By Ron Coleman
There are numerous methods of attracting and retaining employees. In this three-part article we will review two options—benefits programs and performance rewards. Part one deals with benefits programs, and parts two and three deal with performance programs.
Businesses need to determine how to offer employees the most attractive remuneration package possible while still remaining competitive in the market. The cost of attracting and retaining good employees is high, and this cost can be reduced by being an employer of choice. It can be increased if the market place considers you a poor employer.
Union businesses all offer a benefits package. Open shop businesses can get them from a benefits company through their association or local Chamber of Commerce.
Because we are all competing for the same labour force, we must ensure that we offer a competitive remuneration package. Paying too little will mean not attracting and retaining employees; paying too much means not being competitive in the market place and not getting enough work.
Check with your national and provincial association and your local chamber of commerce to see what is available to you. Also, enlisting the services of a benefits specialist will help you make better decisions in this regard.
Employees are not all looking for the same remuneration package. It is important to get a good understanding of what your employees want and what you can afford to give them. Ask your competitors what they are doing. Ask your employees what they had in previous jobs.
As I am based in British Columbia, I am most familiar with the BCCA Employee benefits program http://www.bccabenefits.ca/group-benefits.asp and the ICBA Benefits program https://www.icbabenefits.ca/
There are organizations that offer benefits plans. Review some websites to get up to speed on what’s available. Blue Cross and Great West Life are just two examples of companies that offer coverage across Canada. Benefits programs can include:
- Extended Health Care (EHC)
- Dental Care
- Accidental Death and Dismemberment (AD&D)
- Long-Term Disability
- Life Insurance
- Employee and Family Assistance Program
- Short-Term Disability
- Medical Travel Insurance
- Critical Illness Insurance
The cost of the package must be included in the overall cost of the employee. A question that often arises for the employee is, ‛do I want the benefits, do I want more in my take-home pay, or do I want a combination?’ The employer must calculate the trade-off of attracting and retaining employees with the cost of the benefits program.
If the employee is paying for the benefits, there may be the opportunity to deduct the premiums on their personal tax return. However, I don’t recommend writing off the premiums paid by employees on disability insurance as the benefit then becomes taxable. If the company is paying the premiums for the benefits program, they may be obliged to add an amount to the employee’s T4 as a taxable benefit. The best programs are those that are deductible by the employer and not taxable to the employee.
The basic benefits program that we all get is coverage under the provincial workers compensation programs and the provincial medical benefits programs. Ontario has the OHIP – Ontario Health Insurance Plan, BC has MSP – Medical Service Plan, Manitoba has Insured Benefits Branch of Manitoba. Details of all the provincial plans and their coverage is available at https://www.sbis.ca/canadas-provincial-health-plans.html.
Only British Columbia charges premiums for their medical service plan. All other provinces and territories use other methods including payroll taxes. BC is phasing out the monthly premiums and has started to introduce a payroll tax to offset the MSP premiums.
There is no right or wrong answer as to what benefits a business should offer. Obviously, union businesses are mandated to provide benefits packages based on their collective agreements.
If you are looking at a benefits program you need to take the needs of the employees into account and determine if there is an opt-in process or if it is mandatory. Some employees may have programs through their spouses/partners. If you are going to introduce a benefits program what will it do to your labour cost? Will you absorb the additional cost or reduce the employees’ wages? Going forward with a benefits program is a major decision and one not easily reversed. So, do ensure that you do your due diligence and take professional advise on how to proceed.
Another option to consider is a pension program. Again, these are a cost of labour and the benefit to the employee is the contributions that the employer makes, in addition to forced saving. This can be a very successful program as too often employees don’t save enough for retirement and are forced to work for much longer periods than they expected. Do you really want to be working in construction in your mid-sixties and seventies?
While not something to do with employee benefits, many associations, including MCAC and HRAI, offer a variety of benefits programs for their members. These cover a wide variety of benefits from reduced gasoline prices and special pricing for vehicle acquisitions to a variety of insurances. Make sure that you are availing of all the programs that your association offers. There may be some that allow the employees to get reduced cost on fuel, restaurants, or other personal expenses.
This article is designed to get you thinking about the pros and cons of what you can do to attract and retain employees. Retain the services of a specialist in benefits programs before delving too deeply into this topic. Bringing up the topic with employees too early may set up expectations of unrealistic outcomes and be demotivating. Make sure you tailor a package that works for you and your employees. Here are some key starting points.
- Premiums: Will these be paid by the employer, the employee, or on a cost-sharing basis?
- Which specific benefits are included: dental, vision, prescriptions, and/or others?
- Deductibles: What deductibles are included in each benefit?
- Capping: Is there a cap on some or all the benefits? (Maximum of $500 for vision care in a year)
- Co-insurance: Does the program cover a percentage of the claims? (80% of dental might be paid)
- Which benefits trigger a taxable benefit to the employees?
- Which benefits are deductible by the employer?
- Will you cover all employees? Full-time, part-time, contract employees?
- Will it be mandatory?
- Can individual employees pick which benefits they want?
For an existing company the challenge is how to absorb the cost of the program. You could be easily increasing your labour cost by 15%. Can you absorb this? Can you pass it on to your customers? Are you going to reduce your base wage rates to offset this cost?
There are many points to consider, so proceed carefully. In part two of this article we will explore non-cash incentives and performance rewards for attracting and retaining employees. ▪
