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As a business owner, you have a lot to think about and juggle. One of the most challenging things are benefits for your employees. But much of your value actually comes from making strategic decisions that help your business grow. But when your days are consumed with managing human resources, for example, and handling all the administrative work what goes with it, you can’t be as effective in taking your business where it needs to go.
Think about employee benefits. In a competitive job market, how a company approaches benefits and perks matters. When you approach it strategically, not only can it attract quality job candidates, it can also help you retain current employees. In Glassdoor’s 2018 survey, 48% of workers said they would apply to a job if attractive benefits and perks were offered. And 44% of workers assessed their potential to remain in a job long term based on whether the company is transparent about pay and benefits. In other words, the right benefits package is important, but so is how you administer, communicate about, and update it over time.
The challenge is that putting together a competitive benefits package is a time-consuming task that often becomes the responsibility of owners. Researching what you legally need to offer, coming up with the right components, and ensuring you’re getting the best rates take precious hours and expertise that you likely don’t have. But neither can you ignore it. If you do, you could run into expensive legal and compliance issues that can have an adverse financial impact on your business. Or, you could miss a valuable opportunity to build a productive, successful team.
Let’s take a closer look at what you need to know when securing benefits for your employees and who you can turn to for help.
From a strategic standpoint, you need to determine whether the benefits you want to provide align competitively with the marketplace. Some benefits are required by law and can include Social Security, unemployment, workers’ compensation, and disability. Outside of these, having a variety of desirable benefits helps appeal to all levels of candidates and positions your business favorably among job seekers.
Under the health insurance category, this can mean a group offering that includes a preferred provider plan, a health maintenance plan, and a high deductible plan to suit different lifestyles and budgets. It can also include supplemental offerings such as an Employee Assistance Program, life insurance, short-term and long-term care insurance, pet insurance, or accident and hospital indemnity plans.
Some of the most desirable employee benefits, outside of health insurance, include flexible hours, work-from-home options, more paid vacation time, or unlimited vacation. Employees are increasingly looking for a better work-life balance, and the numbers support their efforts. The physical and psychological effects of employee burnout cost the U.S. healthcare system between $125 to $190 billion per year, according to some estimates, and can cause other problems like high employee turnover and reduced productivity. Making sure you’re providing relevant, preferred benefits that are comparable to other businesses in your field can make an enormous difference in acquiring the best talent and keeping it.
But don’t forget about the cost. No matter what benefits you may aspire to provide, the reality is that every business has a budget to stick to, and it has to cover the cost of required benefits as well as the optional benefits and perks that are deemed most important. Comparing plans and options is a lengthy, finicky process, but also a necessary one to make sure you can really afford what you want to offer.
When putting together your benefits package, there are a number of rules and regulations you have to pay attention to as well. Missing the finer points of benefits administration and legal requirements and failing to stay compliant with federal, state, and local laws can get you in hot water. Some of the biggest pitfalls include not understanding:
If you handle benefits administration yourself and don’t do it correctly, you could get audited by the Department of Labor (DOL) who can request a review of benefits eligibility and requirements, your 401K process, or your employee benefit and tax reporting through Form 5500.
The penalties can be steep if audits reveal any problems. For example, failing to process COBRA letters and election of continuation of benefits for employees who have left your business can result in fines that start at $175,000 by the DOL. If the IRS determines that your business is non-compliant with COBRA, they can fine you $100 per day, per beneficiary.
Yet as you may know, staying on top of rules and regulations can feel like a full-time job that requires considerable HR experience and know-how. Choosing to put your time and energy into benefits administration and trying to learn what you don’t know, instead of spending it on strategy and planning, prohibits you from driving business growth.
Outsourcing benefits tasks to an HR partner can help in a number of important ways. It’s their job to know how to put together a competitive benefits package that stays within your budget and ticks all the boxes. More importantly, they don’t just help you select the best benefits for your business goals, they also handle benefits administration from start to finish.
Working with a partner like Obsidian HR on your benefits package:
In today’s job market, the benefits and perks you offer are key to the success of your business. A competitive benefits package can help you find and retain the right employees who will respect and nurture your business as if it were their own and help you take it to the next level. With a trusted HR partner on your side, you can ensure this critical component of your business gets the attention and expertise it deserves.
To learn more about outsourcing HR activities to a partner, download the eGuide.