Your total compensation plan must serve to attract, retain and motivate your employees. While wages will be the largest component, other parts of the plan are important. Together with the work environment, your benefit program may be the difference between having an effective, steady work force or a group of dissatisfied employees that you are constantly replacing.
Financial rewards are an important part of the total benefits an employee receives. Yet, an employee's decision to work for your company is probably based on additional factors, many of which you can control. In addition, there are some things that can increase employee satisfaction and do not cost additional money. The key is to make sure the total compensation an employee receives is adequate, known and appreciated.
Along with wages, company contributions to a retirement plan and company-paid insurance are usually the most expensive parts of total compensation. If your company has a qualified retirement plan, make sure the type you offer is economically effective. In addition, make sure your employees are fully aware of the plan and recognize that your contributions to it are part of what they get for working. You may also want to review other types of plans, such as SEPs, SIMPLE IRAs and 401(k) options (see below).
If you offer company-paid insurance plans, again make sure employees recognize that you are paying for some or all of it. If insurance costs rise, you may want to consider having employees pay some portion of the cost. This can be effective if there are choices of health insurance plan options (deductibles and co-pays) that have varying costs.
The right retirement plan should take into account business needs as well as the employee concerns. Costs and ease of administration must also be carefully evaluated. Here are very brief descriptions of several choices. Be sure to investigate them thoroughly before deciding which one is right for your business.
Employee benefit consulting firms, trust departments or some investment firms usually have the expertise to help you evaluate your options. However, be sure to understand all the costs for administration and investing the funds.
If your company has many employees, a group medical plan may be attractive. Health insurance has become expensive, so you will want to consider your plan carefully, shop for the best plan and perhaps use a health insurance consultant. Your cost will be based on the size and makeup of your group. It will also change based on actual results. You may want to consider sharing the cost with your employees and providing different options for them to choose.
Many insurance companies offer relatively inexpensive plans that can be established so that employees share in the cost.
This type of program is relatively new and offers some tax advantages for employees with little or no additional costs for employers. Employees direct a portion of their wages into the accounts to provide for the reimbursement of dependent care or unreimbursed medical costs. Employees pay less in income tax, and the company pays less in payroll taxes.
These are "use it or lose it" arrangements. Employees decide how much to defer for each type of expense, and that decision is irrevocable. Many insurance companies offer these types of arrangements, and some will handle all the paperwork.
Many employees are interested in furthering their educations. If your business requires ongoing training in certain fields, it may be prudent to provide partial or total reimbursement for certain types of classes. The employees enhance their skills, and you have a better-trained employee group.
In addition to regular vacation days, employees occasionally need time off for personal reasons. Having a policy that employees understand and that provides some flexibility will be greatly appreciated.
The work environment and the personal satisfaction an employee gets are also important parts of the total compensation package. No one likes to spend time in an environment that is emotionally uncomfortable. There are also federal and state laws that protect workers from harassment and discrimination in the workplace.Here are some ideas that can help boost employee satisfaction:
Many employees are interested in accumulating funds and yet have a very difficult time actually saving money on a month-to-month basis. You may be able to help them without incurring additional costs. Most payroll services offer employees a direct-deposit option, as well as the ability to direct a portion of their wages into an account at their financial institutions. These conveniences make it easier for employees to handle their finances, and the company may save some of the costs of payroll processing
Employee benefits are important. Creating a sound program doesn't have to be difficult or expensive. The trend is for more flexibility for employees to choose what is important to them and for employees to share in the total cost. While most recruiting conversations center on salary levels, ongoing employee satisfaction is greatly influenced by what else comes with the paycheck.