How to Build a Competitive Employee Benefit Package?
Most companies focus on attracting and retaining the top talent by offering a competitive employee benefit package. Studies show that a competitive employee benefit package is easier to design and offer than spending millions on recruitment campaigns.
What is a Competitive Employee Benefit Package?
Employers look at compensation packages in two ways. Firstly, employee compensation can be looked at as a direct expense for employing workers. Employees look forward to salary package elements that could be exempted from the income tax, lowering their tax liabilities. Secondly, you must regulate these workforce costs to meet the state law provisions in both employers' and employees' interests. As an employer, you need to make provisions for expenses towards any accidents at the workplace which may impact your employees. This could be when an employee is in the office or when traveling for work.
In this competitive talent market, employees are attracted by those companies who think in the best interest of employees.
Building a Competitive Employee Benefit Package
Staying competitive in the marketplace isn't easy as others tend to catch up quickly with you. As you think of the best employee management methods, the employee benefits package is an important one. For those in the consulting industry, workforce expenses are a major chunk of your expenses. With much dependence on this piece, you need to get it right. Consider these steps as you plan a competitive compensation and benefits package.
1. Goal Centric
Being clear on your company’s goals to introduce or revamp a competitive work benefits package is the most important piece. Which executive levels are you targeting to offer these? What is the need or purpose of your company? What is the catchment pool of this group or level of talent that is currently missing your fishing net for fulfilling your company’s needs?
Having an executive decision on the goals and priorities makes your job as an HR Manager much clearer.
2. Mandatory Benefits
Your company, like any other, is governed by the state's and center's rules under the jurisdiction of the Department of Labor. Be sure of the existing laws and what this means for your company. It is critical to know the size of your operations, the legal entity, and set-up details, including the company board structure and much more. Rules are different based on some of these factors.
Additionally, as you create a competitive compensation and benefits package, you must prioritize mandated benefits. Do remember that different laws are applicable for semi-skilled and unskilled workers than those who are skilled. Be sure of the rules for the contractual group of workers.
Some of the mandatory benefits packages include providing social security, building in a component for unemployment insurance, providing workers’ compensation, paid time off (annual leave and medical), and more.
You will need to be ready with your existing staffing rolls, including salary numbers and break-ups. Many of these mandatory policies work on basic salary and some on full compensation. The final numbers would be a step closer to the expenses you can expect under various heads. Don’t miss the perks for work-from-home employees.
Healthcare costs have been on an upward trend over the last two decades. With the pandemic, this has further gone north. Large companies may find it easier to contribute some money to an employee's health policies. Smaller businesses can network with a service provider who is a specialist for employee benefits. Such vendors can provide attractive pricing for small businesses helping you lower the costs.
Enrolling in a corporate life insurance plan is a big saver for you as an HR Manager. Why? As employees join and leave, life insurers provide you with special terms and conditions to help you manage this benefit. Special pricing ensures that you as a company are well covered should there be a death due to an accident at work.
You will also need to consider the legalities from the Worker's Compensation Act from the Department of Labor. Such laws are built to safeguard the interests of the family of affected workers when in office premises.
Should a worker have an accident that impacts them partially or fully with a temporary or permanent health concern, your liability as an employer shoots up. Covering your company's risks is as important as it is to manage employees' benefits.
3. Being Budget Centric
Most HR managers tend to miss a step or two as they create a competitive benefits package. How? Well, they tend to go overboard if the priorities aren’t clear. As an HR manager, you need to be clear on the budget required for the mandatory benefits packages. This will help you know what other non-mandatory packages you can create.
Don't miss the objective of offering a particular employee benefits package. Whether the aim is to pull highly qualified employees, employee retention, or being a market leader or more, clarity will make the base easier for you to start working.
As you look at your budget, consider the finer details of any mandatory bonuses, taxation rules and more, that may need to be built into your excel sheets. Working at the details gives you a clearer picture that is much clearer than before.
Do read our blog on the type of employee benefit.
4. Non-Mandatory Benefits
Aptly named as a voluntary benefits package, many companies give their employees a choice from a list of benefits. This could be a variant depending upon their needs. The compensation structure then changes automatically. Some of these may include an employee purchase program, including setting up a home office for remote workers.
5. Final Compensation Budget
You will need to be ready with an executive summary for approval before implementing this competitive employee benefit, as you include various benefits. Having done your homework, meetings with various service providers will ensure final numbers.
Once this is implemented, you can create recruitment campaigns to attract new talent. You can communicate with existing employees through internal communications on the need and benefits of a renewed compensation number.
Here is our blog on the latest employee benefit trend.
As an HR Manager, you can no longer ignore the need to relook at your company's competitive employee benefits package consistently. In today's fast-changing world, you are sure to stay as a top employer as you plan and make your strategic moves.
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