How Employee Benefit Packages Can Impact Hiring & Retaining Top Talent
May 18, 2018 | Ryan Kagarakis and Gabriel DeAnda
Under the ACA (Affordable Care Act), companies with over 50 FTE (Full-Time Equivalent) employees are required to offer Health Insurance to their full-time employees. A full-time employee is now considered anyone that works 30 hours or more per week on average. This change forced many large employers to offer health insurance to employees that wouldn’t normally receive those benefits. It was a major hit to the bottom line for most medium-to-large businesses.
But what impact did it have on small businesses (under 50 FTEs)?
Initially, the ACA didn’t have any major impacts on small businesses because it didn’t require them to offer health insurance to their employees. Many small businesses were seeing a deficit in the talent pool available and a lot of employees were going to large employers that had to offer coverage. This shift in the market is forcing small businesses to re-evaluate how they recruit and retain their top talent. Many are starting to voluntarily offer health insurance while at the same time contributing 50%+ of the employee’s premiums. This is a big expense to any company, but in many cases, it can be less painful than losing their top talent.
Is it worth it to offer Health Insurance to your employees when you don’t have to?
With costs rising in almost every area of business (wages, workers compensation, liability insurance, etc.) most employers don’t want to think about adding another line item expense. Most employers, however, aren’t evaluating another important cost factor…employee turnover. A CAP study done in 2013 estimated that employee turnover in low-mid paying jobs cost the company about 16-20% of the lost employee’s annual earnings. These estimates are actually low compared to some of the numbers put out by SHRM. Even so, a $10/hour employee could cost the company about $3328-$4160 to lose. KFF did a survey in 2015 that showed the annual cost of single coverage health insurance on average was $6,251. Most employers will cover 50% of those premiums, which would be about $3,126/year for the company.
So now the question is, would you rather pay to lose your best people or pay to keep your best people?
Offering a competitive benefits package for your employees can make you stand out as an employer of choice to available talent in the marketplace. It might also make your employees appreciate you more and be happier with their total compensation package.
A sample of recommended best practices include:
Evaluate your annual turnover %
Benchmark your wages/salary/benefit packages with competition in a similar market
Work with your Benefits Broker to develop a strategic benefits package that can give you an edge over your competition
Disclose total compensation package information to employees so they understand the full investment that the company has in them
Conduct exit interviews to understand why you are losing people
In the recent years, Human Resources has become a much more strategic effort and businesses are realizing how much these issues can financially impact them. It takes initiative and forward thinking leadership to make sure these challenges are combated with solutions that will give you a positive ROI to prevent the company that you have built from being destroyed.
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Brown & Brown Inc.
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Brown & Brown Inc.
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