business builder employee benefits
What are ‘good’benefits? It depends
on the employee
by Alan Holz
Joe feels like an idiot.
He moved his pregnant wife and young son across the state for a job that he thought had comparable salary and health-care benefits. He realized, too late, that he had inverted the employer/employee contributions on health care, and now takes home a much smaller paycheck.
Lisa, on the other hand, is a newly graduated recruit with the same employer, finally enjoying a professional wage and the potential the company offers for continuing development. Health care and retirement benefits barely registered in her job decision.
It helps to look at wage and non-wage benefits in terms of the “young immortals” and “enlightened warriors” of your employee mix. You want both working for you, of course, because each provides something to the other. Joe, our warrior, provides mentorship and grounding while Lisa, our immortal, infuses energy and creativity to the work environment.
To keep both of them working for you, let’s break down traditional and emerging benefits options according to employee needs and your bottom line costs.
What warriors wantFor Joe and other warriors, who include employees in their mid-30s to early 50s, affordable health-care premiums that don’t eat into take-home pay are a real concern. A strong employer-sponsored health plan will set one company apart from another in his mind.
He’s also thinking about feathering his retirement nest, and will pay more attention to a firm’s defined benefit plan (if one still exists) or more likely its company match to a 401(k) or 403(b).
Joe has 12 years of experience. He expects his employer to provide a salary commensurate with that experience, or to make up in pay what they lack in benefits. He also wants some challenge in his job to avoid burnout, such as training and unique project opportunities.
With a wife and child and another child on the way, Joe is focused on family matters. He may be attracted to other benefits such as family leave or a flexible schedule.
Several new and existing benefit options can satisfy the most seasoned warriors.
• HSAs and HRAs. Having enjoyed low or no deductible, full coverage health plans for several years, warriors may be skeptical of Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs) — and until the state of Minnesota offers some tax benefits, rightly so.
However, these plans will likely become the norm for many employers in the next three to five years. • Cash balance plans. Cash balance plans allow employees to contribute to retirement based on a percentage of their current salary (as opposed to a pension’s percentage of average final pay times years of service). The benefits accrue faster — a plus for people who change jobs more frequently — but often lead to reduced benefits for long-term workers.
• PTO, or paid time off, and part-time benefits. Many warriors expect to work at least part-time after age 62 because they can’t afford not to. Companies that offer some type of part-time benefits, such as vacation pay or long-term care insurance, will be more attractive.
What immortals wantA PTO plan is also attractive to Lisa, because her generation embodies a stronger entrepreneurial spirit and the values that go with it. The Center on Aging and Work/Workplace Flexibility found that 43 percent of workers surveyed under age 30 planned to “be their own boss.”
Lisa is idealistic at this point in her career, and seeks a mentoring relationship with management. Her sense of entitlement was evident when she negotiated her salary, and her head is easily turned by new opportunities.
Employers that provide challenging projects, the latest technology, and a good balance between supervision and autonomy will earn her loyalty.
Like many young immortals today, Lisa may have lived for a while without health insurance, believing that it’s optional for now. She also isn’t too concerned about retirement, but is attracted to benefits that offer a flexible schedule, possible travel, upward mobility and perks like an expense account.
If she’s thought about marriage or family at this point, Lisa doesn’t foresee it happening until her 30s. Family-related benefits will strike her as progressive, but won’t seal the deal. Salary will be her No. 1 priority to pay off school debts and purchase a home, which she views as a good investment.
Employers must offer immortals a competitive salary based on their education and experience, but there are other cost-effective strategies to attract them.
• Since immortals are more loyal to advancing their own careers than to the company, a tuition reimbursement program is attractive to them.
• Stellar leadership. Studies show that people don’t leave bad companies, they leave bad bosses. Because immortals want to be the boss someday, they seek managers who they can emulate.
• Rather than straight commission plans, sales incentive programs should be designed with no cap and a threshold below which no incentive is paid. Top-down mandates based on company goals rather than professional development will be viewed as a disincentive to immortals.
• Gender equity. Lisa has grown up assuming that she is equal to a man including child-rearing duties. She would bolt from any company environment where men appear to get more perks or faster advancement. And with women still at a disadvantage in corporate leadership, salary and retirement savings, she would be right.
But Lisa’s male co-workers, including Joe, are tired of the traditional pressures to be the breadwinner. As they watch women make choices between work and home, some want the same opportunity. Moving forward, traditional gender roles will continue to blur, requiring professional development plans that take life stages rather than gender into consideration.
As your company reviews its salary and benefits plans in the coming year, think about your employee mix. Do you have more young immortals or more enlightened warriors? Find areas where their desires overlap.
[contact] Alan Holz is the human resources manager/consultant for Olsen Thielen CPAs & Consultants in St. Paul: 651.486.4536; aholz@olsen-thielen.com; www.olsen-thielen.com
