Keys to an Effective Employee Compensation and Benefit Plan

In order to attract new employees and retain your best people, it works to have a competitive Employee Compensation and Benefit plan in place. Employees are looking for more than just the financial reward of a salary; to avoid losing excellent workers to your competitors, you need to consider offering them additional benefits. A compensation and benefits program is an ideal way to meet your staff’s wants and needs while a total compensation statement makes them aware of all of the value of your contributions.

Total Compensation Statements

Demonstrate to your employees the total value of the benefits program through total compensation statements. These provide information about the complete pay package an employee receives annually, including both direct and indirect compensation.

What to Include in a Compensation and Benefits Package

There are many types of benefits that any business should consider including in its benefits package:

Retirement Benefits

When choosing the appropriate retirement plan, you should take into account your company’s needs as well as your employees’ wishes.

  • SEP-IRA plans are ideal for small organizations as they are easy to establish and have no government filing requirements. Employers may make contributions of up to 25 percent of the total amount of their pay.
  • SIMPLE-IRA plans are suitable for companies with up to 100 employees. Some administration is required. Employers may match employee contributions or designate a percent of workers’ wages.
  • 401(k) plans are popular for their flexibility and higher limits for contributions; however, some require significant administration and annual filings.

Health Insurance

Although health insurance can be quite expensive, it is something most employees are looking for in a company. There are a wide variety of plan options available, meaning you should be able to find something that is both affordable and meets your employees’ demands. Also consider offering healthcare through the defined contribution model, which gives you greater flexibility about how much you contribute and allows each employee to choose a plan that meets his or her needs.

Vacation Days + Sick days + Personal Days = Personal Time Off (PTO)

Set out a clear policy that allows employees to take time off when they need it. One week vacation per year served, up to three weeks off, is often thought to be a standard – plus some amount of sick days paid and some considered personal time off (could be in half days) for doctor appointments, family care, etc. Sometimes a competitively engineered program here can be a deal-maker in recruitment. Be creative, but don’t lose site of what’s important for the business.

One great program that we used to provide in my prior life, and our employees absolutely loved it, was Friday afternoons off between Memorial Day and Labor Day. But everyone had to extend their other weekday work to make the 4 hours off good. In our case, we had billability minimum requirements, so they had to still make that minimum. And you couldn’t take Friday morning off or that cost you an entire day off.

Education Reimbursement

Help employees acquire further training in fields relevant to your business. You can offer either partial or full reimbursement for these classes. You would be amazed how important your best learners, who often can be your best employees, see this as an alluring benefit!

Much More

Take a look around your environment. What are you offering, or can you offer, to your employees that are, or would be, meaningful to them, which wouldn’t necessarily cost you more? Even things like free coffee and free parking have value. Or provide them a $50/month cell phone reimbursement, but for that they must be available by cell to your customers. Consider quantifying all of these in annual compensation statements.

Setting up a compensation program can be simple and inexpensive for your business. Whatever benefits you choose to include, ensure the focus is on providing employees with greater flexibility and value, and allows you to share the cost of fundamental benefits such as retirement plans and healthcare insurance.

Disclaimer: Any advice relating to finance, investments, companies, securities or any other financial matters whatsoever reflects the private opinion of the person giving this advice. It is not the advice of a financial or other expert. COMPackage, its employees and representatives take no responsibility for any consequences resulting from following such advice. Anyone seeking financial and/or investment advice is strongly advised to conduct their own research or consult a professional adviser. You are solely responsible for any decisions you make based on this information.

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