A high-quality employee benefits package is the cornerstone of employee satisfaction and retention. While some benefits are mandatory, employers design the rest of the package according to employees’ needs, business objectives, and the company’s budget.
If you don’t have a specialist in benefits administration and want to design employee benefits on your own, these steps can keep you on the right track.
1. Determine Benefits Objectives
Before you start building a benefits package, you need to figure out which objectives you want it to achieve. These goals can guide you when setting the budget and choosing voluntary benefits.
Providing a unique benefits package to outdo the competition
Ensuring full compliance with federal and state laws
Fulfilling the changing needs of employees
Improving the image of the company
Matching the offers of similar organizations
The objectives can depend on the company’s size, location, industry, and the impact of the existing benefits package.
2. Set a Budget
The budget is often the most critical part of designing your benefits program.
With objectives in mind, you need to understand how much money you are ready to spend. The budget can help you determine which benefits belong in the package and which you can’t afford.
If you already have a benefits package, you can analyze how well it fits the current business objectives and make budget alterations accordingly.
3. Do a Competitive Gap Analysis
A gap analysis is the comparison of your ideal benefits to the current benefits package. This can help you see what your current offerings are lacking, so you can adjust the package and the budget accordingly.
Additionally, you can compare your current benefits to what your competition is offering its employees. This can help you design a competitive benefits package to outdo the competition when attracting top talent.
4. Assign Benefits Priorities
By analyzing the information you collected by taking the above steps, determine which benefits have top priority for your business. This can help you understand which elements of the package require larger investments.
While you are setting the priorities, keep COVID-19 in mind. According to Harvard Business Review, 89% of employers are deprioritizing at least one type of employee benefits due to the pandemic, such as on-site child care, paid vacation days, and tuition reimbursement.
5. Ensure Compliance
Federal and state regulations should have a direct impact on your benefits package. Mandatory basic benefits include:
Social Security, Medicare, and Federal Insurance Contributions Act (FICA)
Health insurance for companies with more than 50 FTEs (full-time and full-time equivalent employees) according to the Affordable Care Act.
State requirements for benefits can vary. For example, five states (California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico) require short-term disability insurance. Meanwhile, each state sets its own workers’ compensation requirements and penalties. That’s why it’s imperative to monitor local, state, and federal rules and regulations to ensure full compliance.
6. Communicate with Employees
Your employees should be fully aware of what the benefits package offers them.
For example, if you offer an Employee Assistance Program (EAP), your employee should understand what it entails. Otherwise, when they need counseling, employees could seek medical help outside the program, increasing the costs of health claims.
When designing the benefits program, you can also solicit employees’ feedback. If you decide to use this feedback to make changes, communicate your actions to employees. This can improve employee moraleand assist with retention.
7. Implement Periodic Evaluation
An employee benefits package requires regular maintenance. To make sure the package you offer is still viable, you need to arrange periodic evaluations. During the evaluation, you may discover that:
The current benefits package doesn’t help you meet new objectives.
The utilization rate of the program is low (not enough employees are taking advantage of the package).
Employees complain about the current benefits.
Your package is no longer competitive (after running a competitive gap analysis)
Reviewing your benefits package regularly can help you catch the above problems before they significantly impact the company’s bottom line.
Benefits Design is Essential
Each business has unique needs, goals, budgets, and benefits. To ensure a high ROI (Return on Investment), it’s imperative to take an in-depth approach to create a compelling benefits package. From employees’ needs to the competition’s choices, you need to consider a variety of factors to design a truly successful package.
If the process seems overwhelming, you can consider outsourcing it to an HR partner. A reliable HR outsourcing solution gives you access to expert advice and benefits administration services, making benefits program design much less complicated.
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Tom DiSilva has been providing professional human resource services for over 30 years. As the CEO of Navigate PEO, he actively partners with organizations of all sizes in the Greater New England area and across the country to help their businesses grow. He has expertise in HR and Labor Management, offering guidance and support for key areas of business such as negotiations, operations management, employee coaching, and employee benefits design.