How Benefits Tie into Financial Plans!

Financial Plans

Financial plans are the backbone of your business. They help you determine your operating costs, employee salaries, and benefits payments. In fact, financial plans allow you to map out the entire cost of employee benefits.

That’s essential if you want to ensure your employees receive the best care and you meet all government laws. But how much do employee benefits actually cost your business? Let’s find out.

How Much Do Employee Benefits Cost?

According to the Bureau of Labor Statistics, most employers spend anywhere from $10.83 to $12.18 per hour on employee benefits.

For instance, if the average hourly wage of an employee is $20, and they get $12 per hour in benefits, their employer would pay them $32 per hour. This way, if the employee earned $38,000 per year, they would cost their employer $60,000 in reality.

So, it’s safe to assume that employee benefits cost you around 30 to 50% of total employee compensation. If you think that’s too much, know it isn’t. As a business, you can profit more from a single employee than you actually spend on them.

If that’s not a consolation, know that paying your employees’ benefits payments can help them become more efficient and productive, which makes you successful. Further you can use a Virtual Assistant for Financial Advisors.

What Are the Types of Employer Benefits?

Benefits help employees know they’re appreciated and valued for everything they bring to the company. This directly impacts employee performance and satisfaction, decreasing the time-to-completion rate and delays.

The primary types of employee benefits include the following:

  • Legally Required Benefits – Medicare and Social Security
  • Insurance – Life, health, and disability insurance
  • Paid leave – Holiday, sick, and vacation leave
  • Retirement and Savings – 401(k)s, HSA, etc.
  • Supplemental Pay – Overtime.

Some employers can offer other creative benefits to attract and retain more talent. However, this depends on their budget.

For example, businesses with a higher budget may offer benefits like a yearly learning budget, gym membership, unlimited vacation time, free snacks or lunches, paid mental health days, paid volunteer work, and childcare assistance.

However, businesses with a smaller budget may not be able to offer the above benefits without breaking the bank. Still, they can give benefits like longer lunch breaks, flexible hours, remote work, and business casual dress codes to their employees.

 You should offer employee benefits to your workforce to ensure they stay by your side through thick and thin. But not just any benefits will do. You have to give valuable benefits to your employees if you want them to stay.

What If You Don’t Offer Employee Benefits?

Employee benefits are crucial for workforce happiness and increased productivity, which helps your business make a profit. If your employees begin to ignore their work, you’ll start to lose the money you can’t afford to move in the first place.

You will also see high turnover rates, which means the people who make money for you will disappear. How will your business reach its goals when your employers aren’t even working productively?

Plus, the lack of employee benefits is going to turn off many qualified employees, leaving you with a less talented pool of candidates than you want. So, it’s crucial to make sure you provide your potential and current employees with benefits that keep them coming back to you.  

Which Employee Benefits Should You Focus On?

Your insurance coverage, retirement savings, and health plans are the three benefits you should always provide to your employees. Let’s look at each in more detail:

1. HAS and HRA

You should contribute to your employee’s health savings account (HSA) if you’re thinking of a benefit that could come in handy both now and decades later. The account will act as a cushion for your employee, helping them stay on top of problems when they occur.

Aside from that, you should also contribute a health reimbursement arrangement between your employee and yourself. This arrangement will reimburse qualified healthcare expenses incurred by your employee.

You can reimburse an employee once they request healthcare reimbursement. Doing that can help you retain your employees for decades. You also make sure they’ll work to the best of their ability, allowing you to meet your business goals faster than you thought possible.

Remember: Invest in your employee’s future to invest in yours.

2. 401(k)

Your 401(k) allows you to save for retirement and actually leads to wealth generation, especially when you work on it precisely. It helps you grow your money at a stable pace and make sure it doesn’t decrease during times of inflation or recession.

While you can’t force your employees to invest in a 401(k), you can give them specific benefits that come with their pay stubs and ensure these are deposited into their savings account.  

3. Insurance

Giving your employees health insurance allows you to show that you’re invested in their health and future. It also makes them feel cared for, which helps them feel valued, meaning you get more out of them.

For instance, a happy employee can work leagues faster than someone who’s depressed. They’ll also be more efficient, have lower error scores, and be more productive, allowing you to reach your goals sooner than you ever thought.

The Takeaway

Benefits are crucial to employee retention, lower turnover, and increased time-to-completion. But it can cost around 30 to 50% of an employee’s total salary. That may seem too much for your financial plans, but the benefits you give to your employees help them stay with you longer.

Your employees might even stay for decades with your company when they find out how much you support your employees.

Financial plans article and permission to publish here provided by Roman Romster. Originally written for Supply Chain Game Changer and published on January 31, 2023.