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Beyend 401 small buisness owners - Jean D.

Jean.D Beyend 401 small buisness owners - Wiley & sons , 2004. - 274 p.
ISBN 0-471-27268
Download (direct link): beyond401korsmallbusinessowners2004.pdf
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Ultimately, the employees’ reaction to your compensation plan will determine its effectiveness. Chapter 3 discusses how to ask employees what is important to them.
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Why Have a Compensation Plan?
PLANNING IS AN ONGOING PROCESS
Like an exercise program, planning only proves beneficial when it becomes a routine activity. Annual reviews are a relatively painless means of updating your compensation plan to reflect actual experience and changes in the business environment.
Common Mistakes and Tips to Get a Good Value Benefits Plan
Matt Hollister is the president of Business Benefits, which is located in Clinton, Massachusetts, and on the Internet at www .b-benefits.com. He shares his insights about common mistakes that business owners make, as well as tips for how business owners can get good value in their benefit plans.
Matt’s firm is an insurance brokerage that helps companies find and implement group insurance benefits in the areas of health (medical, dental, vision) and welfare (life, accident, and disability) coverage.
According to Matt, these are common mistakes of business owners:
• Not reviewing their benefits on a regular basis to make sure that the coverage they have is appropriate and the price is competitive
• Being overly generous (such as paying 100 percent of the medical and dental coverage)
• Not offering adequate networks of care providers (such as too few options for doctors, hospitals)
• Not keeping their employee records up to date
• Not communicating clearly with employees about costs and need for changes in plans
Planning Is an Ongoing Process
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• Not providing adequate coverage in key areas such as disability insurance (maximums may be too low)
• Not checking with employees about what they want and how satisfied they are with the company benefits
Matt recommends a “benefits audit” when you renew your benefit plans:
• Do you have the coverage that you think you have?
• Are your benefits on a par with the competition?
• Do you have adequate coverage in short- and long-term disability?
• What services do your vendors provide? (Do they advocate for employees when claims are denied?)
• What other options should you consider?
Inexpensive Benefits for Employers
Matt suggests that employers consider offering Section 125 plans, which are simple to set up and usually pay for themselves. Section 125 plans allow employees to contribute pretax dollars to an account from which they get reimbursed for health and dependent care out-of-pocket expenses. This helps employees with little cost to the employer.
Matt also suggests offering voluntary plans. With optional extra coverage, employees can elect to pay for additional life and disability insurance from their compensation. This is a benefit to employees without cost to the employer. With coverage such as voluntary life and disability plans, employees have access to coverage that they may not be able to get elsewhere. Voluntary plans often come with some level of guaranteed coverage and will generally be better priced than individual policies. Also, voluntary disability plans purchased by employees with
(continued)
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Why Have a Compensation Plan?
after-tax dollars pay a tax-free benefit, whereas with company-paid plans, disabled employees have to pay taxes on the benefit they receive.
Second Opinion at Time of Renewal?
With the increasing costs of benefits (especially health care), it is more important than ever to be clear about your goals for benefits and your company’s budget. Before you renew your plan, it is a sound business practice to get a second opinion. Finding a knowledgeable advisor is essential. You want more than just a sales quote; you want someone who can help you make informed choices for your business. Conscientious insurance brokers guide you in developing your benefit plans and work with you on an annual basis to make sure that you are happy with your coverage.
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WHAT IS IMPORTANT TO EMPLOYEES?
The information in this chapter was contributed by Bruce Katcher, Ph.D. Bruce has a wealth of knowledge and more than 20 years of experience in helping companies understand what is important to their employees and customers. Bruce’s firm, The Discovery Group, is based in Sharon, Massachusetts, and is located on the Internet at www.discoverysurveys.com.
Bruce knows how to ask the right questions. How you ask is as important as what you ask. So, before plunging in and asking employees what they want, you need to understand how to ask questions that generate answers with useful information. Asking questions the wrong way can trigger a backlash of employee dissatisfaction. With Bruce’s practical approach, you gain valuable insights.
EMPLOYEE INPUT IS CRITICAL
Employee input is critical when designing a compensation and benefit program. A very rich program could turn into a total disaster if employees do not feel it is meeting their needs. You might create a 401(k) program with many investment
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What Is Important to Employees?
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