Recently, there has been much talk about the tenuous relationship employees have with their employers. A large percentage of employees are either actively looking for another job, or at least willing to be recruited away if the right opportunity comes along. Loyalty is on the decline, unemployment is low and attracting people with the right skills is difficult; a very competitive environment for qualified people.
Businesses everywhere are trying to address this dilemma. An almost reactive response is to give employees a raise. This works as a motivational tool for employees, but also allows employers to fully deduct wages for tax purposes. However, employees may not always realize the tax caveat: depending on their personal tax rate, they could lose 30% to 40% of the raise to income tax. So, a raise may not be the way to go.
Apart from salaries and wages, employers are increasingly using their employee benefits plan to increase employee commitment to the business. A well-thought-of and holistic benefits plan is a major step towards making employees feel that their employer is interested in their well-being. The peace of mind that results from employees not having to worry about unplanned health costs enhances their general satisfaction and security. The bonus – these benefits are tax-free to employees and tax-deductible to the business.
Employee benefits plan - a competitive advantage?
For most employees, it is impossible to arrange the same level of health and dental coverage that their employer is able to provide. Advantages arise due to many factors:
- Grouped buying which spreads insurance risk over a larger base and in turn reduces administration costs. This makes insurance premiums lower and offers a better plan member experience.
- A business will typically have a qualified team handling the selection, negotiation and implementation of its employee benefits plan. Plans are typically administered by the HR or Finance department and additionally, a broker is involved in implementing the plan.
- Larger companies also engage a benefits consultant to understand what their employee needs are.
The result? A level of expertise that employees generally would not have on their own, which ensures better outcomes and service levels. This goes a long way in making employees feel taken care of by their employer.
This is a win from the employee's point of view as well. It takes away cost and time barriers to personal healthcare as a visit to the dentist or drug store doesn’t end up in substantial out-of-pocket costs.
The bottom line?
A happier, healthier group of people who are absent less often than the norm. If employees are thinking about leaving for a position that offers equal pay, the loss of a good employee benefits plan might be a major factor in their decision.