When it comes to the robust benefits packages and perks that are typically included in Total Rewards Programs, the costs can get intimidating pretty quickly. However, as these sorts of programs and offerings are so important to gaining and retaining top talent, it's a financial commitment you need to make.
How Much Coverage Should You Offer and How Much Should You Spend?
A lot of companies immediately attempt for 100% coverage in order to try and compete with other organizations. While this is certainly a draw for talent, you can arguably achieve similar results with coverages as low as 80%. Many companies who start off giving 100% often find that the system is too costly to maintain over the long run.
As every business is different and unique in size and demands, how much you should be spending on employee perks and benefits will vary. Generally, you want to offer as much as possible without having to go all the way out. For this reason, sticking closer to an 80% coverage rate is usually the best option for most companies.
Keeping Costs Low
To help keep your costs more reasonable while still providing a great package, you can look into removing some less than desirable features, while retaining the big draws. A good example of this is capping drug coverage to about $10,000 and implementing combined paramedical expenses. In this situation, you could offer $500 for paramedical and $400 to $500 on things like physiotherapy and massages. Perks like massages sound especially alluring to employees, while more basic and common benefits will likely be glossed over without much thought.
Another great idea is to offer healthcare spending accounts in addition to the main drug and health benefits. This will work similar to a bank account. Employers will add funds for each employee, and then staff members will be able to submit their claims for the credit they have built up. This way, you can skip more expensive options like vision coverage for everyone, while still giving team members who need it help in dealing with those issues. Because employees can use funds from their spending account to cover whichever expense they need, they can still receive coverage while saving your organization money.
This sort of arrangement supplies superior flexibility which improves morale and helps you keep your costs low. Some small business actually gets rid of traditional benefits altogether and instead focus fully on spending accounts. In these cases, employees could be costing you as little as $100 per month for each employee.
In order to properly budget your Total Rewards Programs, you'll need to understand what your staff values, what the industry values, and more importantly, how much each employee will cost. Once you have that information all put together, it should be fairly clear what the costs could look like for your business to implement these options, so you can begin adjusting your program.
Although lowering costs is an extremely important goal, when it comes to employee benefits and perks, not spending anything is the most costly mistake you can make overall, as employee retention is key in today's business world. Don't get caught up in that trap, take the time to work out a Total Rewards Program that works for both you and your employees.