How Employee Benefits Affects Total Compensation
As more companies provide unique employee benefits packages to attract top talent, the cost of these perks is constantly rising in relation to actual salaries. Benefits that are aimed at boosting workplace productivity and attracting the best employees are beginning to comprise a significant percentage of a worker’s total compensation.
Determining the value of an employee benefits package
A typical employee benefits package will comprise 30% of their total compensation. For example, a worker earning $65,000 a year will typically also have benefits amounting to about $20,000 annually. These benefits will include health coverage plans (about $3000 for singles and $6000 for families), life insurance policies, short and long term disability, and retirement plans.
Newer packages also include dental plans, student loan reimbursement, and assistance with elder care. Each of these benefits adds to the total compensation package. In this case, an employee receiving $65,000 in base salary will actually cost the company about $85,000.
Managing the cost of employee benefits
As benefits packages continue to represent a significant portion of an employee’s total compensation, it is important for businesses to manage the overall cost of employee benefits. The challenge lies in providing competitive packages at a reduced cost to the company.
In order to limit and reduce your benefit expenses while still remaining competitive to top talent, keep the following in mind.
- Control healthcare costs. Healthcare costs are perhaps the largest driving force of the cost behind employee benefits. Providing competitive healthcare plans to workers means offering plans that cover prescription medication, in/outpatient treatment, and other types of care. To manage the cost of these benefits, try to seek out the specific packages that your employees need. Consider the population breakdown of your workforce – is there a good mix of millennials and those from Generation X? Or are they mostly middle-aged? Knowing the demographics of your workforce can help you spend wisely on healthcare benefits.
- Solicit employee feedback. It’s difficult to know what benefits your employees need unless you hear from them. You can request feedback in the form of anonymous surveys, in-person interviews, or any other method you find most productive. This will help you get rid of benefits programs that employees aren’t fond of.
- Implementing high-ROI benefits. Not every employee perk has to be expensive. Some of the most valuable benefits packages are relatively inexpensive to set up. The key here is to go beyond the upfront cost of benefits and consider the return on that investment.
For example, did you know that for every $1 that goes into implementing an EAP, businesses enjoy a return of $3 on average? If you want to learn about how an elder care program can offer valuable benefits at a competitive cost, contact Senior Providers Network today.
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