An Overview of Employee Benefits

Employee benefits have a long and cherished history in the U.S. Profit sharing, pension and health benefit plans can be traced back a century or more. But this important part of our employee's compensation package didn't really take off in corporate America until World War II, when labor was in short supply. Wages were frozen, so management used benefits as a carrot to lure good workers into the factories.

During the 1940s, labor unions won the right to bargain collectively over benefits, so these perks became an intrinsic part of the blue-collar wage package, and not just an optional frill. Shortly thereafter, white-collar workers started to reap the same benefits.

Benefit costs stayed pretty stable until the '70s and '80s, when the costs started climbing skyward. Today, instead of adding benefits to maintain a competitive edge in the marketplace, companies (especially small companies) are trying to put a lid on benefit costs.

The very important health and medical benefit costs for small businesses like ours often run 20-40 percent more than in large companies. This means the owners/managers of kitchen and bath dealerships have to be more creative in the benefit packages they offer, in order to stay competitive, while keeping benefits within a reasonable budget.'

State and federal governments play a big role in dictating changes in the benefits we can offer, i.e. pension programs can no longer offer "preferential treatment" to owners and key employees; the definition of "disability" changed in 1990 with the enactment of the Americans With Disabilities Act; and then there's Workman's Compensation laws which are dictated by the individual states (and these can vary pretty dramatically from state to state).

Our Canadian neighbors have a national health insurance program dictated to them. We could debate the pros and cons of this program, but in the absence of space and the lack of facts, we won't.

Health and medical
This is generally the most needed and most expensive part of the benefit package. Most large companies offer it, and kitchen and bath dealers should, too. Here's why:

  • It helps recruit and retain employees.
  • It improves morale and employee satisfaction.
  • It eases employees' fears about the high cost of health care.
  • It helps ensure that employees stay healthy and productive.
  • It's tax effective, since group medical benefits substitute pre-tax dollars for after-tax costs.

Health and medical care packages can vary dramatically both in coverage offered and cost. Find a good, reliable insurance agent, broker or carrier to work with you in order to find a program that will fit your needs and budget. Shop around. Develop a spreadsheet to make comparisons. Counsel with other small business owners, your local Chamber of Commerce, etc.

Total health care issue is experiencing a dramatic change. . . at all levels. Get expert help to stay on top of what's happening.

Self insurance really isn't an option for most small businesses (under 100 employees) so this is not an issue for us. Likewise, "Flex Plans" or "Cafeteria Plans" are not generally well suited for "mom and pop" businesses like ours.

Wellness programs'
Contrary to popular belief, the wellness phenomenon is not a fad. It's growing in popularity, and this is something small business owners can buy into.

Wellness simply mean educating employees that if they change their health habits (i.e. quitting smoking, or improving their cholesterol levels), they can live longer and feel better. A benefit of this is lower health costs for you, either immediately or in the long run.

You can offer a health risk-screening program for your employees. It relates directly to health care by providing testing for high blood pressure, mammograms, cancer, diabetes, cholesterol and weight control. Encouraging a regular exercise program reaps benefits as well.

Disability & sick time'
This insurance compensates a worker who can't work because of an illness or injury. This is a great benefit to the employee, especially the more elderly, but it also tends to be expensive.

Many small businesses also incorporate sick time into their packages, because it's more cost effective. It compensates the employee for X number of days lost due to sickness. Sometimes length of service will dictate the number of days that can be earned, and it usually compensates at 100 percent.

Workers' comp.'
This insurance compensates employees for lost wages and medical bills as a result of work-related accidents or illnesses. It's governed by the individual states, and each state varies in terms of programs offered. Unfortunately, fraud by a few has driven rates very high.'

"High risk" jobs dictate higher premiums than "low risk" jobs. Thus, it's in your best interest to maintain a safe, accident-free workplace because repeated claims raise the cost dramatically.

Pension plans'
Pension plans are one of the most important benefits a company can provide to its employees. There are plans that only the employees contribute to (out of their own paychecks) and there are plans that both the employee and the company contribute to. Find an expert in this field and seek counsel. Learn all you can, and if it's cost effective, add this to your list of "perks."

Benefit needs are changing dramatically. A few examples would include the following:

  • An employee needing time off to care for a close relative.
  • Working females adding their "house husbands" as a beneficiary.
  • Health and medical coverage for same-sex relationships (domestic partners).
  • Single parents.
  • Child and adult day care.
  • Flex work schedules to accommodate working partners.
  • Working from home (telecommuting via phone, fax, modem).

Many of these areas can be incorporated into small business benefit packages. It pays to be aware that there are differences in employee situations at home.

Employee benefits are key to staying competitive. Find out what your employees want. Decide what you can and can't afford. Get outside help where it's necessary, and be proactive in developing this important part of your employee compensation package.