One common mistake made by many small — to midsize — business owners when considering the right benefit plans to offer their employees is only looking at them in terms of what they cost. The more strategic way to view them is as an investment. Because good employee benefits packages will pay substantial returns for the long-term, even more so than salaries.
Why? Employee benefits packages show employees not only that employers appreciate them, but that they are willing to invest in and protect their future. And in a competitive work environment, what could be more important?
Employee benefits packages vary from company to company, and range anywhere from a bare minimum of offerings to a full range. In terms of prioritizing what can be offered, here is a good way to view which benefits are the most essential to attracting and retaining the right people:
• Health insurance
• Paid time off
• 401(k)/Retirement plan
• Long-term disability insurance
• Group life insurance
To be successful and remain competitive with similar companies in the market, businesses do not need to offer all five items on that menu. However, they would be wise to offer at least a few of them; otherwise they could find themselves at a disadvantage when it comes to truly attracting the right people to grow the business and help it thrive into the future. It is also advisable to look at other companies in the industry, especially larger companies which perhaps have the bandwidth to offer more robust benefit plans, so a company can benchmark when they may need to offer in order to compete.
Businesses are in competition for the best employees every day and they really have two basic choices in order to land the employees they need — the first is they can simply offer a higher salary, and the second is they can offer a better benefits package.
The latter option is the better one, because it ties the employer to the company for a longer period of time — studies have shown that good benefits packages actually matter more to the best employees than their salary. The most important thing is for an employee to feel appreciated and if good benefits become the main attraction for an employee, conversely the lack of a competitive benefits package will ultimately lead them to leave for elsewhere.
As the single most important benefit an employer can offer an employee, health insurance obviously becomes the centerpiece of any package. It’s important to remember that offering health insurance to employees does not mean the employer has to pay the total cost; the cost can be split with the employee based on age, family status and other considerations, and this can be done in a way that works best for each individual employee. There are numerous ways to structure the cost, but what’s most important is being able to offer something in the way of health insurance.
The bottom line is a complete benefits package offered to employees could spell the difference between landing the highest possible quality employees or losing them to a business that offers something better. And the best way to manage such a competitive landscape is to view this not as just one more cost, but as investment in the employee and in the company’s future.
Joel Johnson is a certified financial planner and the managing partner at Johnson Brunetti (https://johnsonbrunetti.com), a Connecticut retirement planning firm with offices in Fairfield and Newtown. Investment advisory services offered by JB Capital LLC.