with a representative sample of employees.
4. Conduct Additional Needs Assessments
Supplement employee survey data with a needs assessment based on workforce demographics like age, gender, job levels, and family status. The needs of a younger, single population will vary greatly from more tenured staff with families.
Evaluate benefits usage statistics to identify underutilized offerings. For example, an on-site gym receiving low enrollment signals an opportunity to add more relevant wellness benefits instead.
Assessing needs from multiple angles ensures your benefits plan aligns with both employee priorities and your workforce makeup.
5. Consider Legal Requirements
Stay up-to-date on legal and regulatory compliance issues impacting the benefits you can or must provide. Key considerations include:
- ACA requirements: Applicable large employers must offer affordable, minimum value coverage.
- COBRA: Continue health insurance for former employees.
- HIPAA: Protect individually identifiable health information.
- ERISA: Govern reporting, disclosure, and fiduciary duties for benefits plans.
- FMLA: Provide job-protected, unpaid leave for medical and family reasons.
Failure to meet requirements can result in significant penalties and fines. Consulting with legal counsel and HR advisors is recommended when reviewing obligations.
6. Design the Benefits Plan
With research and planning completed, it’s time to make benefits design decisions. Focus first on required and highly desired offerings before considering “nice-to-have” perks.
Some key considerations include:
Health Insurance – Offer a range of medical plan options at different price points. Include dental, vision, mental health, prescription drugs, and employee assistance programs.
Retirement Plans – Provide matching 401(k) contributions. Add profit-sharing for higher level staff.
Leave – Include paid time off, sick days, parental leave, and leaves of absence. Review FMLA compliance.
Financial – Offer competitive pay, bonuses, life insurance, disability insurance, tuition assistance, and commuter benefits.
Lifestyle – Wellness programs, gym discounts, employee events, and work-life balance policies can boost engagement.
Prioritize options with the highest perceived value that fit your budget. Phase in other options over time as finances allow.
7. Develop a Communication Strategy
A stellar benefits package only succeeds if employees understand and utilize it. Develop a multi-faceted communications plan to increase awareness and engagement.
Key components can include:
- Benefits brochures with FAQs
- Emails, postings, and flyers announcing changes
- Presentations and Q&As at open enrollment
- Individual consultations with HR
- Benefits portal with contact information
Ongoing communication through multiple forums ensures benefits stay top of mind all year long.
8. Help Employees Select the Best Options
Open enrollment is employees’ once-a-year opportunity to review selections and make changes. Ensure they choose the plans most advantageous for their circumstance.
Provide:
- Side-by-side comparisons of all options
- Plan details like copays, deductibles, premium splits
- Calculators to estimate out-of-pocket costs
- Guidance on weighing tradeoffs like premiums vs. deductibles
Following up with new hires at 30/60/90 days to confirm selections and answer any questions. Benefits may seem overwhelming initially but become easier to understand over time.
Following this structured approach when developing or refreshing your employee benefits plan will help optimize value for employees and your organization. The most successful packages balance great design, thorough communication, optimal utilization, and cost-effective administration. Make benefits a win-win by focusing on your goals, budget, and people every step of the way.
Know What You Want to Accomplish
The better you are at defining the objectives of your benefits program, the easier it will be for your company to design and install it. But this doesn’t mean that you need to know exactly what benefits you are going to be offering at the onset of the process.
It means that you should take steps to understand what you want to accomplish with your employee benefits program, both in terms of how it will benefit the company and your employees.
Of course, you’ll never know what benefits your employees truly want unless you ask them outright, which is why your employees need to be included in the process from the start.
To determine what benefits should be part of your program, go straight to the source and ask your employees. Getting employee feedback, whether through surveys or one-on-one talks with staff, will help you narrow down the list of benefits that your company should target.
If you already have an employee benefits plan that you would like to improve on or revamp completely, get the employees involved in this process as well. Let them tell you what they think of the current plan and which benefits they are or aren’t using. Contact your insurer if you offer medical plans and health benefits to get an idea of how much and to what extent these types of benefits are utilized.
Surveying employees and getting them involved in the process also helps your company show that you truly care about their opinions and want to provide them with the benefits they truly want.
Once you’ve surveyed your staff, continue researching every angle that could provide clues to help you create the best possible plan.
Take a look at recent trends and market research and what they suggest as popular benefits. Identify what benefits your competition is offering; use anything that can help point you in the right direction.
Know Your Budget and Financial Situation
Unless you’re a Fortune 500 company or a unicorn startup with money to burn, you’ll probably not be able to afford every employee benefit you and your team want.
That’s why it’s important to know right away what type of budget is available for benefits. Creating and analyzing an employee benefits budget is not something that anyone can do. Companies should absolutely hire an accountant or other financial professional to help with this process.
It’s important to remember that many of the most popular and prominent benefits, such as health insurance, should be expected to constantly increase in cost, even if your employee count isn’t growing. That’s why hiring someone, whether in-house or outsourced, to help navigate the financial landscape and provide assistance to your company with these very involved and complex budgeting projects is prudent.
If you are a small company, it’s always better to spend what you can afford instead of trying to compete with benefits programs that larger companies offer and ending up in financial trouble.
At this point, you should know what benefits your employees want most and be aware of your budget. With this information at your disposal, you should be able to make the right decisions once the process of designing your employee benefits program begins.
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How do I design an effective employee benefits plan?
The first step to designing an effective employee benefits plan is considering your company objectives and specific goals for the program. Identifying your priorities and hopes can help you determine which benefits it makes the most sense for your organization to offer. Here are some important factors to consider when defining your goals:
What is an employee benefits plan?
Employee benefits plans outline all the welfare or pension options available to employees. Because benefits plans can vary so greatly between employers, plans’ inclusions often depend on a company’s budget, goals and employee needs. Related: A Definitive Guide to Employee Benefits Packages Why is an employee benefits plan important?
How do you plan a benefits package?
2. Identify your goals Think about your purpose for offering the benefits package and what you want to get out of it. For your employees, your goals might be to ensure they can access the health care they need while helping them maintain their financial health.
How do you create an effective employee benefits package?
Your employee benefits package will evolve to suit the changing needs of your business and workers. Here are some best practices to help you create an effective benefits plan. Making employee benefits inclusive involves designing and offering a benefits package that caters to the diverse needs of all employees.
