Employee Benefit Packages:
Selecting a Plan Your Employees Will Appreciate
By: Andrew T. King

To many small to mid-size business owners, an employee benefits package seems more like an expense than an asset. But a well-designed plan benefits not just the employees but the entire company as well.

Above all, a good benefits plan can play a critical role in recruiting and retaining key employees. For a sought-after employee considering several offers, a competitive salary isn’t enough. Benefits weigh heavily into a job candidate’s decision and, in some instances, can tip the scales in one company’s favor.

For many companies, the loss of even one employee can be detrimental, particularly if that employee is highly specialized or required a significant investment in training. A strong benefits package can contribute to current employees’ satisfaction on-the-job. Employees who feel they need better benefits may be tempted to look at other jobs, while those who are satisfied with their current plan may be more loyal.

A plan with real value

While cost is an important consideration, it is also critical to determine that the plan suits the needs of both the employer and the employees. An employer doesn’t need to break the bank in order to offer competitive benefits.

Offering a variety of “voluntary benefits” (which the employee selects and funds) is a cost effective way to enhance an existing benefits package. Dental, vision and a variety of flexible spending accounts can help offset health expenses not covered by traditional health plans. Life, long and short-term disability, and long-term care insurance options can help employees address a number of personal financial needs. There are also countless other non-traditional benefits to help employees feel they have a healthy work/life balance.

Where to start

Most employee benefits plans consist of three parts: 1) health insurance; 2) retirement plans; and 3) ancillary benefits such as life insurance, disability insurance and vacation time. Each part requires careful consideration and should start with some basic research:
Selecting a Benefits Plan

• Analyzing the needs. Talking with employees to determine what benefits theyfind most attractive allows an employer to customize its benefits package to include options that are valued and avoid those which are not.

• Examining the competitive arena. Similar companies usually compete for talent, both locally and nationally. Knowing the benefits offered by competitors is important to remain competitive as an employer. A company that recruits across industry lines should keep in mind the popularity of certain benefits can vary by industry as well as by region. Flextime, for example is offered at 76% of companies in the high-tech industry, but only at 31% of companies in the wholesale/retail trade industry.

• Tapping into professional associations and other resources. Many professional groups provide information about benefits packages offered within the industry or even have them available for purchase. Before signing on the dotted line, however, owners should check to see if an organization’s plan is truly suited for their companies’ needs.

Consumer-driven health care

In today’s environment, a discussion on employee benefits would not be complete with considering consumer driven health care. In an effort to hold employees more responsible for their medical expenses and educate them as to the true cost, more and more employers are exploring consumer driven health care options such as health reimbursement accounts and tiered network plans.

While a majority of employers have shown skepticism toward consumer-driven benefits, according to a recent survey by Deloitte & Touche, that may be changing. There is a clear trend of increasing interest in consumer-driven plans. The interest is in offering this alternative side-by-side with existing options, rather than a total replacement for existing arrangements.

Seeking professional help

In addition to careful research on the employer’s part, a well-laid plan often requires counsel from an outside professional. The laws and regulations surrounding benefit plans can be complicated and change rapidly. Unlike large corporations, most small and mid-sized businesses don’t have a human resources department with people highly trained in employee benefits.

With the constant introduction of new products, frequent price changes and the vast array of options available, a knowledgeable financial professional can be critical to designing the most effective plan to meet the specific needs of a company. It can also have the welcome result of freeing up the business owner(s) to stay focused on running the business.

Selecting a Benefits Plan

Throughout the process, it’s important for business owners to maintain a long-term perspective. A good employee benefits package might not have a dramatic and immediate impact on the bottom line, but its subtle implications can help a company prosper for many years to come.

Andrew "Andy" T. King is a Financial Representative for the NORTHWESTERN MUTUAL FINANCIAL NETWORK. 3950 Sunforest Ct. Suite 200 Toledo, OH 43623 E-Mail: andy.king@nmfn.com Office (419) 407-8602 Fax 419/471-0274