It’s hard to decide whether or not to provide your employees with benefits. As a small business, there are many concerns that prevent you from being able to provide the type of employee benefits you might want to give your employees. However, once you've committed to providing benefits, there are several factors that determine the cost:
The size of the group has a lot to do with the cost of health insurance and retirement plans. This is because, in the case of health insurance, the more people there are in a group the more the risk can be spread around, which drives the price down. In the case of retirement plans, when there are more people in a group the more money there is to put into a group retirement plan. While you can’t save money by hiring more people, you can strongly encourage every one of your employees to sign up for group plans of this kind.
As with any other product or service, shopping around is a must. Not only do the prices of different benefits vary from one provider to another, there are also administrative and enrollment costs to consider. Often times, these enrollment costs are significant, meaning that it is important for you to ask about such costs up front and consider them carefully when choosing a benefits provider.
The one cost of providing benefits nearly no one ever talks about is the cost of providing benefits the wrong way. If you don’t administer your benefits in the correct way you can open your company up to lawsuits and fines from state and federal authorities. This means you will almost certainly want someone whose job revolves around administering benefits. While the cost of an added employee might make you balk, consider it against the cost of administering benefits improperly.
You might find that some professional organizations provide benefits specific to your industry. They might even do this at a reduced rate, or, at the very least, tailor benefits packages to your industry, allowing you to save time when shopping around for the right provider.
Is Bargain Shopping the Right Thing To Do?
You should consider whether or not bargain shopping for benefits is the right way to go about things in the first place. While you certainly never want to pay more than you have to, it’s probably better to concentrate on getting the best benefits package that you can afford. It’s unlikely that new talent will be attracted to a shoddy, bare-bones benefits package. It’s equally unlikely that employees who have been clamoring for a benefits package are going to be terribly impressed by such a package. Look around at different packages, but never make your final consideration based on price alone. Employees know the differences between a good package and a bargain basement one. If you provide poor options, this runs the risk of decreasing morale among employees who have been waiting for benefits.
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