Employee benefit analysis
When you’re a business owner or member of management, you know that your most valuable asset is your outstanding employees. You’ve made a significant investment into each one, and you want to retain them.
This makes employee benefits as important to you as it is to them. If you don’t offer a well-designed benefits package, you might not be able to hire the best talent available, and your current staff may leave for a company with better benefits.
However, you also need to pay for these benefits. It’s a careful balancing act. This guide can help you better understand employee benefits, and the ways to analyze them.
The 4 Major Types of Benefits
There are a few benefits that almost all employees want as part of their employment package. These benefits can be costly, and some are required by federal law if your business exceeds a certain number of employees.
When you’re shopping for the four major types of benefits, you can look at what other businesses in your industry provide to ensure you aren’t offering too little or too much in coverage or cost-sharing. In some cases, asking the employees to share a part of the costs of the benefit is acceptable.
Here’s a look at each of the four major types of benefits:
Medical Insurance
Depending on the size of your company, the government might require that you provide a certain level of medical insurance to each of your full-time employees. Even if you aren’t required to offer medical insurance, it’s one of the benefits that employees are most interested in having.
Medical insurance coverage also helps your company. When your employees have insurance, they miss fewer days at work due to illness. If the cost is too high for certain policies, you can ask your employees to share part of the cost.
Life insurance
It’s important to your team members that their family members are protected in the event of their death. A life insurance policy helps pay medical bills, burial expenses, and offsets future expenses for a family.
With this type of benefit, your company might pay for a policy up to a certain amount and then offer each employee the chance to increase the size of the benefit at their own cost. A life insurance policy provides your employees with peace of mind and helps them concentrate on other tasks.
Retirement Plans
Most people know that they can’t rely on Social Security to pay their bills in old age and worry about the money they need to retire. This makes a company’s contributions to an individual’s retirement account an enticing benefit.
In most industries, the company matches funds that an employee places into their retirement accounts with a limit to the matching dollar amount each year. It might be that you match the employee contribution dollar for dollar up to $2,000 a year. You can evaluate other plans in your industry to create your own plan.
Disability Insurance
If one of your employees becomes injured, either at work or during their off time, or ill and can no longer perform their job, disability insurance steps in to guarantee their income. Some policies cover their entire income while others provide a percentage of it.
Disability insurance covers injuries as well as health conditions that leave an employee disabled. You might consider offering several plans to your employees to include ones with higher premiums and better coverage, but the employee pays a portion of the costs.
Other Benefits to Consider
While the four major benefits should be high on your list when creating a benefits package, there are other ones to consider. Some of the most popular benefits among employees include:
- Paid time off (PTO)
- Access to financial planners
- Family leave
- Parental leave
- Remote work option
- Office attractions, such as a stocked kitchen or relaxation area
All or a few of these additional benefits can enhance your company’s benefits package and help you attract the best talent while retaining the staff members already working for your business. Some of these benefits can be included without a lot of expense.
How to Calculate The Value of Employee Benefits
One easy way to discover the benefits that employees value most is by asking them. A survey about benefits is the best way to see if your benefits package is of value to an employee.
You can calculate the value of employee benefits by taking the total dollar cost of all benefits and dividing it by the number of employees. For example, if you have spent $50,000 last year on benefits for 50 employees, then the value per employee is $1,000 per staff member.