Why a benefits program is important
A robust benefits package doesn’t just benefit your employees. It can help you in many ways. Some benefits to you as the employer include:
Attracting talent: A solid benefits package, especially one that’s better than the competition, can help you with talent acquisition. Talented job seekers might be more likely to accept your offer due to your benefits.
Employee retention: Once you have employees working for you, giving them the benefits they want can help them stay. Employee retention can cut your hiring costs and keep your company highly productive.
Attendance: Offering affordable health insurance with good coverage helps employees keep themselves and their families healthier. This benefit can help keep employee attendance high, which makes your staff more productive.
Employee satisfaction: When you give employees the financial stability that comes with benefits, you show that you care about them beyond just what they do for your company. Generous benefits can increase employee satisfaction and loyalty.
Typical parts of a benefits program
Your benefits package includes all forms of compensation outside the employee’s salary. Common benefits that most employers offer include:
Health, dental and vision insurance
Short- and long-term disability insurance
Paid time off
Flexible spending plan
You don’t have to offer all these options, and you can add other benefits if you want. Within many of these categories, you’ll have a wide range of options. For example, you can offer different types of health insurance plans and choose between various coverage levels. If you offer life insurance, you can decide how much you’ll provide and if employees can buy additional coverage out of pocket.
How to design a benefits program for employees
Designing an employee benefits program from scratch can take a lot of time and research, but the following steps will help you more effectively design a benefits program for your company.
1. Set your benefits budget
Before you decide what to include and which plans to choose, set your benefits budget. Consider the total you want to spend on benefits and how many employees you have to determine how much you can spend per person. Keep in mind that your costs may increase in the future if you expand your workforce. Working with your accountant and reviewing your overall budget can help you calculate your available budget for benefits. You can increase your budget as your company grows if needed.
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. For the company, your goals might be to keep employees happy, reduce absenteeism or improve your employer brand to attract talented employees. Remember these goals as you’re considering benefits options and choosing specific plans.
3. Research the requirements
Review the state and federal requirements for benefits based on your company size and other factors. For example, under the Affordable Care Act, a business that employs 50 or more full-time or full-time-equivalent employees might have to make Employer Shared Responsibility Payments if they don’t offer those employees insurance that meets the minimum requirements. Determine if you’re required to provide certain benefits or if you’ll have to pay a penalty if you don’t offer them. Ensure you meet these mandated offerings before adding extra benefits.
4. Determine employee needs and wants
The best benefits plan is one that meets your employees’ needs. Doing a needs assessment helps you determine what kind of health insurance they want and other benefits they need. This approach lets you spend your benefits budget on things your staff will use to avoid wasting money on frivolous benefits that no one uses.
Your employees’ priorities can vary based on where they are in life. Parents and older employees might value health benefits and retirement plans. Younger employees might want more extra perks or paid time off. If you have a mix of employees, try to balance the needs and desires of everything while staying within your budget.
If you already offer some benefits to your employees, look at how much they’re used. If you provide free gym memberships, but not many employees use them, it might not be an effective perk for your staff. If most of your employees use your health insurance program, you might choose a better plan with lower out-of-pocket costs or add a flexible spending account option to help with out-of-pocket medical expenses.
5. Choose the core benefits
Start with the core benefits you know you’re offering, such as health insurance, paid time off and life insurance. These components help keep your employees healthy — physically and financially. Research the available plan options to see what kind of coverage you can offer within your benefits budget. You might ask for employee feedback on plans and benefits you’re considering to see if you’re on the right track.
6. Decide on extra perks
If you still have room in your budget, consider adding extra employee perks. These extras make your employees feel appreciated and offer additional money savings or convenience. Some examples include:
Gym memberships or an on-site gym
Game rooms, nap rooms or other workspaces that encourage relaxation
Some of these perks come at a price, but others are relatively low-cost, giving you a good return on investment. For example, having flexibility in your scheduling doesn’t require a monthly fee, but it can keep employees happier and help with work-life balance. Creating an on-site gym has an initial cost, but the ongoing costs are minimal. Getting creative with low-cost perks can add to your benefits program while letting you stay within your budget.
7. Write a benefits plan policy
Once you decide on all your perks and benefits, compile the information into written policies. Include all perks that employees get with details on what they include. Cover eligibility for the perks and benefits, especially if you have part-time and full-time employees who get different benefits. Your HR team or a business lawyer can review these policies to ensure they comply with state and federal regulations.
8. Talk about it
Once you finalize everything, let your employees know what’s in the benefits package. You might host a company-wide presentation or send an email detailing the perks and benefits. Ensure every employee gets a copy of the written policies and understands how to enroll in the benefit options if they want them.
Reviewing benefits packages
Once you establish your benefits package, it’s helpful to review it periodically. Using employee surveys lets you get feedback from your staff to ensure the perks and benefits still meet their needs. Your employees might have life events that affect what they need. If your company expands or you have high turnover, your newer employees might have different needs or priorities. Do these reviews before your open enrollment period for the following year so you have time to change or add benefits if necessary.