How to Set Up an Employee Benefits Program in 6 Steps

Not all employers offer paid vacations and health insurance in exchange for employees’ hard work. As the percentage of companies that do benefits has grown, it’s become more important to consider what you’re giving your employees policy-wise as well as how much money it’ll save them over time.

As your employment base grows, it’s only natural to expand your benefits package beyond regular pay. Benefits are an element of the complete remuneration package that an employee considers when applying for a job. You’ll need to create a rich and creative employee benefits package to attract and retain top employees in your sector. You don’t need to spend a lot; all you need to do is make well-considered, smart judgments.

It may be difficult for most small firms to pull together a complex array of benefits plans into a single bundle. Zenefits, an all-in-one HR, benefits, and payroll software, can make the process considerably simpler.

Follow these six phases when creating your benefits program, and apply them to whichever decision-making paradigm you use:

1. Create a budget

You need to make a budget now that you’ve chosen to construct a benefits program. You’ll need to figure out how much your small firm can contribute to a complete benefits package, regardless of the sorts of benefits you provide. One-time products, such as a business T-shirt or a lunch-and-learn, are the cheapest. Health-related benefits, such as medical insurance, and long-term savings plans, such as a 401(k), are the most costly (and usually the most beneficial to workers).

In essence, this is a requirements analysis based on the company’s financial resources and regular benefit packages. Pre-tax benefits are provided for many perks, decreasing an employee’s total taxable income.

Employee benefit deductions are computed on the employee’s paycheck before tax withholdings, lowering the company’s payroll tax burden.

Cost-per-benefit analysis (Employer vs Employee)

When deciding on a budget, it’s critical to do a cost-benefit analysis. The Bureau of Labor Statistics has published data that demonstrates the varying amounts that firms spend for various types of employee perks. Employers spend significantly over 30 percent of each employee’s overall salary. For example, the typical business spends an extra $13 per hour in employee perks to a $35-per-hour employee.

2. Select the benefits you want to include in your program.

Small firms should pick which perks to include in their package at this point of the planning process. Employers may provide a variety of advantages to their workers. The following is a list of popular choices:

• Medical/Dental/Vision: Many businesses pay to the medical element of this package (for example, 50/50), while dental and vision are covered entirely by the employees. Employee engagement will very certainly expand if the program is kept inexpensive.
• Paid Time Off (vacation days, sick days, and holidays): Having a strong PTO policy helps employees maintain a healthy work-life balance. Employees need time away from work to concentrate on their personal goals. Offering a progressive PTO plan may result in a higher-quality work environment as well as increased productivity.
• Retirement Savings Options, such as a 401(k) or 403(b): An increasing number of people are seeking for methods to put money down for the future. 401(k) plans are a fantastic alternative since they allow employees to set aside a specified amount of money each year. Many employers provide 401(k) matching, which means the firm will match employee contributions up to a particular percentage (usually a 5 percent cap).
• FSAs and HSAs (Flexible or Health Savings Accounts): FSAs and HSAs aid workers with out-of-pocket medical expenditures. The employee pays a certain amount each year, and the corporation usually contributes as well.
• Employees should be offered life and disability insurance as a benefit to aid with expenditures (medical, funeral, etc.). It might be sponsored by the firm or donated by employees.
• Flexible work schedules, remote work, professional development, employee clubs/activities/gifts, food/beverage, and other options may be available.

Unique Employee Benefits

Although not all firms provide the above advantages, there is competition among businesses to be innovative, dynamic, and adaptable with employee benefits. No, not every company wants “dog-friendly” offices or can provide free lunches every day, but there are some innovative ideas worth considering that may match your benefits philosophy and that your workers would like.

You may wish to think about the following less usual rewards (or perks):

• Snacks and drinks are provided free of charge at work.
• On-site gyms or free gym memberships
• Tuition help or a student loan
• Retreats for the whole company
• Daycare services are provided for free.
• Sabbatical: a stipend given by the firm to be used on vacation.
• Maternity and paternal leave are both paid.
• Options for working from home
• PTO is not restricted.
• Team-building activities
• Workplaces that welcome pets

REMINDER: Certain benefits, such as those listed below, may be mandated by law.

• Unemployment benefits
• Compensation for employees
• Disability insurance for the short term (required in California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico)
• Absences from work (FMLA required in California, Hawaii, Massachusetts, New Jersey, New York, Rhode Island, Washington, and Washington D.C.)
• Leave of Absence

3. Examine the whole compensation package

It’s critical to cover all areas of salary (or the company’s benefits package) when speaking with job prospects and workers. The term “total compensation” refers to all aspects of an employee’s pay package, which includes more than simply the employee’s salary and benefits.

Total compensation encompasses all of a company’s perks, including those mentioned above. Among the additional benefits are:

• Bonuses
• Commissions
• Profit-sharing arrangements
• Assistance with tuition
• Assistance with child care
• Credits or reimbursements for public transportation (commuter benefits)
• Reimbursements for information technology (home Wi-Fi, cellphone, personal computer, etc.)
• Memberships to a gym or a club
• Employee support services are available (EAP)

4. Take into account external resources

Putting up a comprehensive benefits package might be difficult. Consider employing an external provider for your benefits program to assist reduce some of the problems and ensure compliance with HR requirements.

Professional Employer Organizations (PEOs) handle all areas of HR administration and provide small firms access to group benefit prices they wouldn’t have otherwise.

5. Complete Your Benefits Plan

It’s time to finish your plan before distributing it to workers, now that you’ve calculated your budget and determined which perks to include in your package.

If your benefits are not provided by an all-inclusive organization, you will need to consult with healthcare specialists to select the best package for your business. Once you’ve decided which business to provide your workers, you’ll need to collect paperwork, sign it, and figure out when your plan will begin. This procedure should be followed for each sort of employee perk you provide.

6. Disseminate the Strategy to Employees

Once your program is set up, paperwork is signed, and you’re ready to integrate your benefits package into the employee experience, it’s critical to communicate what you’ve done, as well as how and why you did it.

Our guidelines for ensuring that you design a successful employee benefits program communication campaign will help you address the most crucial areas of your workers’ experience as they digest this information.

To provide essential information to your colleagues, follow these steps:

• Notify your coworkers. Hold a group discussion meeting with your workers to go through the terms of the benefits program and answer any questions they may have. If you’re passionate about your program, your staff will be, too.
• Give specifics about the proposal. Physical or digital copies of each benefit offered, including the cost to the employee and the amount the firm will pay, should be provided to your workers.
• Make sure you understand everything. Once the news has been given, be sure to follow up to make sure everyone knows their benefits, coverages, and how dependents may be covered, among other things.
• Make use of a portal or other online resources. Publish your benefits program after you’ve spread the news and started it. Make sure workers have a place to go if they have further questions or want to learn more about their benefits and how they may improve their quality of life on their own.
• Make changes to your company’s career page. Employees are getting more savvy as they do internet research on organizations. You’ll want to make sure your major advantages are displayed and simple to grasp while job hopefuls and casual job searchers peruse your Careers Page.
• In your job postings, mention the advantages. Despite the fact that job adverts are largely focused on the position you want to fill, always add a short but useful text about your perks. It’s what draws job seekers in. (It’s worth noting that, according to a Glassdoor poll, the absence of wage or benefits information in a job ad is the most common source of irritation for job searchers.)

Creating an Employee Benefits Program

It’s crucial to examine how workers (and job applicants) view perks when creating your benefits package. It’s also crucial to consider how other companies see perks. Take a look at the following breakdown:

When it comes to perks, there might be a disconnect between what workers and companies believe. Keep these three guiding concepts in mind as you seek to close the gap in your workplace:

• There’s no turning back once you’ve started. It’s not fun to take away additional perks once you’ve offered them (due to cost or other causes). Employees dislike having access to a perk one minute and then losing it the next, for whatever reason.
• Calculate the true cost of each perk. Many firms may stick to a new benefit concept and expose workers to it before learning the full costs of the perk. To put it another way, how much would this perk cost the organization if all eligible workers take use of it? Will there be any administrative costs associated with the benefit?
• Don’t just observe what others are doing. Although this is a smart precaution to take, it should not be your exclusive means of screening. Ensure that your benefits are well-supported by your team so that they may best serve your workers’ individual requirements and aspirations.

Data on the Demographics of Your Employees

There are several options for determining how and what kind of employee perks you wish to provide to your employees. Although we can assist you look at this issue from a variety of perspectives, the most easy data to look at are those that show the most popular employee perks.

There are several comparisons between what men and women consider to be the most desired employment advantages. According to the Harvard Business Review (HBR), women place a higher value on insurance and flexibility than men do.

In addition, the International Foundation of Employee Benefit Plans published a study that included the following transgender-inclusive benefits:

• Ninety percent of people apply for mental health benefits.
• Cosmetic Surgery advantages are requested by 14% of people.

According to Forbes, non-binary workers increasingly demand to see gender classifications other than male or female on standard documentation. Consider the case of X. They’re also seeking for healthcare and insurance possibilities via domestic partnerships.

Different forms of fringe benefits are desired by workers in the baby boomer and Generation Z generations. There are several instances that overlap, such as paid time off (PTO), vacation time, and paid holidays, since all workers seek such benefits. Boomers, on the other hand, place a higher importance on 401(k)s and healthcare than Gen Zers, who prioritize skill development, work-life balance, and mobility.

According to statistics, desired perks differ by wage range within firms. The pay scales are divided into three categories in the table below: under $40,000, $40,000–$70,000, and over $70,000.

Employee Surveys

The simplest approach to learn what your workers are enthused about in terms of employee perks and overall pay is to conduct a survey. Surveys may be delivered in a variety of ways, but their main draw is that they provide employers with vital input on what workers want to see more of, and employees can anonymously express their honest views, emotions, and ideas.

We’ve observed that the following two methods of surveying workers are both effective:

1. In-house employee surveys are often led by HR.
2. Using a third-party surveyor like SurveyMonkey to conduct the survey on your behalf. You may personalize your survey questions before launching them online for anonymous participation from workers.

Employees who believe their company cares about their health and well-being are 38 percent more engaged and 28 percent more willing to advocate for their employer’s organization and brand, according to Quantum Workplace. Employee surveys allow you to show that you care about your workers’ well-being in a manner that they can see and feel.

Conclusion

There are many approaches to developing and sustaining a benefits package that existing workers will like and job prospects will be interested in. Many organizations provide robust, innovative, and interesting benefits packages, each of which is unique.

Your organization’s objective should be to develop your own sustainable version of an inclusive and creative employee benefits package that speaks to your workforce while staying within your budget.

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Frequently Asked Questions

How do you create a benefit strategy?

A benefit strategy is an organized way for a company to increase employees benefits and their satisfaction with these benefits. They are often put in place when the employer needs to retain employees, as they can be expensive or otherwise difficult to maintain.