Managing Your Company's Benefits Program

Last issue, I focused on the importance of providing retirementplan
benefits to your employees. One aspect of said benefits is
to help tether your valuable employees to the organization.
Retirement plans, however, are only a part of the benefits
equation. Equally critical is the need to provide the “every day life”
benefits, which may include: medical; dental; vision; short-term and
long-term disability coverage; accidental death and dismemberment
insurance; and life insurance. In addition, specific, in-depth
benefits such as maternity and cancer coverage also are available
(these are typically offered by third-party groups working directly
with your employees).

The best mix
When deciding which benefits
to offer, the possibilities
are endless (as are the
phone solicitations once
you begin seeking information).
I suggest taking the
following steps to help you
best choose the benefits
mix that will provide your
employees with a good
package without putting a stake into the heart of your budget.

First, be sure that you solicit input from key employees.
These employees are smart enough to know that you won't be
able to offer anything and everything without crippling the company
financially, and their input will provide you some solid
insight. You may find that a particular benefit you had not even
considered is actually so important to your employees that they
will appreciate you offering it”?even at the exclusive cost of the
employees.

Second, you should align yourself with a good third-party
benefits broker. Choosing the right benefits broker for your
company is one of the most critical things you can do when
establishing or changing your benefits program. If the broker
does its job, it will make your life much easier. Because benefits
brokers are paid by commissions from the various insurance
companies they represent, however, you need to be careful
when deciding which company to hire. A few points to consider:

• Take your time evaluating companies that will suit your
  needs, and look at multiple companies”?not the first one that
  comes across your desk. After all, you'll work closely with these
  people in making benefits decisions that will affect your company
  for a long time; you need to trust that they will recommend
  decisions beneficial for you and your employees, not themselves.
  My suggestion is to interview them as thoroughly as you
  would any potential new employee.
• Choose a benefits company that will be objective when it
  comes to recommending insurance companies for your plan. It's
  important to closely evaluate which company you will be affiliated
  with”?it should have the resources to service you fully for
  multiple carriers.

Maintaining balance
Another difficult decision regarding your benefits plan deals
with the level of participation that you, as the employer, will provide.
It certainly isn't a news flash that insurance costs”?particularly
health care and worker's compensation”?have increased
in the past seven or eight years at an unbelievable pace. These
expenses have become a major line item on corporate America's
financial statement, and they have the ability to paralyze a company
if they aren't well-managed.

While it's unrealistic to absorb 100% of your employees'
healthcare premiums, it is equally unrealistic that your employees
carry this burden all by themselves. If healthcare becomes
too costly to your employees, you will find some of your employees
will leave while others will elect to go without coverage. Both
actions will prove to be damaging to your company. Your goal
should be to maintain the best balance possible that will be fair
to both parties.

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One option, by the way, is to offer some of the less-expensive
benefits free to your employees. For example, many employees
“?particularly your younger (more “invincible”) staff”?may
not elect to pay for term life insurance. But your benefits broker
may be able to find you a relatively inexpensive term-life insurance
plan that provides $10,000 to $20,000 in coverage that
you can afford to pay for. This type of perk can sweeten the pot a
little for your employees without breaking the bank.

Dangerous ignorance
Each business needs to evaluate what's important for its own
needs in terms of the type of benefits coverage, as well as the level
of participation between the employee and the employer. I recognize
that the company-benefits program is never a favorite issue
to tackle. But ignoring it can be disastrous. Whether you address it
semi-annually or annually, you must spend the time needed to
determine the best possible plan for you and your employees.

Marty McGhie ([email protected]) is VP finance/
operations of Ferrari Color, a digital-imaging center with Salt
Lake City, San Francisco, and Sacramento locations.