Whether you run a small, family-owned business or a large company, attracting and retaining key employees is challenging in today’s economy. Businesses often compete for skilled and talented employees in the same way they compete for a customer’s business. So, how can your business set itself apart with top performers?
Robust Benefit Packages
In addition to a competitive salary, most potential employees have a certain level of expectation concerning benefit plans. When evaluating prospective employers, selective candidates may compare the core benefits being offered. The following benefits may be among their primary considerations:
Qualified Retirement Plan. With the shift away from defined benefit plans toward defined contribution plans, personal retirement savings are more important than ever, and the 401(k) plan has become a sought-after vehicle for retirement savings. Prospective employees often expect, at a minimum, that a plan will be offered. Plans such as the 401(k) are enhanced with company-matched contributions.
Health Insurance. With the Affordable Care Act (ACA), many workers entered the marketplace to purchase their own health insurance from state exchanges. For this reason, employer-sponsored health insurance, may still be considered an important employee benefit. Although the details and costs associated with company plans vary, prospective employees may place a high value on the availability of an employer-sponsored plan when conducting their job search.
Paid Time Off. As employees seek work-life balance, the amount of vacation and personal time offered by an employer is often an important consideration. In fact, many individuals value the amount of vacation and personal time available to them, even if they fail to use it all on an annual basis.
Flexibility. The change in workplace demographics and technological advances have resulted in the need for greater flexibility on the job. Therefore, it is important for businesses to recognize these trends and modify policies for flexible work schedules, as appropriate.
Work Environment. The workplace atmosphere can also be a major factor in employee satisfaction. Prospective employees may be looking at stress levels, communication styles, and the workload.
In some cases, Internal Revenue Service (IRS) anti-discrimination rules limit the benefits received by highly-compensated key employees. For executive-level employees, there are additional benefits that can be offered. The availability of these selective benefits can distinguish one employer from another.
Executive Bonus Plan. An employer may offer key employees a compensation bonus to be used for paying the premium on a life insurance policy. If an employee owns the policy, the bonus amount can be a deductible business expense for the employer. The employee must claim the annual bonus on his or her tax return as ordinary income. Any death benefit paid to the employee’s estate or beneficiary is generally income-tax free.
Disability Income Insurance. For a highly-compensated employee, a group disability insurance plan may provide only a limited amount of coverage for sustaining an illness or injury that prevents him or her from working for a length of time. To supplement this coverage, an employer may offer additional, individual disability income insurance.
Voluntary Benefits. Through a voluntary benefit plan, an employer can offer a menu of benefit options in addition to existing core benefits. Employees choose the benefits that meet their respective needs and pay for them through payroll deductions, as defined by the specific plan. Because voluntary benefit plans are offered in a group setting, costs are generally more affordable than if an employee were to purchase similar benefits individually.
Business owners are realizing that a competitive salary is no longer the only factor sought by highly skilled employees in today’s tight job market. Just as you shop for key employees, they shop for the employer that offers the best combination of salary and benefits for their specific needs. Therefore, you may want to consider creating a benefits package that keeps you one step ahead of the competition.