It doesn’t take an entrepreneurial genius to understand the value of investing in a group insurance plan for your employees. Attracting and retaining employees is a challenge, and employee benefits are an attractive part of any compensation scheme. Providing them shows that your organization cares about its employees; conversely, not providing them can say a lot about the philosophy and working environment of your firm. You may be apprehensive about the cost, or unsure of where to start, but selecting a benefits plan need not be a daunting task.
Hire an expert
If your company is still small (for example, if you employ less than 50 staff), then you can contact a benefits provider directly for information. But medium-sized and large companies should hire a broker or a consultant who specializes in group benefit programs for companies of your size. To find the right person for the job, seek referrals from other business leaders.
Involve your employees
Because employee retention is the biggest benefit of offering group coverage, ask your employees what they want. Paul Crossdale, a partner at Morrow, Crossdale & Associates Inc., an employee benefit consultancy in Markham, Ont., recommends asking staff to provide you with a list of the three to five benefits they most desire.
“The most common mistake is overbuying,” says Mario Malatesta, account executive for small business benefits at SunAdvantage of SunLife in Toronto. Obviously, you don’t want to pay for benefits that are beyond your budget or perceived by staff to be of low value. But the real challenge comes when you try to strip down an existing plan. Take a benefit away — no matter your justification — and you risk rankling employees.
Talk to your consultant about starting with a basic plan — perhaps life insurance, long-term disability and accidental death and dismemberment. As the years progress, you can easily add vision, dental, employee assistance programs, short term disability and more, because you revisit your plan with every yearly renewal.
Consider tax-saving strategies
When choosing your plan, consider offering several tiers of coverage that employees can work up to. Crossdale suggests implementing a rewards program of additional benefits in lieu of bonuses or raises to reduce the taxes that both you and your employees pay. “It’s a tax effective form of compensation,” agrees David Krieger, president of Krieger and Associates, a Toronto-based benefit, pension and human resources consultancy.
As well, sharing the cost of coverage in the right places could save you and your employees money, says Crossdale. “If an employee pays 100% of his long-term disability premium [thereby reducing your costs], that benefit becomes tax-free to them if they ever use it.” You’ll also want to ask your adviser about integrating your plan with existing government programs. For example, consider forgoing short-term disability at the start, because employment insurance disbursements may be sufficient.
Remember the extras
There are other things to consider besides the actual plan, such as the carrier’s reputation, the ease of administration, whether there is a local service representative and whether employees can make claims online.
Most importantly, don’t feel pressured to get it right the first time. You’ll have the chance over the years to build a competitive group plan that your employees will love.
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© 2004 Corinna vanGerwen