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For Your Business November 18, 2019

How to determine the right mix of benefits and compensation for your staff

At this time of year, you’re likely starting your year-end budget review and planning for FY 2020. Expenses, group benefits, and employee compensation may all be a big part of the conversation as you look for areas to control costs or trim spending. 

If your health insurance renewal is at year end, then Open Enrollment is in full swing, which means your employees are reviewing their expenses and thinking about which benefits are most important for their needs. Inevitably, many of them will think about their current compensation as they make these decisions. As an employer, this is an opportunity to learn about the things that are important to your employees to help you determine the right mix of benefits and compensation for your team.

There are several ways to create an effective and competitive benefits program at your small to mid-sized business. Here are a few ideas to consider.

Review Your Employees’ “Total Compensation” Package

A “total compensation” approach to benefits and compensation promotes the idea that your employees’ compensation is more than their paycheck – it’s the total of what’s available to them. This includes…

  • Monetary Compensation. At its most basic, this is their salary.
  • Benefits. This may include health insurance, short- and long-term disability insurance, employer contributions (match) to a retirement account, as well as health, wellness, and educational stipends.
  • Work-life effectiveness. Includes things like schedule flexibility, office perks, and PTO.
  • Performance management. This may look like tools or a plan to help the organization and individuals meet specific goals.
  • Talent development. This may include an open door to professional development opportunities or a defined career ladder to help employees advance.
  • Recognition. Are there bonuses associated with meeting certain targets or achievements?
  • Equity and profit-sharing.
  • Employer-paid taxes. Your employees should be aware that you pay Social Security, Medicare, unemployment insurance, and workers’ compensation on their behalf.

Creating the right total compensation package depends on your organization’s values, goals, and strategy for growth. It’s important that the compensation and benefits offered support the culture and brand you’re trying to build. Once you know the types of employees you’re looking to attract and retain, you should build your total compensation plan with them in mind and budget accordingly.

Determining What Your Employees Need and Want

 A good way to make sure that offer your employees benefits that they actually value is to ask them and evaluate their usage. 

  1. Survey your employees directly. Ask questions about which benefits they want and the ones they value the most. You may even ask for suggestions. 
  2. Conduct an annual analysis of how benefits are being used. Reviewing utilization will show whether your employees are actually using the benefits they say they want. If you make changes year over year, this is important to monitor.

For example, if your employees tell you that continued education is important, the solution may be as simple as providing a modest stipend for professional development events each year. This may not be compensation in the traditional sense, but it can make a big difference in your employees’ experience at your company.

Other benefits you may want to consider include…

  • An Employee Assistance Program (EAP). These programs typically include phone and email support for employees to get advice on issues they face in and out of the office. If employees are feeling distracted by financial troubles at home, health issues, or a conflict in their lives, these confidential advisors can guide employees to resources that will help them navigate their problems.
  • Stipends for wellness. Encourage employees to care about their health and wellness by offering a stipend – maybe $100 per month – to subsidize a gym membership or massage therapy. 
  • Financial planning workshops: A simple lunch-and-learn series with a financial planner can help empower employees to take an active role in saving for their future. Guidance on investing in a retirement savings plan and leveraging an HSA or FSA is also a great way to help employees understand the value of such benefits.  

Whatever direction you choose, pay attention to feedback from your people to uncover needs and offer benefits that are truly appreciated. 

Assess Your Offerings: Are They Competitive?

To access the competitiveness of your plan and compensation with other organizations, turn to databases and benchmarking tools.

Firms like Mercer offer annual reports that provide employee benefits and compensation benchmarks based on industry, market, and business size. If you happen to work for a venture-backed startup that meets certain criteria, you may be able to get access to useful compensation data through Option Impact from Advanced-HR. These resources are not always free, but if offering competitive benefits without overspending is important to your company, you may consider the investment. 

Of course, if you don’t want to purchase data or evaluate on your own, you can reach out to a handful of peers in your industry to share data and insights. You can also turn to an HR service provider like a PEO, a benefits broker, or an HR consultant who specializes in this area.

Create a Communications Plan to Help Your Employees Make the Most of Their Benefits

Whatever benefits you decide to offer, a communication plan will help increase participation and appreciation among your employees. 

This may look like a newsletter or a “benefits” channel in Slack or other internal communication platforms. Whatever format you choose, regular communications help remind employees of the benefits and resources available to them. 

Communication around benefits and compensation shouldn’t just happen during open enrollment or new-hire orientation. Make sure you work on raising awareness year round.

Evaluating Impact and Success for Your Organization 

Finding the right compensation and benefits package for your employees is an ongoing process and one that can change as your organization’s goals and strategy evolve.

Make sure leadership is aligned with your benefits strategy, research your options thoroughly, and regularly evaluate your efforts to make sure they are effective. Both your company and your employees will benefit.

 

This article was written by Robert Cerone from Forbes and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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