Month: November 2015

Recently, the Society for Human Resource Management (SHRM) conducted several surveys of their members. In one, 20 percent of organizations reported leveraging benefits packages to retain workers. That number is surprisingly low given how effective desirable benefits can be for keeping staff happy, engaged and committed to their employers.

 

For example, one MetLife survey found that 58 percent of employees say benefits are one reason they remain with their employer. That percentage jumps to 63 percent for Generation Y workers and 62 percent for those in Generation X. In the same survey, 61 percent of employees who are very satisfied with the company benefits package they receive feel a strong sense of loyalty towards their employers. Only 24 percent of those very dissatisfied with their benefits feel the same loyalty.
Most Common Benefits

Most employers view health insurance and retirement savings benefits as the most important for employee retention. In the SHRM survey mentioned earlier, 72 percent of the organizations reported leveraging health insurance—including medical coverage and flexible spending accounts—to retain valuable employees. Fifty-eight percent relied on retirement savings benefits—including 401k and stock options, to do the same. Other commonly offered benefits include paid holidays, paid vacation and sick time, and supplemental insurance plans including vision, dental, life and disability.

 

Benefits Most Employees Want

While 90 percent of employees consider health insurance most important according to The Principal Financial Group, it’s not the only thing they find attractive in a benefits package. For example, a study by the Families and Work Institute found that 87 percent of employees say the flexibility to balance work and personal life is “extremely” or “very” important.

When structuring an employee benefits package that will keep your staff happy and engaged in their work, it’s important to survey them and find out what they really want. Then think outside the box when exploring ways to satisfy their needs. You’re likely to find some benefits—like their birthday off and PTO plans that combine personal, sick and vacation time—that you can offer at little to no cost.

Other benefits popular with today’s workforce include onsite childcare, onsite fitness classes, health and lifestyle coaching, wellness program bonuses, referral bonuses, one-on-one investment advising, flexible schedules (including four-day workweeks), telecommuting opportunities, leadership training and career development programs.

Structuring a Package

There are no one-size-fits-all formulas for benefits offerings. Every business needs a plan tailored for its specific needs. Working with an advisor is the best way to structure a package for your workforce, not only to ensure you meet state and federal benefits regulations, but also to provide insight into costs and the needs of your particular organization.

Remember, happy workers are engaged in their jobs, increasing business productivity. They’re also less likely to leave for greener pastures, reducing your company’s hiring and training costs. While a solid employee benefits package may require a financial investment, the long-term benefits will be more than worth the expenditure.

While a solid benefits package will help your company attract and retain top talent, setting one up incorrectly can subject you to fines and even criminal prosecution. Benefit planning is a complicated undertaking, and it’s all too easy for busy business owners to make mistakes. Consider the following potential legal pitfalls you need to avoid.

 

Required Benefits

The law requires all employers to provide their employees with time off to vote, serve jury duty or perform military service. You must also comply with workers’ compensation requirements, pay state and federal unemployment taxes, contribute to a short-term disability program if one exists in your state, and comply with the Federal Family and Medical Leave Act (FMLA), which covers maternity and adoption leave as well time off for serious personal and family medical conditions. In addition, you must withhold FICA taxes from your employee’s paychecks and pay your own portion of FICA taxes for each worker. Failure to provide any of these required benefits may subject your business to fines or criminal prosecution.

 

Government Scrutiny

Health insurance and retirement plans are among the benefits deemed most important by employers. They’re also subject to government regulations. For example, the Employee Retirement Income Security Act (ERISA) regulates employers who offer pension plans to their workers. It imposes a wide range of requirements, including employer-paid insurance to protect retirement benefits.

 

The Health Insurance Portability and Accountability Act (HIPAA) amended ERISA to impose requirements on group health plans. It increased employee access to health insurance benefits by limiting preexisting condition rules. The more recent Affordable Care Act requires all employers with more than 50 employees to offer health benefits to every member of their staff working full time hours or pay significant penalties. Implementation of the employer sponsored insurance portion of the new regulation was set for January 2014, though the government recently postponed it.

 

Audits

If you haven’t designed your employee benefits program appropriately, don’t think it will go unnoticed. The IRS is notoriously aggressive in their audits, as is the U.S. Department of Labor. Any discovered errors are subject to penalties. You may also need to repay any associated tax benefits your company has received.

 

Common Errors

According to benefits professionals, the most common mistake employers make is excluding employees from the plan. Regulations for voluntary benefits vary so it can be challenging for employers to determine which workers must be offered the opportunity to participate. Another common error is failing to enroll new employees in healthcare or supplementary insurance plans during the ‘open enrollment’ period—a fixed time after hire during which you may make changes without incurring additional costs. This is often the fault of poor administration by the employee responsible for the details—for example, when a small business puts a bookkeeper or office manager in charge of benefits.

 

Whether you have 20 employees or 200, don’t try to build a benefits plan without consulting a qualified advisor. You can reduce your costs by conducting preliminary research—including what your employees want and what your competitors are offering—on your own. Then hire a benefits consultant to walk you safely around potential legal pitfalls.