Businesses that offer benefits to all employees may attract higher caliber candidates to fill job vacancies and retain good workers longer. For some job seekers, the employment benefits offered by the company can play as great a role as salary in their job acceptance decision.
Insurance Tops the List
With the high cost of health care, offering employees health, dental, vision or life insurance is perhaps the most enticing employment benefit to a potential hire and may contribute to higher retention rates. As an employer, you will work with an insurance provider to negotiate a group plan that may provide employees health insurance options from which to choose, like a Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), or Point of Service Plan (POS). Information provided to the employee will explain the difference between the health insurance plans along with their portion of the premium. The company will also cover a portion of the premium. The more the company pays, the more enticing the benefit.
For assistance in choosing the best insurance plan for your company, check with your state’s insurance commissioner or work through an independent insurance agent. Click here for the National Association of Insurance Commissioners (NAIC), and then click on the “States & Jurisdiction Map” tab to locate the insurance commission website for your state.
Paid time off work in the form of vacation or sick days, and paid holidays is an employment benefit that can vary from company to company. Some may offer paid time off for only Federal holidays, while other businesses may offer an additional option for more dates off at the employee’s choosing, like a significant religious day.
Rather than having separate totals for vacation and sick days, the company may choose to use the term “annual leave” for the days (or hours) that the employee can take off for vacation or illness. A cap may be placed on how many accrued “leave” days (or hours) can be carried over to the next fiscal or calendar year. The number of days (or hours) offered may increase based on the employee’s years with the company, which can also contribute to employee retention.
401(k) retirement savings plans are widely recognized. Through pre-tax payroll deductions, employees can contribute to their own retirement, perhaps with the ability to choose into which funds or markets the money is invested. Employers may also contribute a percentage to the employee’s 401(k), making this a particularly attractive employment benefit.
Small business owners might use a Simplified Employee Pension (SEP) plan, which requires no government reporting and is similar to an IRA (see IRS_forms 5305-SEP and 5305-SIMPLE). Employees can defer pre-tax dollars with the Salary Reduction plan (SAR-SEP).
Missing from the list are benefits, or perks, that typically are not made available to all employees but rather to a few management level staff or high performers, like the use of a car or cell phone that is covered by the company.
Sources: Small Business Administration: Managing Employee Benefits; forms 5305-SEP, 5305-SIMPLE