Benefit Programs Boost Employee Retention


The right retirement plan should take into account business needs as well as employee concerns. Costs and ease of administration must also be carefully evaluated.Your total compensation plan must serve to attract, retain and motivate your employees. While wages will be the largest component, other parts of the plan are also important. Together with the work environment, your benefit program may be the difference between having an effective, steady work force or a group of dissatisfied employees whom you are constantly replacing.

Retirement Benefits

The right retirement plan should take into account business needs as well as employee concerns. Costs and ease of administration must also be carefully evaluated. Here are very brief descriptions of several choices. Be sure to investigate them thoroughly before deciding which ones are right for your business:

  • Simplified Employee Pension-Individual Retirement Account (SEP-IRA) – These plans are ideal for small organizations or self-employed individuals. They are easy to establish and have no special governmental filing requirements. Only the employer makes contributions and the limit is the lesser of 25% of compensation or up to $49,000 for 2009.
  • SIMPLE IRA – These plans are for companies with up to 100 employees. They allow for employees to defer wages into the plan and for companies to also make contributions. Employees can defer up to 100% of their wages with a limit of $11,500 for 2009. The employer can elect to match employee contributions, or can contribute a simple percentage of employee wages. There is some administration needed.
  • 401(k) Plans – These plans have become popular because of their flexibility and the higher limits for employee and employer contributions. There can be significant administration needed and annual filings are required.

Employee benefit consulting firms, trust departments and some investment firms usually have the expertise to help you evaluate your options. However, be sure to understand all the costs for administration and investing the funds.

Medical Insurance

If your company has many employees, a group medical plan may be attractive. Health insurance has become expensive, so you will want to consider your plan carefully, shop for the best plan and perhaps use a health insurance consultant. Your cost will be based on the size and make-up of your group, and the type of coverage selected, and will likely change from year to year. You may want to consider sharing the cost with your employees and providing different options for them to choose.

Disability and Supplemental Life Insurance

Together with the work environment, your benefit program may be the difference between having an effective, steady work force or a group of dissatisfied employees whom you are constantly replacing.Many insurance companies offer relatively inexpensive plans that can be established so the employees share in the cost.

Flexible Spending Accounts

This type of program is relatively new and offers some tax advantages for employees with little or no additional costs for employers. Employees direct a portion of their pre-tax wages into the accounts to pay for covered expenses such as dependent care, medical insurance premiums and unreimbursed medical costs. Employees pay lower income taxes and the companies pay less in payroll taxes.

Flexible Spending Accounts are “use it or lose it” arrangements. Employees decide how much to defer for each type of expense and that decision is irrevocable. Many insurance companies offer these types of arrangements, and some will handle all the paperwork.

Savings Programs

Many employees are interested in accumulating funds, and yet have a very difficult time actually saving money on a month-to-month basis. You may be able to help them without any cost. Most payroll services offer employees the ability to direct a portion of their wages into an account at their financial institution. Be sure your employees are aware of this option and also of direct deposit. These conveniences make it easier for employees to handle their finances, and companies may save some of the costs of payroll processing.

Education Reimbursement Programs

Many employees are interested in furthering their educations. If your business requires ongoing training in certain fields, it may be prudent to provide partial or total reimbursement for certain types of classes. Tuition reimbursement programs have been shown to increase worker satisfaction and reduce employee turn-over, thereby saving employers money. The employees enhance their skills and you have a better-trained, more productive employee group.

Vacation and Days-off Policies

Employees need time off occasionally for personal business or just for rest and relaxation. Having a policy that employees understand and that provides some flexibility will be greatly appreciated.

Summary

Employee benefits are important. Creating a program doesn’t have to be difficult or expensive. The trend is for more flexibility for employees to choose what is important to them and for employees to share in the total cost. While most recruiting conversations center on salary levels, ongoing employee satisfaction is greatly influenced by what comes with the paycheck.

 

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