Even as companies begin hiring again, it will take some time before the workforce is back to pre-recession levels. What this means for the average business is that managers are trying to maximize productivity with a smaller workforce. The inevitable result is a more stressful work environment as both employees and management struggle to find a healthy balance between productivity and the decreased manpower. Employers will be required to find new ways of incentivizing and motivating their workforce to maintain a positive attitude while managing increased workloads.
According to the Bureau of Labor Statistics (BLS), prospective employees value benefits second only to pay when considering a new job. And for good reason – the BLS reports that benefits account for 30% of employers’ total compensation costs. What this means to employers is that they must give serious consideration to providing a range of benefits to maintain a happy and committed workforce.
The challenge, however, is investing the time to research, plan, and roll-out benefit plans. With small employer resources already strapped, finding the manpower to implement a benefit program can prove overwhelming.
PEOs Enhance Performance with Health Insurance and Voluntary Benefits.
Professional Employer Organizations (PEOs) provide small employers the unique opportunity to offer their staff a rich and comprehensive array of employee benefit programs that are typically available to only the largest corporations. These robust offerings include a wide range of major medical plans and voluntary benefit offerings. The PEO provides these benefit packages to hundreds of clients, and has the experience to research and procure these top-rated plans for their clients. When joining a PEO, clients merely select they plans they intend to offer, and the PEO takes over from there. From open enrollment, to addressing employee questions, to administering the monthly billing, all the plan management is the responsibility of the PEO.
Most large PEOs offer the following range of benefits:
- Multiple health insurance coverages
- Dental insurance
- Vision insurance
- Life insurance
- Disability and alternative insurance
- 401 (k) Retirement Plan
- Pre-tax Cafeteria 125 Plans
- Flexible Spending Accounts (FSA)
- Employee Assistance Programs
- Credit Union and financial services
PEO clients are assigned a benefits manager to address all employee inquiries and to manage any related administrative issues. Clients can literally sit-back, and let the PEO manage the process.
Containing Benefit Costs Through Economies of Scale
While most employers recognize the need to offer rich benefits to their staff, the ever-increasing cost of health insurance is forcing them to think twice before rolling out a new plan. Luckily, in a PEO relationship, small employers can offer the scope and pricing of their large competitors. By pooling hundreds, and even thousands of businesses, PEOs aggregate health benefit plans, retirement plans, workers’ compensation insurance, and legal expertise. The PEO establishes relationships with large regional insurance companies and can offer better plan selections with lower premiums.
Another benefit of working with a PEO is that it provides the insurance carriers greater stability by offering insurance coverage to employees in a broader employee base. The pooled employees come from different industries and geographic areas which stabilize the premiums over the long-term. This provides the PEO greater negotiating power at renewal, thus typically keeping renewal rates below market averages.
There is little question that in today’s economy, employers must offer their staff a rich benefit plan to maintain morale and commitment. PEOs have become a serious option for small business looking for ways to roll-out robust plans, quickly and cost effectively.
Our last post introduced the High Deductible Health Plan (HDHP) and how instituting this plan can ultimately lead to reduced insurance usage, and lower premiums. Coupled with an HSA (Health Savings Account) the HDHP can have an ever greater impact on your bottom line.
Our last post looked at ways of creating a healthier workplace to reduce the soft costs related to employees’ health insurance. Most employers recognize that an attractive benefit package promotes loyalty as well as generates better productivity amongst the company’s employees. On the other hand, it also can easily be one of the most expensive costs an employer has to consider. Like most businesses in our tough economy, you are probably looking at ways to cut benefit premiums, pronto.
At a time when employers are carefully watching every dollar they spend, employee benefits are top on everyone’s mind. Especially with new legislation moving through Washington that may make benefits mandatory for all employees, you should begin to take the costs of your employee benefits very seriously.
