Using Benefits to retain Employees
Employee benefits have become very costly in recent years, but employee turnover may be even more costly to a small business. Adding the right mix of employee benefits to your business can help minimize employee turnover. It might be the best investment you can make in your business.
The most common type of employee benefit and the most costly is health insurance. You might not be able to afford this type of insurance and before you rush out to buy a group policy, be aware that once you get a group policy, it may be very hard, if not impossible, to cancel it. Rather than provide a group health plan, some small employers reimburse employees for the cost of an individual or family plan. Others provide Health Savings Accounts (HSA) instead of traditional group health insurance plans where, in essence, the insured person is rewarded for managing his own health care costs. A small chunk of money is put into an account to be used for health care costs. If the money is not spent on health care costs during the year, the insured person gets to keep the money. HSAs are new, authorized by Congress just a few short years ago.
Another common type of employee benefit is a company- sponsored retirement plan, often a 401(k), so-called because of the section and paragraph of the Internal Revenue Tax Code from which it springs. It is an employersponsored, defined contribution (meaning the employers periodic contributions are specified) retirement plan.
Employees can elect to contribute to the plan with funds that come out of their paychecks before the money is taxed. Employers can match none, some, or all of the amount contributed by the employeethats up to the employer, though the percentage matched must be the same for all employees. Any size company can offer a 401(k). These plans are very popularthe U.S. Department of Labor says there are 25 million American workers enrolled in 401(k) plans that gave assets totaling about $1 trillion. There are, however, lots of choices in the retirement planning area but the 401(k) is considered the gold standard to which other plans are compared. Make sure to shop around to find the best type of retirement plan for your business.
Non-traditional employee benefits
Many small businesses feel that they cannot compete with big companies when it comes to providing adequate benefits to their employees. This simply is not true. Yes, big companies have buying power. They can buy a variety of group benefits for their employees. Small companies may not have the money to do this, but small companies can offer a different work environmenta family-friendly one. They can offer flexible schedules for single parents, unpaid time off when an employee needs it, and other perks beneficial to a working parent. They can offer a work environment that appreciates their employees hard work, where employees can feel that their service to the company is valued, where they can make a difference.