Tag Archives: employee benefits

Creating a Total Rewards Program: Compensation and Benefits

Many employers are becoming increasingly concerned with how to sustain and recruit a high-quality workforce while also maintaining costs.

What steps are you taking to make sure that you are an employer of choice? How are you promoting the full value of your company and your offerings?

 

Total Rewards Concept

Establishing a total rewards program is not a new concept for employee recruitment and retention. For years, employer groups have produced total compensation or “hidden paycheck” statements that detail compensation and benefits costs. These programs are extremely important in improving recruiting and retention strategies in a tight labor market.

Total rewards programs provide monetary, beneficial and developmental rewards to individuals within an organization who meet specific goals. These incentives are perceived to be of value in the employment relationship, including:

  • Base and variable pay
  • Group insurance (medical, dental, life, retirement, savings, etc.)
  • Paid time off (PTO)
  • Recognition programs
  • Training and career opportunities

 

These elements are interdependent and may have different values and importance to each person. Ultimately, the outcome of a total rewards approach is to provide each individual with a combination of monetary and non-monetary rewards to motivate them to maintain desired business performance.

 

Weighing the Options

The Top Five Total Rewards Priorities Survey, sponsored by Deloitte Consulting and the International Society of Certified Employee Benefit Specialists (ISCEBS), surveyed Human Resources professionals from 22 countries around the world (in the Americas, Europe, the Middle East and Asia Pacific). Respondents were to represent their company’s views on many questions and to share personal opinions on others.

Despite differences in political and cultural climates, 35 percent of respondents reported that their top challenge in the coming years is to find, motivate and retain top talent.
Other challenges listed include the rising cost of total rewards, being able to afford significant pay increases in a cost reduction environment, navigating through uncertain economic conditions and anticipating new tax and regulatory requirements, and providing meaningful total rewards to employees.

When asked about changes employers planned to implement to their total rewards programs over the next 12 months, responses were as such:

  • Increasing health and well-being initiatives (43 percent)
  • Definition, mix of components, and/or redesign of overall rewards strategy (40 percent)
  • Alignment with organization strategy and brand (34 percent)
  • Differentiation by employee group (workforce segmentation) (23 percent)
  • Differentiation by business unit (14 percent)
  • Significantly reducing total rewards investment (8 percent)

 

Re-evaluation, redesign, alignment and differentiation of programs seem to be the most popular strategies among employers. To cater to your employees and determine what they value and prefer to receive in exchange for their time and talent, consider using surveys, focus groups and exit interviews to gather the needed information. Plus, on a consistent basis, communicate with employees concerning what incentives are offered and how they can take advantage of the rewards in their unique circumstances.

 

Creating and Implementing a Total Rewards Program

To create an effective total rewards program at your organization, consider putting together a team of individuals to assess your current benefits package and how it helps your company achieve its goals. If you find that you are not meeting the organization’s objective, then implementing or enhancing a total rewards program may be the right strategy for you.

Here’s how to develop a solid program:

  • Ask management to identify and analyze various rewards strategies to determine what would suit your workplace best. Consider pay rewards, nontraditional benefits and personal development opportunities to further company objectives.
  • Implement the new system by publicizing it to your employees and educating management personnel.
  • Train employees on how they can use the program to achieve results for personal success and for company goals.
  • Evaluate the program’s effectiveness and make necessary changes to further achieve your goals.

 

To help employees understand the concept of total rewards, there are many online tools that will allow them to view information on benefits and compensation statements, learning opportunities, paid time off, educational reimbursement policies, wellness activities, and career development and recognition programs.

Consider implementing a total rewards program or revamping your current one to meet the company’s needs and the needs of individual employees in order to increase the value of your investment.

For the complete results of the ISCEBS and Deloitte Consulting survey, visit: www2.deloitte.com/us/en/../top-five-rewards-survey-2014.html

 

 

Why Strategic Benefit Planning Makes Sense

Competitive employee benefits packages are essential for attracting and retaining quality employees, but continuing to offer them can be tough with the rising cost of health care squeezing an already tight budget. Cutting benefits may seem like a necessary reality for some companies, but could have serious long-term consequences.

Retaining employees throughout these rocky economic times is vital so that your company remains competitive and positioned favorably in its industry when the economy rebounds. One remedy could be implementing a strategic benefit plan, which will help you find ways to contain or even cut costs while still offering competitive benefits.

What is a strategic benefit plan?

A strategic benefit plan is a three-to-five-year plan crafted by you and your Libertate Insurance representative that outlines goals, strategies and action plans in regards to your employee benefits program. In creating the plan, you and your broker will strategically analyze ways to contain costs through various plan improvements. This approach is a methodical and logical long-term approach to benefit planning, as opposed to making decisions year to year, and will provide a thought-out road map for your future benefits.

What are the benefits of implementing one?

At the company level, creating a strategic benefit plan will help greatly with internal budget planning and can also be incorporated into your corporate strategic plan. This will bring HR and employee benefits into larger strategic conversations and ensure that a competitive benefits package continues to be available.

Employees will also see the benefit from a strategic benefit plan in many ways. First of all, by finding ways to cut and contain costs for the company, the employee will likely reap some of the savings as well. In addition, this type of plan will provide assurance for employees worried about their benefits. Next to job security, employees worry most about their benefits and compensation, namely that they could be reduced or cut at any time.

Studies have shown that workplace morale is strongly linked to the quality of employee benefits, so reassuring employees that their benefits will continue is a beneficial move for companies. The strategic benefits plan can include an employee communication initiative, which will keep employees informed and assured on the future status of their benefits package.

Voluntary Benefits – A Win-Win for Employers and Employees

As health care costs continue to rise, so has the demand for voluntary benefits. Since many employers find it increasingly difficult to provide employees with a complete benefit package, voluntary benefits have become an ideal solution. Voluntary benefits allow employers to offer benefits that are attractive to employees without added cost to the company. Employees benefit because they have a variety of insurance options available conveniently in one place, and often with lower premiums than individual polices they would have bought themselves.

What are voluntary benefits?

Voluntary benefits are coverages and products made available to employees for elective purchase. These programs have four key characteristics:

  • 100 percent employee-paid
  • Offered through an employer
  • Solicited and enrolled through a carrier or enrollment firm
  • Paid through automatic payroll deductions

Because of their cost efficiency and portability, as well as their contribution to an employee’s work-life balance, voluntary benefits are becoming a central component of many companies’ overall benefits strategies.

What are some common voluntary benefits?

  • Permanent life insurance
  • Disability income insurance
  • Accidental death and dismemberment (AD&D)
  • Supplemental health insurance
  • Long-term care insurance
  • Retiree medical insurance
  • Dental/vision insurance
  • Auto/homeowner’s insurance
  • Prepaid legal services
  • Pet health insurance
  • Identity theft insurance
  • Computer purchase programs
  • Adoption assistance

Why should employers consider expanding their benefit offerings to include voluntary benefits?

  • Trends show employees have strong emotional appeal towards these benefits and have come to expect them
  • Usually there are no fees or costs for employers
  • They complement the goals of most corporate work/life programs
  • They offer easy implementation (most do not have legal and regulatory issues associated with insurance benefits)
  • They require little post-implementation administration or support

What are some specific advantages to offering voluntary benefits?

Voluntary benefits appeal to both employer and employee needs.

Employers:

  • Increased expense control in the face of rising benefits costs
  • Cost-effective way to supplement benefits cuts or reductions
  • Important tools for attracting and retaining valued employees
  • Differentiate themselves for competitors (both in offerings and image)

Employees:

  • Opportunity to access a broader array of benefits
  • Freedom to choose benefits that best suit their needs
  • Affordable premiums (often deducted on a pretax basis)
  • Portable coverage
  • Easy enrollment process
  • More convenient and time-saving than buying on their own
  • Convenience of payroll deduction
  • No medical exams
  • More lenient underwriting requirements

What process should employers follow when expanding their non-traditional voluntary benefit packages?

Employers wishing to roll out new voluntary benefits must show their support for these products in order for them to take off with employees. Showing support motivates workers to take notice and see the value for themselves and their families.

  • Examine your current benefits package to determine which benefits are popular or not.
  • Talk to employees to determine what voluntary benefits they would prefer.
  • Determine which benefits are offered by your competitors, as current and prospective employees may use this information as a benchmark for evaluating your company.
  • Determine the source(s) of benefits that offer the most value for the lowest cost (this is very important to ensure success of a voluntary program because of employees’ perceived value).
  • Determine enrollment logistics, including methods of enrollment One-on-one enrollment is the most effective means of communication and provides personalized attention.
  • Determine service logistics, including support, new employees, terminated employees and re-enrollments.
  • Initiate an employee communications campaign to educate employees on what voluntary plans are offered and the benefits of electing them.
  • Consider offering benefits multiple times per year, not just during open enrollment. This allows employees to focus on one or two voluntary packages versus being overwhelmed with many packages all at once.
  • Follow up to ensure employees are satisfied and that there are no issues with any of your voluntary benefits.

Are there any fiduciary responsibilities associated with offering voluntary benefits?

Although most employers do not contribute to the cost of this coverage, they still have a fiduciary responsibility under ERISA to police such plans if they engage in the promotion or distribution of benefits information related to these programs or allow payroll-deducted payment on a pretax basis through a Section 125 cafeteria-style plan.

How are voluntary benefits administered?

As the number of available voluntary benefits increases, proportionally more time and resources are required to communicate, administer and manage such programs. Even turn-key products, such as discounts, can be administratively challenging when there are numerous benefits.

To ease this burden, employers can outsource their voluntary benefit and/or discount programs to third party administrators, automated platforms or service providers. These service providers typically charge a per-employee fee for managing the corporate discount program(s).

Consultants have extensive training in all areas of voluntary benefits and offer valuable resources. They can assist employers in negotiating more favorable benefit and cost terms with insurance carriers and enrollment firms, along with supporting the program once it is in place.

Most employers try to avoid paying third party management charges, but these fees may be more affordable than the cost of internally managing the program, and they often yield a more robust program in terms of access, product variety and control.

How are voluntary benefits outcomes measured?

To ensure that voluntary benefits programs are as competitive and effective as possible, employers should measure the success of the programs every 12 to 24 months. Employers can conduct surveys to test employee awareness of, understanding of and satisfaction with the voluntary benefits against those offered by industry peers. Finally, employers can examine participation rates among employees to determine if they are at, above or below industry norms with regard to re-enrollment and persistency.

 

Education

The Benefits of Implementing an Educational Assistance Program

Today’s companies are more competitive than ever, and there’s an ongoing battle for acquiring and maintaining top talent. That’s why many employers choose to go the extra mile and offer perks to their employees — one of which is an educational assistance program.

 

What is an Educational Assistance Program?

As defined on Inc.com, an educational assistance program is “A type of employee benefit in which an employer reimburses employees for the costs associated with continuing education. Assistance usually comes in the form of reimbursements for tuition, fees and books.” Simply put, an employer provides financial assistance to employees who wish to pursue an ongoing education. The exact amount of money provided can vary, and it’s often contingent upon employees maintaining a certain grade level.

 

Why Implement this Type of Program?

Employers choose to provide their employees with educational assistance for many reasons. One of the more common reasons is to increase loyalty so that workers stick around longer and develop a sense of loyalty to their employer. Another reason is to ensure that employees are equipped with the necessary skills to perform their jobs at a high-level. This is particularly important in industries where there’s a lot of change (e.g. tech and engineering), helping to maintain a knowledgeable and adept workforce.

An educational assistance program can also serve as an effective recruiting tool. Millennials in particular can kill two birds with one stone by having a decent job and completing their education without racking up massive debt. It can also be beneficial from a public relations standpoint by enhancing a company’s overall reputation.

 

The Pros

Information from a survey by the International Foundation of Employee Benefit Plans (IFEBP) found that “Almost 75 percent of organizations say their educational assistance offerings are successful.” More specifically:

  • 45 percent of programs were successful in retaining current employees
  • 44.3 percent kept employees current on evolving skill sets required for the organization
  • 39.4 percent maintained/increased employee satisfaction and loyalty
  • 15.6 percent attracted future talent
  • 12.8 percent maintained/increased productivity and innovation

The data shows an encouraging outcome for companies using educational assistance programs . With nearly three-fourths of companies reporting success, it’s likely to have a positive effect on your company.

 

The Cons

Perhaps the biggest drawback is that some employees may use the program to “Get an education and run.” Someone who receives a degree after a few years and takes off for a better, higher paying job will leave the company without the fruits of its investments.

Many organizations report only a small number (five percent) of employees participating in the educational assistance program offered. For this reason, it could potentially be a waste of time to set one up and complete the associated administrative tasks.

 

When considering implementing an educational assistance program, it’s necessary to look at the current state of your business and determine if it would make sense. However, it’s important to note that by and large, the positives outweigh the negatives. Offering this perk to employees can be a smart move in the 21st century.

What Type of Retirement Plan Should You Offer Employees?

Offering a retirement plan to your employees can be mutually beneficial in several ways. Besides improving the well-being of your workers and positively impacting their future, it can be used as a recruiting tool, serve as a motivator for increased productivity and decrease turnover. Additionally, it can often give your business some considerable tax advantages. Which type of retirement plan should you offer?

 

Defined Contribution Plan

A defined contribution plan is on the Investopedia website as “a retirement plan in which a certain amount or percentage of money is set aside each year by a company for the benefit of the employee.” There are several types of plans that fit under this umbrella including 401(k), 403(b), SIMPLE, etc. When it comes to how much money an employee can pull out of a defined contribution plan, it’s contingent upon how much you and your employee put in and the interest rate.

Pros

  • You and your employees have more control over what you contribute
  • You can easily calculate your obligations each year

Cons

  • You could potentially incur fines if you’re not compliant with the IRS, HIPAA, ERISA, etc.

 

Defined Benefit Plan

A defined benefit plan is defined on the Investopedia website as “an employer-sponsored retirement plan where employee benefits are sorted out based on a formula using factors such as salary history and duration of employment.” As an employer, you’ll usually make most of the contributions — and unlike a defined contribution plan, employees receive a fixed amount of money once they retire. Choosing this plan tends to work well for many smaller businesses because there are no employee number requirements.

Pros

  • You can often get bigger tax deductions with a defined benefit plan than you could with a defined contribution plan
  • Significant benefits can accumulate within a relatively short period of time
  • Employees can better predict the benefits they’ll receive

Cons

  • This tends to be a costly plan to establish
  • It’s complicated from an administrative standpoint
  • You will have to pay an excise tax if either minimum contributions are not made or excess contributions are made

 

Qualified Retirement Plan

Unlike the previous two types of plans, a Qualified Retirement Plan is also defined on the Investopedia website as “falling outside of ERISA guidelines” and is not eligible for tax-deferral benefits. In turn, they tend to be very flexible and can be customized to the specific needs of individual employees. These aren’t usually used for lower-ranking employees, but instead are designed for those in executive positions. As a result, a qualified retirement plan isn’t geared toward the masses, but can be ideal in certain cases.

Pros

  • There is a lot of leeway, and it can be tailored to reach an employee’s exact objectives
  • You can minimize your administrative and funding costs
  • There can be major long-term tax advantages

Cons

  • It isn’t practical unless you have high-ranking executive employees
  • You can’t capitalize on deductions until an employee actually retires
  • It comes with greater liability than other plans

 

There’s no doubt that offering a retirement plan is a great choice for many employers and can be a contributing factor to the long-term success of your business. Understanding the key differences between these common plans allows you to choose the best one that meets the needs of both your company and employees.

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