Crafting A Benefits And Policies Plan

The packages and procedures you choose should aid both employer and employee

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An employee manual is an invaluable tool that virtually every business owner should use in running his or her operation. By crafting a personnel handbook, employers provide specific guidelines concerning job performance as well as details about company benefits, policies and procedures.

In the first part of this series (February 1997), you learned the primary function of an employee handbook, the best format to use and some basic items to include. The next step is crafting each section in detail. Benefits and policies/procedures are two of the most important parts of the manual. These two areas will help business owners attract and retain employees, carry out objectives and avoid possible litigation.

The first step is to know what’s available and then choose options that work well for both you and your employees. There are a variety of options, so to make your approach easier, distinguish between company- paid benefits, such as short- and long-term disability insurance, and cost sharing benefits, which include health care and retirement plans.

Preparing benefits package’ can be very costly. In fact, in 1994 all benefits, including health, retirement, workers’ compensation and group life insurance, cost employers about $746 billion, according to the Employee Benefit Research Institute, a private nonprofit public policy research organization in benefits can be just as costly, cautions Armentha “Mike” Cruise, CEO and president of Aspen Personnel Services Inc. in Takoma Park, Maryland. If you don’t offer benefits, “initially you can hold a person for a couple of years, but after two or three years, they will leave,” she says. Their departure will mean decreased production, thus less profits. Cruise, who employs 300 people, spends about $11,000 per month on company benefits.

Health care is a major concern for business owners, so when choosing a plan, consider managed care through health maintenance organizations (HMOs) and preferred provider organizations (PPOs). These systems save money and give the employer some leeway in selecting and monitoring the doctors who will provide care. Under an HMO, patients make they see a doctor, but their choice is limited to a group of affiliated physicians. PPOs, on the other hand, provide more flexibility. Employees can see a doctor outside the group, but for a higher cost.

When considering retirement plans, there are a number of options, including the typical and widely used 401 (k) plans, the Simplified Employee Pension Plan (SEP-IRA) and the new retirement plan option called Savings Incentive March Plan for Employees (SIMPLE). According to a survey released by Fidelity Investments, the nation’s largest mutual fund company and a leading provider of financial services, 80% of small business owners think it’s important to help employees save for retirement, but only 35% currently offer an employer-sponsored retirement plan. Some business owners don’t make this offer because they are overwhelmed by the choices, the expense of employer contributions and the time it takes to implement and administer these plans, says Wendy Taussig, director of marketing for the Small Company Retirement Plan for Fidelity Investments. But there is help: the firm’s 82 branches

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