Employee Benefits Strategies

Any employer hoping to retain his employee should develop employee benefits strategies that fit the needs of both the company and its staff. Small business owners, in particular, have to be careful about the type of benefits they offer because funds are not always readily available for unlimited out-of-pocket expenses.

An employee benefits package should be attractive to both current and prospective staff members, but it must also be feasible for the employer. If, for example, you are having difficulty making payroll every month, it might be necessary to plan well into the future rather than executing a plan now. However, just letting staff members know that employee benefits are on the way will have a positive impact.

Deciding Which Employee Benefits to Offer
There are dozens of possibilities that you might want to include in an employee benefits package, so it is important to determine which benefits your employees might want. Health insurance is usually at the top of the list, followed by paid vacation and paid leave. Employees will probably also want an employee benefits package that includes some sort of retirement plan.

Beyond that, you also have to look at intangible and unique benefits that will make you a competitive employer. For example, many employers are now offering telecommuting time for employees that helps save gas money and creates more flexibility for staffers. This also conserves workspace at the office, meaning that it benefits the employer as well.

Some employee benefits will cost immediate money for a business, such as health insurance where premiums must be paid on a monthly basis. Others, such as corporate discounts, can make money for the business. It is important to balance both moneymakers and expenses when preparing an employee benefits package.

Who Gets What and When?
It is doubtful that everyone in the office will be entitled to the same employee benefits package, especially if you employ more than 100 workers. In many offices across the country, employee benefits are earned rather than given, and each staff member will qualify for benefits at different times.

For example, according to the Employee Benefit Research Institute (EBRI), the average employee in 2004 waited 1.6 months for the start of health insurance coverage. Some employers start employee benefits right away, while others might instill a waiting period of three to six months before coverage begins.

Businesses with high turnover of staff members might have longer waiting periods for employee benefits. This is to help save money by not offering benefits to staffers who stay employed for only a few months before moving on. This is more common in entry-level and lower-paying positions.

Other employee benefits, such as paid leave and paid vacation, might also be subject to a waiting period for staff members. Indeed, many employers offer these benefits as earned rewards for loyal service to the company; the employee receives more paid vacation, for example, the longer he works for the employer. This helps encourage employee retention while saving money on employee benefits.

Furthermore, some employee benefits might be made available only to certain levels of employees. For example, crew members might receive only health, dental, vision and 401(k), while managerial-level employees could receive paid vacation, paid leave, stock options and year-end bonuses. Not only does this help the employer save money on employee benefits, but it also promotes advancement and dedication among staff members.

Taxes and Employee Benefits
Another aspect to consider when developing an employee benefits strategy is taxes. Some benefits are taxable for the employer, while others might be exempt or deferred. This is often a deciding factor when employers develop an employee benefits package.

Some employee benefits are voluntary, such as paid vacation and leave, and are therefore taxable by the IRS. The employer receives no tax breaks on these employee benefits, so they aren't as attractive for the business. Others, such as health, dental and vision insurance, are tax exempt, which means that they can be used as deductions on the employer's tax returns.

According to the EBRI, many retirement plans are considered tax deferred, which means that no taxes are paid on those employee benefits until and unless the funds are withdrawn from the retirement account. These include 401(k)s, Deferred Compensation plans and tax-sheltered annuities.

Industry-Specific Benefits
In certain industries, some employee benefits are more important than others. For example, if employees are consistently exposed to dangerous or hazardous materials, workers' compensation benefits are particularly important, as well as life insurance and paid leave. In industries where new methods and information is developed on a regular basis, education reimbursement programs might be a solid investment.

It is important to consider the type of work in which your employees engage before putting together an employee benefits package. Consider both the benefits that will profit the employee and those that are advantageous to the business.