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4 Ways to Lower the Costs of Employee Perks
Posted by Insightlink on 09/23/15
A good benefits package can make the difference between winning over a talented and in-demand employee or losing him or her to an established competitor in your industry. But the costs of benefits grows every year and can leave you pinching pennies elsewhere just to keep the doors open. Benefits can make up a large portion of an employer's costs. In fact, a recent report by the Bureau of Labor Statistics found that private industry employers spent an average of $31.39 per hour worked on employee compensation, and that the cost of benefits made up an average 30.5 percent of these costs. Bearing this in mind, here's a look at how you can maintain a good benefits package while cutting costs.
Your current benefits package may not be appropriate for your employees, as there is no one-size-fits all package. Some benefits providers base their packages on demographical information for your company, while others compile packages based on the group experiences of companies in your industry. If you are a small company, your benefits provider may be calculating the individual health risks of your employees rather than aggregating your data with that of other companies in your industry. If this is the case, you can save money by choosing a new benefits partner that takes into account the industry average costs rather than your company's individual risk.
Sometimes it's all about offering unique perks to your employees that aren't prohibitively expensive to your organization. Cutting on costly perks and offering utilitarian ones is a good way to maintain company morale while shaving costs. For example, switching from a more expensive perk to a cheap-to-maintain one, such as company-provided cellphones from T-Mobile, allows you to pay for an employee's perk over a long period of time. Differing costs over a long period of time can save you money in the long run, especially when you don't have to front the entire cost up front.
Medium-sized businesses can offer insurance for vision, life, dental and disability at no cost by offering voluntary benefits. With voluntary benefits, employees are given the option to access insurance at lower group rates but must pay for those benefits themselves. Just like employer-sponsored benefits, the cost of voluntary insurance comes out of an employee's pre-tax paychecks. You can also offer a variety of plans with different coverage models based on how much an employee wants to pay. Keep in mind, Fuse Financial Partners points out that you need to have more than 50 employees to offer this model and you can't offer health insurance with this model.
You can save a lot on benefits by restructuring the way you build your employee's retirement plans. Take a look at your current retirement benefits and compare them to the 12 forms of retirement plans recognized by the IRS. For smaller businesses, 401(k) plans and SIMPLE IRA plans often work best as they are cost-efficient for both you and your employee. If you have fewer than 100 employees, you can completely avoid administrative fees with a SIMPLE IRA, but your company has to match the first 3 percent of your employees' contributions or contribute a flat 2 percent of their salaries annually.
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AboutInsightlink Communications are experts in employee survey design, data collection and analysis. Since 2001 we've helped companies of all sizes measure and improve their employee satisfaction and engagement.
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