5 Easy Steps To Creating An Employee Benefits Plan
An employee benefits program is essential and costly at the same time. It is one of the heftiest endeavors that an employer has to put money on. But such programs are one of the virtual channels towards employee engagement in your organization. The benefits you offer will make or break your employee's decision to work for you.
So, investing in such a program is vital, or you can say it will form an essential part of your organization's foundation.
Employees are an organization's most important asset, and the benefits they receive can be monumental in helping them be productive and successful.
However, many HR managers and leaders are unclear about what a good employee benefits program should include.
This article is the perfect guide for anyone looking to learn what it is, how it works, and some valuable insights.
What Is An Employee Benefits Program?
The world is changing faster than ever before. Today, employees want more than a paycheck and a retirement plan.
Organizations are finally responding to this need by reshaping how they use rewards and benefits to attract, retain, and engage the right talent.
Employee benefits refer to the set of employee benefits and services that the employer offers to its employees. Employee benefits programs are provided as a part of their total reward packages to attract and retain top talents.
Some benefits are mandated by law, while others are optional. Employee benefits programs primarily handle the expense of employee health care coverage and can include different plans that support employees and their families.
Employee benefits can either be tangible or intangible — meaning they can be both monetary and non-monetary benefits.
It is broadly classified into two categories:
● Non-monetary benefits: These benefits are provided to employees as services. These include social security, health insurance, educational help, employee discount programs, etc.
● Monetary benefits: These benefits are as cash given to employees as a reward for their service to the organization, such as bonuses or incentives.
4 Major Types of Employee Benefit Programs
Businesses across all industries are offering a bevy of benefits for their employees. From health plans to life insurance, companies must understand what benefits will work. It must be looked at from a cost, benefit, and employee satisfaction perspective.
As an employer, have you ever wondered if your employee benefits program is in the way you wanted it to be? Or is it optimization enough to provide all the benefits that your employees enjoy?
Designing such programs is not easy and requires a hell of a lot of planning to hit the bull's eye. We've compiled a list of four major types of employee benefits and their key factors to help you make better decisions.
1. Health Insurance
Health insurance is a form of health care coverage that pays for medical expenses. It is a source of personal health benefits that cover medical treatment costs, medications, preventative care, and even dental care.
It also helps employees and their families by providing for unforeseen medical expenses and hospitalization services.
In addition, most medical insurance plans are tax-deductible for both the employee and employer.
Employer-sponsored health insurance plans are tax-exempt for employees. Therefore, it can also help attract high-quality job applicants.
If your employees are healthy, they can contribute more to your company, which leads to higher productivity and greater net profits.
You can also offer a wellness plan as a fringe benefit, depending on the type of employer and the terms of the plan.
2. Life Insurance
Life insurance can be a very valuable benefit to any employee and the employer. It is a great way to help protect your company's financial future while helping protect the financial future of your employees.
But what is life insurance? A life insurance policy is an agreement in which an insurer agrees to pay a designated beneficiary a certain amount of money in case of your demise.
Life insurance as employee benefits is a way to show your employees you care about their finances, health, and future. While it does not require medical and dental insurance in all the states, most companies offer it.
US Department of Labor recently conducted a study where 98% of employees have life insurance as benefits.
Not only does a life insurance program provide the company with a financial security net, but it also makes the employees feel more valued as an employee by demonstrating that their well-being is an essential part of the business's daily operations.
3. Disability Insurance
According to the Social Security Administration, disability is defined as a severe impairment that prevents someone from working for at least 12 months, leading to death. Disability insurance pays a portion of a person's salary if they become disabled and cannot work.
It can be short-term or long-term:
Short-term disability insurance only replaces a percentage of the employee's income for a set period (for example, six months)
Long-term disability insurance replaces a percentage of income for an extended period (for example, five years).
If you employ a large number of people, you may want to consider disability insurance as employee benefits.
Employees often need this type of insurance if they have a long-term health problem or get older and may start having health issues.
Disability insurance is a type of insurance that should pay the employee's income if the employee cannot work due to a sickness or accident.
4. Retirement Plans
A retirement plan, or pension plan, is a form of deferred compensation provided through an employer. It allows employees to save up money for retirement on a tax-deferred basis.
Retirement plans are very popular with employees because they offer the potential for substantial savings on current income taxes. These savings are because contributions to a retirement plan are not taxed as income, and earnings accumulate tax-free until distributed.
They are usually mandatory in most companies, depending on the country's laws. Employers can offer retirement plans as a pension plan or a 401(k) plan.
You can offer both forms of retirement plans for any number of years that the employee has worked for the company.
The selection of benefits is a critical component in total compensation costs.
Employers should have a well-thought-out benefits plan design, keeping in mind the employer cost and the benefits provided to employees in recruiting and retaining.
With so much in line, your benefits program should:
Have clear goals.
Be realistic and meaningful.
A financially stable structure.
These are the main points that you should keep in mind while coming up with a benefits program. Now, let's look at the steps to building a solid employee benefits program.
Steps to Build an Employee Benefits Program:
1. Having Clear Goals:
Before building a benefits program, the first important step is to identify its objective. This will provide a guide in establishing and designing the benefits program.
This does not result in the list of benefits but rather overviews the objectives that an organization needs to cover. When designing benefit goals, consider factors such as the number of employees in the firm, the location, and so on.
Having goals will keep you focused and realistic as you choose which benefits to offer.
Also, your key objectives to provide employee benefits will be:
Attracting and retaining potential targets.
Operating within the allocated budget.
Have unique benefits in the labor market.
Benefits that comply with state and national laws.
2. Including Meaningful Benefits:
The benefits that you will offer have to be those which will benefit your employees. Knowing what your employee wants is essentially crucial for designing the program.
You will have a mixture of veteran employees and millennials at your workplace. Keeping that in mind, you have to have a basic set of ideas that will benefit both the set of employees. You need to align the benefits with their ideologies as well.
Having so will not only increase your employee’s productivity, but they will also be loyal to your organization.
3. Conducting Surveys:
Choosing benefits for your employees can be an uphill task, and you have to be very specific while finalizing the benefits.
The benefits package that you offer will be crucial in achieving the organization's targets and goals in the long run.
But how do you choose what benefits will be best for your employees? The usual benefits include health insurance, retirement plans, health plan, insurance plans, and much more.
Apart from these, what more can you offer? To understand the perspective of your employees, you can conduct a survey. The survey will have questions related to all the benefits that your employees want.
And to help you out with conducting surveys, Vantage Pulse provides the perfect solution for the organizations. It is robust, transparent, and user-friendly that caters to the necessary questions that can make the difference.
Want to Know More about Vantage Pulse? Click here.
After completing the survey, you will have an idea of what your employees want and what their expectations are. This way, you will be able to have a complete benefits package satisfying everyone's needs.
Furthermore, this will leave a sound impression on your employees that you care for them and have a stand-out company culture.
4. Choosing Financially Stable Benefits:
You choose to count on the benefits, but you also have to look after the money you will put into it. You need to design the program so that the benefits that you will provide fit your budget.
If you are a small organization, spend on what you can afford. Be strategic and specific with your approach. Just keep track of the benefits your competitors have to offer. This will providde you with a clear picture on what steps you need to take.
Keeping that in mind, you will provide a few of the employee perks that your competitors are not providing.
By doing so, you might be able to retain your top assets and attract potential candidates as well.
Keep the benefits within your allocated budget and slowly increase them with time. This will be strategic, and it will help the stable growth of your finances as well.
5. Picking Optional Benefits:
The rest of the benefits package will be optional or the ones which you will choose for your employees.
Optional benefits can include the following:
Having a defined set of retirement benefits or pension plans for your employees. A program where your company helps your employees by making contributions in their savings towards their retirement. Having such a program will not only make you competitive but will also help you become a well-liked company among your employees as well.
You can also hand out paid vacation packages to your employees who have done well in their particular duties. Because why not? They worked hard and put effort into completing their work. And a few days off from work will be refreshing for your employees while reducing burnout. Also, setting up an example that hard work has its perks.
Sick leave with full reimbursement could be another one of your optional benefits. By doing so, you will keep hold of your greatest assets. Moreover, you will be able to create a sense of loyalty in them.
Check more benefits like tuition reimbursement, skill development programs, child care subsidies, financial planning, disability insurance, health care facilities, and much more.
Make your benefits program efficient and sustain it by improvising with new ideas with every chance you get. To help your employees appreciate any optional benefits you provide, give each employee an annual statement of total compensation.
Learn More: Company Benefits that Millenials Want
Latest Trends To Watch Out in 2021
The future of employee benefits is changing, and an employer needs to stay up-to-date on the most innovative methods for developing successful benefits packages.
The changing landscape of employee benefits will significantly impact how employers choose to attract and retain the most promising talent.
Today's employee benefits offer more flexibility and choices than ever before. Let's look at some of the latest trends in the employee benefits programs -
1. Personalized Benefits
When it comes to employee benefits, they often leave employees out of the discussion. One of the primary reasons for this is because they aren't expected to be experts on the topic.
You have HR departments, payroll specialists, and insurance advisors hired to handle this stuff, right? The truth is, none of those groups will be able to help you if your employees aren't satisfied with what you offer.
As a company, you want to offer benefits that appeal to diverse members of the workforce. One way to do this is to provide different types of benefits for people at different stages in their lives.
For example, if you have younger employees traditionally, you might offer tuition reimbursement or a fitness reimbursement program. This will help bring value to their lives and be a win-win for both parties. This is just one way that companies can bring real value to their lives.
2. Profit-Sharing Plans
According to this Gallup poll, 40% of employees want profit-sharing as a part of their benefits plan.
A great way to share your company's profits with employees is through profit-sharing. Profit-sharing is a percentage of the company's profits that will be shared with the employees.
The employer can choose how to provide the money, such as by direct deposit or through a profit-sharing plan. The share percentage depends on what salary package the employee has and how well the company is doing.
The benefit of having a profit-sharing plan helps attract and retain talent, tax benefits, employee loyalty, and so much more.
3. Severance Pay
In the unpredictable world that we live in, employees are not seeking all kinds of security regarding their jobs- especially after the 2020 pandemic scenario.
Severance packages are a lump sum of money given to employees who get terminated involuntarily. This happens when an organization needs to downsize or lay off employees for economic reasons. They include a sum of money, continuation of insurance benefits, unused vacation time and sick days, stock options, and pension assistance.
A severance package is a gift given out of goodwill by an employer to a departing employee. It is not a mandatory payment, but it is usually given to employees who have worked at the company for a long time.
Sometimes it is offered as a competitive advantage in order to keep their good employees.
Summing it Up:
You would want a workforce full of employees who are not only productive but enthusiastic and driven towards their work at the same time. To keep every employee happy and satisfied is an impossible feat to achieve.
But you can work on it to some extent if you have a powerful and well-designed employee benefits program.
This program will help you retaining your current employees but will be more centered on attracting talents from worldwide.
Creating an employee-friendly culture is an essential task that needs much of your attention and effort day in and day out. A culture that your employees can be proud of and a unique one too amongst your competitors.
Work on it, plan it strategically and execute it well because you have put a tremendous amount of time into building it.