How Do I Build an Employee Benefits Program and Become an Employer of Choice?

Looking back at the first year-plus of the blog, I realize that we’ve gotten very deep and technical on benefits concepts. Today I’m going to take a deep breath and go back to some basics. I realize that there are many employers out there that are struggling just to get their benefits program off the ground – or trying to connect the dots between offering good benefits and becoming an employer of choice in their region or industry. How would I do it if I took a job in Human Resources at a small or midsize company? These are the steps I would take:

Step 1: Look at the Whole Picture and Take Stock

If you haven’t read my earlier post on total rewards, now would be a good time to do so. Remember that rewards go far beyond salary and health insurance. Compensation and benefits are two important facets of why employees choose to work for you. But employees also – sometimes subconsciously – choose you because they like the work environment, or because you offer professional development opportunities. So first things first, read the total rewards post, and take stock of what you’re already doing that employees may value… compensation and beyond.

Step 2: Identify Strengths and Gaps

Once you’ve taken stock of what you’re already doing, look for both strengths and gaps. To the extent possible, try to know how your pay practices line up with your competition. There are online tools that can help with this step. Also try to gain an understanding of how your existing benefits stack up against competitors. Sometimes this is as easy as knowing (anecdotally) what is offered at the competitor down the street – perhaps because you’ve hired their former employees. Good benefits advisors (like us!) can also help you with benchmarking reports, so that you understand if your package is competitive or uncompetitive. Also remember to look for strengths in the other areas of total rewards. I was recently speaking with a hospital who offers free breakfast and lunch to employees in their cafeteria. This is a huge benefit! On the other hand, you may realize you do nothing in terms of professional development or employee recognition. Summarize these deficiencies in the same way you catalog your strengths.

Step 3: Decide Where You Can Compete

In some industries (think of tech firms in Silicon Valley), competition for talent is so fierce that you have to compete in all areas of total rewards. But chances are, in your industry you have a little more wiggle room. I often hear frustration from clients who say things like, “yes, the competitor across town pays $0.50 more per hour, but their benefits are lousy!” So in that case, the competitor has chosen to compete for talent by paying at the top of the market… while my client has tried to balance pay with a more generous benefits program. Think about your company and your competition. Where do you compete best? Where do you lose out? What are areas that – if enhanced – could tip the scales in your favor? The good news is that this doesn’t always mean you have to spend a bunch of money. Would it be terribly costly to beef up employee recognition? Studies show that people put more value on being shown they are appreciated than they do on small financial rewards. So maybe you can’t budget paying $0.50 more per hour. In that case, choose to compete in other areas!

Step 4: Design and Implement

Here is where good consultants, advisors and brokers are worth their weight in gold. What makes a good advisor? I would argue someone with experience and creativity. No one benefits program works for every employer. So why use an advisor who just picks products off a shelf? If you need a good advisor, I happen to know where you can find one.

Step 5: Communicate Effectively

None of the thought and work you’ve put in thus far is going to matter if you don’t communicate your rewards package effectively – both to existing employees and to recruits. I worked at a large firm years ago that did a study of employers. They put a value on the benefits packages of each participating employer. Then they judged the communication methods of each employer. The results were startling: employers with “bad” benefits but great communication had employees who valued their benefits far more than employees at companies with “good” benefits but bad communication. Think back to the client I described in Step 3. Their benefits are better, but employees didn’t value it. I guarantee that the employer could improve the situation if we spent more time working on how they communicate the benefits… perhaps next time, the employee would think twice about the small raise if they understood all the other perks associated with their current job. Remember: communicating your rewards package with clarity and enthusiasm will go a long way toward making your company an employer of choice!

This is a simple but effective roadmap. Engaging with an advisor can really help along the way. Need a good one? Drop us a line at bayoubenefits@gmail.com