Bill Scuorzo BCG Advisors on increasing the value of the employee benefit plans employers offer
Series 3 — Increasing the value of the employee benefits program you offer
Health care costs are and have been a major cost to employers for many years. Over the last 50 years, health care costs have risen at eight times the rate of inflation for every other product or service. The costs of providing employee health care coverage is expected to skyrocket to nearly $15,000 per employee per year, according to the National Business Group on Health. To maintain a competitive benefits and total rewards package, companies need to ask themselves one question: How can maximize the value of the benefit program we offer?
While many factors drive employee retention, a key element is ensuring that employees understand and appreciate their benefits and compensation. A total compensation statement is one of the most effective means by which employers can educate employees and help them to understand the true value of the employment relationship.
As employers know and understand, the cost of an employee reaches far beyond their salary alone. Total compensation statements give employees information on the complete pay package awarded to them on an annual basis, including both direct and indirect compensation. Direct compensation can be defined as “all compensation (base salary and/or incentive pay) that is paid directly to an employee.” Indirect compensation can be defined as “compensation that is not paid directly to an employee and is calculated in addition to base salary and incentive pay (e.g., employer-paid portions of health/dental/vision insurance, retirement benefits, educational benefits, relocation expenses, and employee paid time off).”
Some common items to include in a total compensation statement are:
• Salary/hourly rate
• Medical benefits coverage — include amount paid by employee and employer
• Flexible spending account information
• Paid leave — include vacation/sick/PTO, holiday, personal, bereavement, military pay, jury duty,
• Disability insurance
• Life insurance
• Employee assistance program
• Retirement benefits — include 401(k)/403(b), pension plans, etc.
• Educational assistance programs
• Relocation expenses
• Stock Options