This article is part 3 of a 5 part series entitled A Guide to Building Better Benefits, which is intended to help companies differentiate themselves as top employers in a competitive job market. This series was created to help promote CloudAdvisors newly launched Bar Score, where you can evaluate how effective, and competitive your current benefits plan is in seconds. In post 2 in the series, we established 5 Employee Benefits To Set Apart Your Recruiting
The advantages of having an effective employee benefit plan are vast. It can help meet the needs of employees, differentiate yourself from competitors, and is a key aspect of employee recruitment and retention. However, they can be costly to develop and maintain. They often make up around 40% or more of total compensation costs. Due to the benefits and high costs, it is essential to have a well designed employee benefit plan that matches the goals of both the organization, as well as its employees. Here are 5 essential steps to building a competitive employee package.
What is an employee benefit package?
To understand how to develop and design a competitive employee package, you should first understand exactly what an employee benefit package is. You’ve probably already heard of the basics. If you’re employed, likely your employer covers you with basic health insurance so you don’t have to pay the full premium. But employee benefit packages can be much more complex.
Employee benefit packages contain a set of perks and protections given to employees from a company. These tools can help employees take care of themselves as well as their families, manage their finances, attend to their mental health, and more. While some benefits are mandatory, such as health insurance, others are used as differentiators to attract and retain top talent. Because benefit plans can differ greatly from one another, it depends on the company’s goals and employee needs.
Below, we’ve listed 5 essential steps you can take to develop and implement a highly effective employee benefit package. Beginning with goal and scope definition.
Step 1: Define Your Organization’s Goals
The first step in generating your employee benefits package is to define and identify your organization’s goals. This process will enable the design and selection of the employee benefits plan to meet organizational, employer, and employee needs. Employers can begin developing benefits objectives with factors in mind such as cost, competitiveness, and employee value proposition.
Step 2: Figure Out What Your Employees Want
The benefits package should be designed primarily for the needs of your employees. This starts with a needs assessment. After all, who wants to spend all this money on a plan that won’t be used by their employees. These days, it is common to use a market research approach as an assessment of needs. This often looks like focus groups, surveys, and questionnaires. The feedback and insights gained through market research should be implemented in the employee benefit plan itself. This will further show that you appreciate their opinions and increase satisfaction.
Identifying the primary demographic can also play a big role in what your benefits package should look like. For example, if the majority of your employees are younger, they may value financial wellness and individual health benefits. As opposed to an employee from an older demographic who may place more value on family health benefits. Your needs assessment should also take into account other factors such as, regulations and the overall job market.
Step 3: Formulate Your Program
After defining your goals and identifying employee needs, it is now time to formulate the design of your employee benefits package. Start by organizing the potential benefit offerings in order of priority. Then analyze the cost of providing them against your available budget. This step will involve many decisions. These decisions include what changes should be made, if certain unused benefits could be eliminated, and many more.
Step 4: Communicate Your Benefits Plan to Employees
Being able to communicate the value of your benefits package is essential. This involves growing employee understanding and awareness. Many employees aren’t aware of the added perks provided to them. So, employers need to prioritize sharing the availability of their benefits. In a Harris Pole study, 48% of employees who were offered disability insurance reported a lack of understanding on how the benefit worked. An added 66% saying that employers needed to better educate them.
When communicating your benefits, make sure to answer questions clearly. Show that you considered employee input in the development process, and educate employees about how to take advantage of the solutions offered.
Step 5: Consistent Evaluation
The final step is to implement a periodical process to consistently evaluate the effectiveness and competitiveness of your employee benefits package. Practicing benchmarking is key in the evaluation process. It helps you make more informed decisions. And this is where we come in!
Benchmark with CloudAdvisors
CloudAdvisors provides complimentary benchmarking for employers. Once you upload your existing employee benefit plan, you can be immediately introduced to advisors with access to our leading technology. You can then, benchmark your plan against over 15,000 companies by size, region, or industry to see how effective your current benefits package is and what improvements you need to make. This will help identify if your current plan is outdated, or is lacking in a certain area. All in real time!
An attractive employee benefits package helps attract and retain top talent, and keeps your employees healthy and productive. These 5 steps to building a competitive employee benefits package should be used to develop and design a healthy and effective plan that meets your organization’s goals.