Business Management Articles
Help your company stand out through its benefits plan
Ken Davidson
BDO Dunwoody LLP
July 2005, Okanagan Business Journal
If you’ve hired any staff recently, you may have found that one of the first questions candidates ask, after they discuss the job itself and the salary, involves benefits. In many cases, workers are attracted towards employers that offer good benefits programs. Such companies can often take their pick of the most qualified workers.
Why is this particularly an issue here and now? Consider:
- The rising cost of pharmaceuticals has squeezed many individuals, particularly the semi-retired people who have moved to the Valley;
- The trend away from full-time well-paid jobs in the BC Interior, and the rise of service-sector jobs that are largely part-time, has left much of the workforce without benefits coverage;
- Dental care costs are starting to pinch due to more comprehensive treatments.
We also see a rising rate of companies offering benefits. Previously, the suppliers of benefits programs would not be able to offer competitive packages to small employers – with, say, less than a dozen employees. Now, the providers are more willing and able to offer small-scale plans at competitive rates.
So how does a small company develop a benefits program that helps attract and retain workers? Your first step is to find out “what’s hot, what’s not” with the people you want to attract and retain.
You’ll likely find that pharmaceutical coverage, dental coverage, and both short-term and long-term disability are big issue.
Old-style pension plans are not as popular, partly because of today’s high-mobility workforce. Rather, employees often prefer a plan under which the employer contributes some towards a Registered Retirement Savings Plan, with the employee contributing the rest off her or his paycheque.
However, we have seen in recent years an increased interest by young people, particularly those who are highly educated, in some kind of pension provision.
Many employees in the Valley want to work just part-time, but also want to get in enough hours to qualify for the benefits plan. Making sure that at least your best workers have coverage can help you build workforce loyalty.
It’s important to consider closely, before putting a benefits plan in place. Trying to change it after the fact is much like trying to put toothpaste back in the tube – employees will object, strongly, if they feel that they were hired under one set of expectations and you are trying to change the rules afterwards.
This can be a challenge if your costs rise. Particularly in the case of pharmaceuticals, you may find that a benefit that costs $50 one year per employee jumps significantly the next year, and more the following year.
One way to deal with this is to make employees well-aware of the cost of the benefits, so that they appreciate more what they have from you. This can be done through having the employee pay for the service received – such as a pharmaceutical prescription or dental visit – and then be reimbursed by the benefits plan. Another way is to have a co-pay plan in which the employee pays part of the cost. You can also keep costs down by group buying, possibly through an industry association or a local Chamber of Commerce.
A good benefits plan may take time to put in place and does add to your costs, but it can also help you build a satisfied, long-serving employee base that can help your business succeed.
Note: Information in this article is not a complete treatment of the subject. For more information particularly on the tax implications, consult a qualified professional.
Ken Davidson, CA, is a Partner in the Kelowna office of BDO Dunwoody LLP. He helps clients with a wide range of issues including accounting, assurance, taxation, and computer consulting. He can be reached at tel. 250.763.6700 or kdavidson@bdo.ca.
