Whether you have one, ten or one hundred employees, part of what will make them stay loyal to your company is the benefits that you offer them. However, this would take a significant chunk out of your operational expenses.
If you’re just starting out in the industry, how can you make your employee benefits package attractive enough for employees to not find other job opportunities – but affordable that it would not take so much out of your daily operational costs?
That is exactly what we will find more about here. You should always look for money-saving ideas for employee benefits.
Creating a Balance Between an Attractive Employee Benefits Package and Its Affordability
Why do employers need an attractive employee benefits package in the first place? Here are a few quick reasons:
- Qualified employees are difficult to come by. When you stumble upon one who’s a perfect fit for the job, you would want to keep his/her working for your company as long as possible.
- If you have a direct competitor who is offering a more attractive employee benefits package, it is possible for a qualified job candidate to turn down your offer and go to the other company.
- It’s more cost-effective to hire and keep an employee than to keep on rehiring new ones. If an employee’s average stay in your company is only one year or so, you would end up having to pay a new hire during the training process.
The hiring process is also tedious, so you are losing precious company time out of the hiring/rehiring steps. Instead of a person already working on operations, you would have to spend time with hiring, orientation, training, going through the first few months of employ, etc.
- Offering the right benefits package will make employees happy, and stay loyal to your company.
Now, how can you create that delicate balance between offering employees an attractive benefits package, but without it costing your company too much?
Fortunately, there are a few ways for you to save on an employee benefits package. These techniques will make the benefits package seem attractive to them, but you would not have to spend so much as an employer. Read on to find out what these cost-saving ideas are for employee benefits.
How to Save Money on Employee Benefits
If you’re a small business owner, it seems as if you cannot compete with the giants in the industry when it comes to the benefits that you are offering employees.
The good news is that there are actually techniques that you can use to still offer employees the benefits that they would typically like to have from an employer – but without taking a huge chunk out of your operational expenses. Take a look at the ways for you to save money on employee benefits:
Use a direct deposit account for employee salary
One of the biggest misconceptions that small business owners have is thinking that they can save money by distributing employee benefits through paper checks.
According to the Electronic Payments Association, business owners can actually save up to $3.15 per payment by using direct deposit instead of issuing traditional pay checks.
If you have ten employees, it will save you $75.60 per year – more if you have a larger number of employees. What’s making your company save money by using direct deposit instead of traditional pay checks is the fact that you would not have to pay processing and administrative costs.
You can also save a lot of time and money working on the payroll because direct deposit is automatic. Simply use a software payment program or a payroll processor and you can churn out the employee’s salary in no time.
You can even hire a third party payroll processing company at a fraction of the cost so no employee of yours would have to spend time away from operations just to process the payroll.
Yet another benefit of choosing direct deposit over paper checks is that the employees would not have to cash them out. Even if the work hours last way past banking hours, you don’t need to give them extra time off work just to have the checks processed. They simply need to have an ATM where they can withdraw the money from machines anytime.
Include a 529 plan contribution as part of your employee’s benefits package
A 529 plan it an investment vehicle that offers tax advantages, and the goal is to encourage parents to save for the college education expenses of their kids. If you are hiring practical parents, they might look for a 529 contribution from you as an employer, which is why it should be part of your employees benefits package.
Basically, you can offer a direct payroll contribution program to a 529 plan. This is a tax-free benefit and in the future, the money can be withdrawn for qualified expenses related to college education.
To learn more about this, check on the 529 plans available in your state. Some states do offer tax incentives while others provide it as benefits to their residents. If you want to save money on this type of employee benefits, make sure to purchase it directly from providers rather than through third parties like financial advisers or mutual fund companies.
Make it easy for your employees to save on retirement
Another reason why employees stay loyal to companies for so many years is the retirement package that they expect. As you may already know, the earlier retirement is planned for, the better it is for an individual. If you would like to save money while offering an attractive benefits package to your employees at the same time, include a suitable retirement plan.
There are many plans that you can choose for this. Employees can contribute to their own retirement fund pre-tax, where the invested funds will increase in a tax-deferred manner until the first withdrawal is made.
Another option is for you to have a 50-50 sharing for the retirement fund. This means that if the employee contributes $100 out of his or her monthly salary for the retirement fund, you would have to contribute another $100 as an employer. Make some quick calculations to determine which among these two options will be cheaper for you as an employer, and offer that to your employees.
Is there a day care option for working parents?
If most of your employees are working parents, it would not hurt to offer the option of a day care program. Child care problems account for more than 80% of absenteeism, lateness and even completely dropping off work. The solution is to consider an on-site child care center for the parents who have nobody to look after their kids once they leave for work.
Parents feel more relaxed knowing that their kids are taken care of near the workplace, it’s a great morale booster and it is an attractive part of any employees benefits package.
This might necessarily sound like a cost-effective option for you as an employer. But if 50% to 90% of your employees are working parents, you will actually save money in the long run by investing in a child care facility. It will reduce turnover, attrition rate and lost work days – so the investment is well worth it in the end. Employee benefits are very important, so look past the paycheck and the medical insurance!
Think about voluntary benefits
Most small business owners may not be able to offer benefits such as dental, disability, vision or life insurance – but you can offer them as part of a group plan. What will happen is that you can get your employees to purchase a group of affordable insurance policies. The credit goes to you, as the employer, for sponsoring them. This will save you a lot of money instead of offering full health insurance plans and similar benefits.
What about paid time off?
Traditionally, a paid time off benefit gives employees two weeks’ worth of paid vacation days. As an employer, you would need to hire temporary workers to replace the staff who are taking personal days off – so it will cost you double.
To save money, what you can do is offer a paid time off buy-back. Through it, employees will be given half of their salary for the day for the paid time offs that they do not take. It will save you a significant chunk of money, especially if you have a large number of employees.
Save on on-site amenities
The bigwig companies typically spend a lot of money on on-site amenities that make their employees stay in the office longer. A gym, for example, makes them stay in the office longer. But when you think about it, employees would much rather spend time away from the office rather than in it.
So instead of putting your money on fancy on-site amenities that most employees would rather not use, anyway, think of more creative perks that will let them live their lives outside the office – in their own terms.
All in all, what you should be investing in as an employer are benefits that do not cost you that much, but your employers will surely appreciate. Instead of obsessing over the tiny details, look at the bigger picture and make sure that the set of benefits you offer make your employees happier and healthier while still being productive in your work environment. Find out how to get the best employee benefits and enjoy your new workplace!