Abstract
The creation of a employee benefit plan will be crucial to the start and retention of a business. Providing employees with benefits that are important to them will attract talented individuals, and ensure the business goals and strategies are met. Some of the most significant components of an employee benefit plan include wages, insurance and time off. Each of these components relates to the compensation of an employee, and employee compensation is what attracts, retains and motivates individual employees. Without an adequate plan, a business would not succeed. An employee benefit plan must be comprehensive and requires a plan that evaluates the market, company goals and strategies, and company needs as well as what motivates an individual to choose to work for your business. An employee benefits plan that meets the needs of the employer as well as the employee is the type of plan that a business should implement.
Creating an employee benefits plan is an important aspect in the development of a business especially in today’s competitive market. There are many significant components that must be considered when instituting a new employee benefit plan. Although some components have more importance than others, each component relates to the compensation of an employee, and employee compensation is what attracts, retains and motivates individual employees. Without an adequate plan, a business would not succeed. The information that must be considered includes wage compensation, retirement plans, insurance plans, education reimbursement, vacation and other time off, as well as other optional components. An individual will base the decision to work for an employer on the employee benefit plan. Thus, an employee benefit plan must be comprehensive and requires a plan that evaluates the market, company goals and strategies, and company needs as well as what motivates an individual to choose to work for your business.
Prior to considering the actual components of an employee benefits plan, a business must determine its own objectives and strategies in offering the plan. The market, the location, and the size of the business are critical in this assessment. The company budget is crucial as the components of the employee benefits plan will rely on the budget. It would also be important to consider the needs that the employees will have when coming to work for the company. The employee needs will include the components of the plan as well as considering what motivates and satisfies an employee. Employee demographics is also a determinant. Finally, prior to looking at each component of the plan, an employer must consider the governmental and legal requirements of a plan.
Wages
In order to establish an effective and attractive wage, a business must consider the market in which the company exists. This may require a market survey of wages to determine the amount of wages that other similar companies are providing. The business then must determine whether to set the wages above the market or below the market. This is a crucial decision when establishing the employee benefit plan as wage will attract or deter potential employees. In considering wages, it is also important to look at the value of the position in which the wage is being offered. This may require an analysis and evaluation of the actual job to be performed.
Retirement plan
Retirement plans are of significant concern to employees, thus they are one of the most important items of information to consider when planning and developing the employee benefit plan. The costs of various plans as well as the administration of the plan must be reviewed. Some of the choices of an employee retirement package may include the SEP-IRA, the Simple IRA or the 401(k). The SEP IRA are best for small businesses. These types of plan are easier to create as they have not filing requirements by the government. Within this type of plan, the employer can contribute up to twenty-five percent of the benefit for the employee. The Simple IRA plan is for mid-sized companies. This type of retirement plan allows the employee to defer his or her own wages into the set plan while the company makes its contribution as well. These types of plans allow the employee to contribute all of his or her wages if desirable. The employer may provide a feature within this plan to match the employee’s contribution as well. Finally, the 401(k) retirement plan is another option to consider. This plan allow contribution by both the employee and employer as well. However, there are many governmental requirements in establishing this plan that must be considered.
insurance
Personal insurance for the employee is another very important consideration to be made when developing an employee benefit plan. Insurance includes medical and dental benefits, as well as disability and life insurance benefits. There are a variety of medical and dental plans available. An insurance plan will either attract or detract potential quality talent. A variety of providers exist to choose health insurance for employees and the Affordable Care Act will be a consideration.
Life insurance and disability insurance are two other insurance programs that should be included in an employee benefit plan. When considering these components, the employer must review the state regulations as many states have particular requirements for disability insurance. Disability insurance can include long term and short term disability. The plans vary as to which types of disabilities are included so each plan must be considered carefully in view of the company goals. Employees place value in insurance benefits so the planning must include what is most cost effective, cost efficient as well as tax efficient based on the goals and strategies of the business. Insurance will be an expensive aspect of the employee benefit plan. It will be important to ensure the plan chosen is cost effective and addresses the needs of the company and the employees it wishes to attract.
Education Reimbursement
It may be worth considering offering a package to allow employees to pursue their education. This would be valuable especially if the business requires continuing education requirements. The benefit to the business that offers educational reimbursement is substantial as employees will have more education and more training. The business may choose which educational expenses to offer reimbursement including tuition cost, cost of books and other fees. Typically, educational reimbursement is offered for job related classes. It will be important for the company to determine which courses or classes fall into this category.
Time Off
Vacation and days off include holidays, medical or maternity leave, flex time and sick time. The cost and amount of time to be offered to an employee must be considered. Some states do not require vacation time so although this component is not important as far as legal consideration, it will be important to potential employees. All states require employers to provide time off for voting, jury service and military service. Offering one to two weeks of vacation time per year is typical for employers with full time employees. These specifics must be considered when putting together the employee benefit plan and should also include proper procedures for notification.
Other Optional Components
Other components that may be considered when developing and planning and employee benefit plan include employee assistance programs, and legal service plans. Employee assistance programs have the potential of improving productivity and satisfaction in the workplace. These programs offer counseling to address personal issues that employees may be facing. Legal service plans are often included in employee benefit plans. These plans are not crucial considerations but can add value to a particular plan. Legal service plans provide employees with information and advice that may ultimately be serious and affect the employee’s work.
Conclusion
The creation of a solid employee benefit plan will be crucial to the start of a business. Providing employees with benefits that are important to them will attract talented individuals, while providing solid plans will ensure the business goals and strategies are met. Some of the most significant components of an employee benefit plan include wages, insurance and time off. Each of these component relates to the compensation of an employee, and employee compensation is what attracts, retains and motivates individual employees. Without an adequate plan, a business would not succeed. An employee benefit plan must be comprehensive and requires a plan that evaluates the market, company goals and strategies, and company needs as well as what motivates an individual to choose to work for your business. An employee benefits plan that meets the needs of the employer as well as the employee is the type of plan that a business should implement.
References
Compensation Plan. (2016). Retrieved from Business and Legal Resources: http://www.blr.com/compensationtips/compensation-plan
Guidelines for Creating an Employee Benefits Program. (2016). Retrieved from Branch Banking & Trust Company: https://www.bbt.com//small/employee-benefits-program.page
How to Design an Employee Benefits Program. (2015, June 16). Retrieved from Society for Human Resource Management: https://www.shrm.org/resourcesandtools/tools-and-samples/how-to-guides/pages/howtodesignanemployeebenefitsprogram.aspx
