Buyer’sBlock

Preparing the Perfect Package
It’s Time to Take a Look at Your Benefits Package
by Paul Bieber

The Easter Bunny told me a couple of weeks ago I could drop medical insurance because I would be healthy next year. Since the group insurance for my consulting company renewed on May 1, I just happened to get my renewal notice at the same time as my conversation with the Bunny. It went up 65 percent. So I figured I could drop the insurance.

Fortunately I have a great insurance broker, Mike, who got new quotes from companies that last year were very high, but this year are hungry for business. The new rates, although up from last year, were 30-percent less than the rate from my current carrier, for a better program. It took about five seconds to make the decision to switch.

Mike told me that many companies are switching this year even though it is a paperwork and administrative hassle. A lot of companies are going to “cafeteria style” plans, where employees are given a fixed amount allocated to create the package of benefits that best suits their needs. Talk to your broker about this.

Many companies keep their benefits the same year-to-year, and reduce the coverage or raise the co-payments to control costs. Mike said that a better route to take is to poll your employees and see what benefits actually are being used. If a small number of your staff is using a benefit, make that an optional, employee-funded benefit, and use the company dollars to get a benefit that would be used by more of your people.

A couple of months before your policy expires take a survey of your competitors and companies in your backyard. See what they are offering. Call their human resources or personnel people, telling them you are interested in applying for work and asking what are their benefits. You will get answers that will help in knowing how to frame your benefits programs. You do have to be competitive in all aspects of hiring: wages, benefits, working conditions and job growth potential.

If you want to hire longer-term employees,
most studies say that benefits are equal to and in many cases more important than wages.

The Payroll-Benefits Shuffle
If you are planning to hire part-timers or short term employees, it is all about the wages. If you want to hire longer-term employees, most studies say that benefits are equal to and, in many cases, more important than wages. Everyone knows the economy is down, and there is no money for raises or high starting wages. But the good employees are looking at the benefits packages. If a prospective employee asks more questions about benefits than about the next raise, they are interested in the long haul with your firm.

It is time to look at all of your benefits: dropping the seldom used, looking at the generosity of time off and shifting funds to the key benefits of medical and disability insurances. Don’t do the payroll-benefits shuffle where you give a 5-percent raise, but ask employees to pay more on their insurance. When the employee’s bottom line is the same, it appears you are trying to pull a fast one.

People will say they want to keep their same doctor, but if you switch to another plan, they will find good doctors. Don’t let this be a deterrent from changing. Going to an HMO should be strongly considered. They are usually less expensive than a fee-for-service or PPO plan. Plan to raise the out-of-network costs to gain lower costs for in-network doctors and hospitals.

Keeping wage changes low and reworking your benefits program for the betterment of your employees will gain your employees’ respect and increase the retention rate of your staff.

Author’s Note: We are shifting the emphasis of this column to a question-and-answer format. Please send your questions about business issues to paulbaseball@msn.com, call me at 603/242-3521, or fax to 603/242-3527. I don’t have all the answers, but I will research your question with experts in various business fields and get the answers. All questions will be verified with the writer, so please include your contact information. Your name will be withheld from the article at your request, but I can’t accept anonymous questions. Whether it is an ethical, legal or accounting question send me a note. If you want advice on marketing or a business plan, help with an employee situation or succession planning, I’ll help you get the answers.

Paul Bieber has 30 years in the glass industry, including 21 years as the executive vice president of Floral Glass in Hauppauge, N.Y., from which he retired in 2005. Mr. Bieber’s opinions are solely his own and do not necessarily reflect the views of this magazine.

USG
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