By SooJi Min

4 Fashion Must Haves  -- - and How to Care for Them

According to the Bureau of Labor Statistics, on average, the total cost of employer-provided group benefits, including retirement, health and welfare, is about 30 percent of payroll, or 30 cents of every payroll dollar. "Given the high cost, it's a huge challenge to know, 'Am I offering the right benefits?'" says Kathryn Helmke, human resources government affairs director at the Management Association (MRA), based in Plymouth, MN. MRA is one of the largest not-for-profit employer associations in the nation, serving more than 4,000 employers (from Fortune 500 to small businesses with only a handful of employees) in the Midwest, and covering 800,000 employees throughout the United States and abroad.

The first step in choosing the right employee benefits for your small business starts with planning. You want to know your end goal and analyze your employee demographics. Then, once you have chosen your benefits program, you need to work in collaboration with your employees to ensure that they understand your offerings.

Recruit or Retain?

Whether you're looking to attract new talent or retain star employees, benefits are a key consideration. "Nearly six in 10 (57 percent) small-business workers said they're likely to accept jobs with slightly lower compensation but better benefits, "as reported in the 2014 Aflac Workforce Report for Small Businesses, and "nearly half (47 percent) of small-business employees said improving their benefits packages is one thing their employers could do to keep them in their job."

Meanwhile, employers often do not promote their benefits program as part of their employee recruitment efforts. "As employers continue to report that it is difficult to find qualified employees and that they are unable to fill open positions, understanding the respective roles of salaries and benefits is critical," says Helmke. If increased wages are not an option, Helmke suggests using a "total rewards" approach. "Here's what we have to offer, this is why we are an employer of choice and offer a range of benefits," she says.

Similarly, with regard to existing staff, there is often a disconnect between what companies spend on benefits and how their employees value their benefits. "Employees who are satisfied with their benefits and understand them are more likely to report that they consider their companies great places to work and are more positive about their organizations," says Helmke. That means you need to make the same "total rewards" case on at least an annual basis, especially when salaries are being reviewed.

Analyze Your Workforce

Once you've set your benefits goal, take a step back and look at your workforce. "Mostly full-time with long tenure. Part time with high turnover?" asks Helmke. "The nature of an employee's workplace also should be a consideration in determining which benefits to offer." Helmke categorizes the workforce into four generations -- traditionalists, baby boomers, Gen Xers, and Millennials -- and sees that each approaches benefits differently. "This is a starting point and not a stereotype when considering benefits for employees," says Helmke.

For example, traditionalists may have a need for long-term care, and while they become eligible for Medicare at age 65, may still rely heavily on their employer's group health plan as their primary carrier. Baby boomers may prefer more flexible work schedules and be more willing to accept voluntary employee-pay-all benefits. Gen Xers and Millennials also value voluntary benefits, including life insurance and disability, as well as portable benefits that may move from employer to employer.

Choosing the Right Program

Employers also need to look at their industry -- whether it is construction, healthcare, retail or professional services -- before selecting an appropriate benefits program. "If you have high turnover or part-time staff, that will be a directive as to what kind of program you will offer," says Helmke. "You do not want to offer a defined benefit pension or rich medical plan at low cost." Instead, you might consider looking at a variety of voluntary benefits that employee can purchase based on their need and life circumstances.

Helmke suggests small business owners then benchmark the cost of their programs. "If the average cost is about 35 percent of payroll and I do my own analysis and I'm at 35 percent, then what is that telling me about the cost of the service that I sell? Either I am less profitable or mine costs more. What does that tell me about my competition?" It is important to know your cost of benefits relative to others in the industry. There are published surveys available at no cost. If you are looking for industry-specific information, you may need to be a member of an association for that industry or industry group.

Share Your Benefits Story

Despite the recognized value, employers generally report that their benefit communications have been largely ineffective and that their employees lack a basic understanding of the benefits they offer. Once you have selected a benefits program, you need to clearly communicate their benefit offerings with staff on at least an annual basis. "Communicating benefits is critical to employee understanding and satisfaction with benefits," says Helmke. "Employees who have reported that their employer has effectively communicated the benefits offered by the employer are more than twice as likely to say they are loyal to their employer." They are also more satisfied with their benefits and with their jobs, which translates into greater productivity, according to Helmke.

The bottom line is that benefits matter. Put your benefits program to work for you -- whether you're recruiting new staff or retaining existing employees -- and add another competitive advantage to your small business.


SooJi Min is a freelance writer and nonprofit executive based in Ann Arbor, MI. She has written on small business topics for Crain's, Imagination Publishing and The University of Chicago Booth School of Business

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How to Choose the Right Employee Benefits Plan for Your Small Business