Designing a Benefit Package for Your Small Business

employee-benefits
If you’re a small business owner, you face many
challenges in growing your company. One of them is
recruiting and retaining the best talent for your needs.
When your primary goals are managing costs and
increasing revenue, how do you sufficiently entice
new recruits and reward current staff members for
continually putting their best efforts forward? One way
is ensuring that you provide a competitive,
cost-effective benefit package comprised of both
traditional and not-so-traditional benefits.

Traditional benefits

In order to remain competitive, nearly all employers
should offer some form of health insurance and
retirement savings plan. Yet according to the U.S.
Department of Labor, only 57% of small employers
(those with fewer than 100 employees) offer health
coverage and just 49% offer a retirement plan.
(Source: National Compensation Survey, March
2013)

Health insurance
Small businesses can typically choose among
traditional plans or managed care/health maintenance
organizations (HMOs). Traditional plans are typically
more expensive but tend to provide more access to
providers. HMOs generally carry lower costs but have
fewer options for care providers. Some small
employers opt for a high-deductible health plan
(HDHP) along with a health savings account (HSA).
In an HDHP, employees carry a higher burden for
up-front costs, but the HSA allows them to set aside
money on a tax-advantaged basis to help defray
these costs.
Note that a provision in 2010’s Affordable Care Act
requires employers with 50 or more full-time
employees (as defined by the Act) to offer adequate
health insurance that’s affordable or face a possible
penalty. “Adequate” means that the company’s share
of total plan costs must equal at least 60%. Coverage
is “affordable” if an employee’s share of the premium
is less than 9.5% of his/her household income.
Originally, the provision was to take effect in 2014,
but the Department of Health and Human Services
recently delayed implementation until 2015. In
addition, employers with fewer than 25 full-time
employees will be eligible for a credit to help them
pay for health insurance.

Retirement plans

In today’s economic and political environment, most
adults view retirement planning as a high financial
priority. That’s why it’s important to include a
retirement savings option in your benefit package.
There are several options available to small
employers, including traditional 401(k) plans, SIMPLE
savings plans, and SEP-IRAs. A financial professional
can help you choose the plan that’s right for your
company’s needs.

Other options
Other traditional benefits include the following group
insurance policies:
• Life insurance: These policies generally provide
employees’ survivors a death benefit in a set
amount or an amount based on salary (e.g., two
times salary).
• Disability insurance: These plans provide
employees with an income stream should they
become disabled. Benefit amounts are typically a
percentage of salary.
• Vision and dental coverage: These plans tend to
be highly valued by employees, as the costs
associated with dental and vision treatments,
which are generally not covered by health
insurance, can be quite high.
Not-so-traditional perks
In addition to traditional benefits, there are several
not-so-traditional perks you can offer to help set your
organization apart in the competition for talent.
Wellness programs
Some employers offer workplace-based wellness
programs. According to a 2013 RAND Health study
sponsored by the U.S. Departments of Labor and Health and Human Services, about half of U.S.
employers offer wellness promotion initiatives. The
study found that such programs can help reduce risk
factors such as smoking and increase healthy
behaviors like exercise. In particular, incentive-based
wellness programs help improve overall employee
engagement and encourage individuals to take
responsibility for their own well-being. Although the
study did not reveal a significant reduction in
health-care costs for the period analyzed, authors did
note trends that might lead to lower costs over the
longer term. (Source: Workplace Wellness Programs
Study, RAND Corporation, 2013)
Flexible work arrangements
In today’s hectic world, time is nearly as valuable as
money. A company that values the work-life balance
of its employees is nearly as highly valued as one that
offers the best insurance or retirement plan. For this
reason, one of the most popular and appreciated
employee benefits available today is a flexible work
environment. Once the hallmark of only small and
“hip” technology companies, flexible work
arrangements are growing in popularity. In fact,
flexible scheduling is now offered by many larger,
more established organizations as well.
Some examples of flexible work programs include:
• Flex schedules: work hours that are outside the
norm, such as 7:00 a.m. to 4:00 p.m. instead of
8:00 a.m. to 5:00 p.m.
• Condensed work weeks: for example, working
four 10-hour days instead of five 8-hour days
• Telecommuting: working from home or another
remote location
• Job-sharing: allowing two or more employees to
“share” the same job, essentially doing the work of
one full-time employee (e.g., Jan works Monday
through Wednesday noon, while Sam works
Wednesday afternoon through Friday)
• Part-time or a combination: allowing employees
to cut back to part-time during certain life stages,
or use a combination of strategies to meet their needs
Allowing your employees to tailor their work
schedules based on their individual needs
demonstrates a great deal of respect and can
generate an enormous amount of loyalty in return.
Even if your business requires employees to be
on-site during standard operating hours (such as a
retail establishment), having a process in place that
supports occasional paid time off to attend to outside
obligations can have tremendously positive effects.
These obligations might include doctors’
appointments, family commitments, and even
unexpected emergencies, such as a sick relative. In
some cases, these benefits have no costs associated
with them, while in others, the costs may be minimal
(e.g., the price of a smartphone or laptop to help
employees remain productive while on the go).
Social activities
Sponsoring periodic activities can help workers relax
and get to know one another. Such events don’t need
to take much time out of the day, but can do wonders
for building morale. Bring in lunch or schedule an
office team trivia competition or group outing. If you
work in a particular industry in which colleagues share
a common passion, consider organizing events
around that interest. For example, a sporting goods
retailer could close up early on a slow-business
afternoon and go for a hike or bike ride.
Concierge services, discounts
You may also be able to negotiate with other local
companies for employee discounts and services.
Laundry service, dry cleaning pickup/drop-off, and
meal providers that can deliver hot, family-sized
take-home dinners may help employees save both
time and worry–and stay focused on the job.
Financial planning/education
For many people, money worries can be distracting
and time consuming. Consider inviting a local
financial professional into your office to provide
counseling sessions for your employees. While you
don’t necessarily have to pay for any services
provided, simply offering the opportunity to get such
help during work hours will be appreciated by your
workforce.
Involve your employees
The best benefits are those that meet the needs of
your employees. Before making any assumptions,
solicit ideas from your employees and then conduct a
survey to see what benefits they value the most.
Consider putting together teams of associates to help
with the idea generation and execution. By involving
your employees in the decisions that matter most to
them, you demonstrate that you value their time,
efforts, opinions, and hard work.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2014