Employee Benefits

How to Build a Cost-Effective Employee Benefits Program

August 23, 2022

In case you missed it, our recent article on the “15 Common Employee Perks and Benefits Explained” offers an extensive exploration of the most common (and innovative) benefits and perks employers are offering to incentivize new hires, retain talented employees, and demonstrate their commitment to company values.

Still, even with that information in hand, employers are challenged to develop benefits programs that are appropriate for their industry, fit within their budget, and satisfy staff expectations and preferences. In this article, we’ll offer you concrete guidance on how to choose high-value benefits for your company and employees without compromising your budget.

Solicit Feedback and Survey Away

It may seem obvious that one crucial step in formulating a benefits and perks plan is to solicit feedback from your employees, but some companies (regrettably) bypass this step, favoring a “superimposed” approach. The obvious downside to this choice is that your company may be investing in unnecessary perks or optional benefits that employees don’t particularly desire while a greater investment in core benefits (or even scheduling flexibility) may improve employee satisfaction or work-life balance more significantly. 

This is why conducting a thoughtful and thorough survey of your employees’ preferences promises to give you a clear picture of which benefits and perks they value most. When the benefits and perks package you ultimately choose reflects the feedback you’ve received, your employees notice. Although it’s unlikely that any one benefits and perks package will completely satisfy every single employee, by starting with surveys and open conversation, you’ve demonstrated your commitment to transparency, candid communication, and your company’s stated values. You’ll also save money by investing your benefits and perks budget in the right areas.

Assess Your Budget and Primary Goals

From a purely financial standpoint, you first need to determine which portion of your budget you can reasonably and sustainably direct towards your benefits and perks strategy. You’ll need to consider other factors like your total number of employees, the location of your office or offices, and the financial impact of any workplace configuration changes you’re considering (hybrid work, remote work, or otherwise). 

As you work to match your benefits strategy with your budget and the feedback you’ve received from employees, also consider doing a little competitor research to see what others in your industry are offering, particularly to new job prospects. Spend some time considering how you can a) fulfill your current employees’ benefits preferences and b) offer industry-distinct and appealing benefits/perks to potential new hires. You’ll also want to make sure that your new benefits package complies with all federal and state laws.

In addition to all of these tangible concerns, remember that one of your primary goals is to establish – through your benefits and perks offerings – a company culture where high-quality employees are given the health and lifestyle support that they need to thrive as employees and as individuals.

Learn About Required Benefits

Be sure to review the federal, state, and local laws that apply to your area and industry. Doing so protects you from unexpected additional expenses as you finalize your benefits and perks plan (a situation we want to help you avoid). You may be required to offer any or all of the following benefits:

  • Workers Compensation

  • Unemployment Insurance

  • Leaves of Absence 

  • Social Security

  • Disability Insurance (currently required by law in six states/territories)

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Select Optional Benefits

In most cases, health insurance (though technically optional) is considered a “non-negotiable” benefit for most prospective employees seeking full-time employment. Within that option, you have a range of choices: HMO vs. PEO-sponsored; using flexible spending accounts (FSAs) or not; choosing high or low deductibles, etc. Regardless of which plan you choose, you should closely review the feedback and surveys you receive from your employees to ensure that you offer health insurance that accommodates them and their families as much as possible. Bear in mind that many companies include dental, vision, and life insurance alongside traditional health insurance, particularly because the premiums are quite affordable for most businesses. As we mentioned earlier, disability insurance may be a requirement in your state, but it’s worth considering, regardless. Most companies choose plans that cover 60% or more of employees’ salaries in the event of sickness or accidents.

Retirement Savings, (401(k)s, and Beyond) – Retirement plans, namely 401(k)s, incentivize employees to contribute earned income towards retirement each pay period. This is especially true when an employer is willing to make a matching contribution in the form of a designated percentage each pay period. Remember that some companies offer student loan assistance in tandem with 401(k) packages, either by paying the employee’s lenders directly or by offering to make increased employer contributions to the employee’s 401(k) until they have paid of all student loan debt.

PTO (Paid Time Off) – Traditionally, paid time off has been a benefit/perk accrued over a sustained period of employment. More and more, companies are turning towards offering a single consolidated bundle of PTO days, which can be used at the employee’s discretion (for mental health days, national holidays, family vacations, or otherwise). This approach goes hand-in-hand with some of the wellness initiatives and scheduling flexibility perks we’ll discuss below. 

Parental Leave and Childcare Assistance – These are two other benefits categories that are steadily on the rise, especially due to the disruptions families with small children faced during the COVID pandemic. Employers can use the EPCCC (Employer-Provided Child Care Credit) for a tax credit of up to 10% of qualified child care referral and resource expenditures and up to 25% of all qualified child care expenditures.

Perks and Special Benefits

In many ways, designating the company-wide perks and special benefits you’d like to offer is one of the most exciting but creatively demanding aspects of your benefits selection process. In the past few years alone, many companies have developed dynamic, life-accommodating, and employee-friendly policies and perks that are wildly popular among employees across industries. As you consider your own perks and special benefits, consider that you can offer special benefits like fully remote work, hybrid-at-will work, or flexible scheduling that give employees an increased sense of autonomy and latitude while communicating trust in their productivity, work ethic, and ability to manage a distinct work-life balance. 

Similarly, wellness initiatives, mentorship programs, career advancement programs, and other programs can showcase a company’s investment in the wellbeing of your employees – short-term and long-term, within and outside of the workplace. They often have the added effect of improving camaraderie among employees who will spend more time together outside of work-related functions.

Highlight and Present Total Compensation to Your Employees

We’re ending our discussion about formulating a cost-effective benefits program by returning to the original principle of clear communication. Just as you want to solicit honest feedback from your employees to hear what they value and desire, when your benefits and perks strategy is set, you’ll want to relay the full scope of benefits to your employees as comprehensively as possible, using a mixture of quantitative and qualitative data.

Quantitatively, you should show them how much you pay (or would pay) for each month of health insurance, paid leave, life insurance, retirement “matching,” disability insurance, or other core and optional benefits. Qualitatively, you want to highlight the lifestyle and wellness benefits you’re offering by virtue of perks like remote/hybrid-at-will work, mentorship programs, consolidated PTO, or the other appealing benefits and perks you’ve selected. Remember that you want to show the numbers and the qualitative benefits, but also emphasize the holistic picture: that you’re a company invested in the wellbeing of your employees and have adopted a benefits strategy to fulfill those lifestyle needs and preferences as much as possible.

Design and Implement Your Health and Benefits Package with Payday

The process of gathering feedback, organizing surveys, determining a budget, and exploring benefits and perks can feel like an overwhelming prospect. This is especially true in the next stage (implementation), which demands legal compliance, communication of changes to current and prospective employees, updates to your payroll processes, and much more. 

Payday can work closely with you to identify benefit plans that fit your organization’s unique profile while ensuring cost-effective budgeting and seamless integration with your existing Payday services. Contact us today to begin our collaboration and implement a benefits plan that works for your employees and your budget.

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