The SESCO Report – April 2023
Do Your Employees Appreciate the Benefits You Provide? (Are They Worth the Expense?)
The way in which we compensate staff for their work has become extremely complicated as the technology on which our culture depends. Anything received beyond wages, which serves the employee more than the employer, are called employee benefits.
As we know, wages + benefits = total compensation. Total compensation is our largest, single controllable cost and that cost must be managed to the penny if an employer wishes to maximize profitability. All other expenses in the business relationship are considered "fixed". A vendor or provider of services tells us as employers what we are going to pay. These are fixed expenses. These include rent/mortgage, materials and supplies, utilities, taxes, workers' comp and other items. However, the variable expenses are critical and must be managed. It behooves employers to establish formal compensation and benefit programs to "protect ourselves from ourselves." For example:
- Within the organization. The right price is determined by the market blended with position responsibilities and our financial ability to pay. If we do not define our "right price" for each position, then that vacuum is filled by external as well as internal inequities. We chase after talent as we get desperate and/or pay our employees inconsistently for the same job or relative production which is one of the primary reasons employee morale suffers and subsequently employees leave the organization.
- Along with wages, many benefits are tied to wages wherein as wages are increased, so are the cost of the benefits. Examples of these increases include pension or 401(k) plans, paid leave benefits, etc.
While wages are 70.4% of an employee's total compensation on average (BLS 2022) and subsequently must be managed closely, in this article we are focusing on the remainder of that cost which is 29.6% spent on benefits.
More clearly stated, the Bureau of Labor Statistics Employment Cost Index as reported in 2022 provides the following averages:
- $27.19 per hour on average (70.4% of total compensation)
- Benefits — $11.42 (29.6% of total compensation)
Although not required, benefit programs are a firmly established tool in the employer-employee relationship. And there has been an increasing tendency for employees to regard them as a "right" of employment. The day is long gone when it was a question of whether benefits would be provided. Today, the question is: "What types of benefits can we provide with the benefit dollars that we can afford to spend?"
Maybe even more importantly, "What types of benefits can we provide with the benefit dollars that we can afford to spend that employees will appreciate?"
This second question is ever changing. The days of the standard health plan, pension, days off and maybe a year-end Christmas bonus are long gone. We are finding that employers are spending a significant amount of their variable expenses (expenses that the employer can control) on benefits that are not appreciated and subsequently discounted by employees.
What all employers, no matter what profession or industry or size or scope, need to ask themselves is: "What are the needs and desires of my employees?"
In today's workplace relationship, it is critical that employers know and understand what employees like about working for their employer and, most importantly, what employees suggest for improvement. You cannot be scared to ask this question and don't feel obligated that you must meet every wish list of your staff. Simply asking them these basic questions sends an immediate message to your employees that you value them, and you value their opinion and input. This basic conversation is the cornerstone of an effective employer-employee relationship. (See page 2 for an overview of SESCO's validated and well tested Employee Satisfaction Program.)
During this process of seeking employee input, you certainly will not receive a 100% response from your staff on what they like to dislike. However, you will find a trend and as such, you will be able to challenge what you are providing to your employees to include benefits and the cost thereof. They may fully appreciate what you provide or as we are finding in 2023 (post COVID) employees are valuing non-traditional benefits and workplace factors completely different than that of previous generations.
What you may find out is that you are spending a significant amount of your variable expenses (30% of total compensation) on benefits that are not valued by employees nor attract or retain employees. What many employers are hearing from employees:
- Employees want less, not more hours. In fact, the government is considering a 32-hour workweek as the official workweek. Overtime and subsequently more gross income is not what many are seeking.
- Traditional health insurance programs are not important to typically those less than 45 years of age. Also know that traditional health insurance programs can be customized to meet the demographics and/or needs of your employees.
- 401(k) plans, matching dollars, etc., again, are not appreciated as in the past. Many employers establish a plan and subsequently pay annual administrative fees while a few, if any, employees actually participate.
- Other traditional benefits as provided by employers have lost their luster such as long-term, short-term, dental, vision and other traditional benefits.
Note: This is not to say that this list as noted above is universal or statistically validated. However, given our practical hands-on consulting with employers across the country in various professions and industries, we can verify that employers must challenge what they are providing.
So, what are employees seeking? Consider the following contemporary benefits for consideration to possibly include replacing "old school" benefit programs which are costly and also tied directly to wages. As wages are increased, so do the cost of benefits increase.
- Flexible scheduling
- Employee meals
- Standing desk or other technology
- Bring your pet to work days
- Employee of the month
Personal and Family
- Personal shoppers
- House cleaning
- Car detailing
- Pet insurance
- Fresh flowers subscription
- Child care
- Adoption grants
- Date night
Financial and Education
- Home loan assistance
- Employee referral programs
- Business dress allowance
- Tax consulting services
- Financial coaching or training services
- Time off to attend seminars or conferences
Wellness and Leave Time
- Nutritionist services/hotline
- Stipend for mental health
- Gym or fitness reimbursement
- Exercise classes
- Counseling or Chaplains
- "Use it or Lose It" fund encouraging employees to use it on fitness or health programs
- Time off around holidays
The one benefit that will not be replaced and possibly will increase over time is that of paid time off programs (vacation, sick, personal leave rolled up into one program). Holidays will also continue to be a reality in the employment relationship.
It is time to think outside the box.
In fact, you may find that many benefit programs can be canceled and that you simply provide an increase (up to the value of the benefits) to employees' hourly rate or annual salary.
As we mentioned above, one of the most effective changes an employer can make and, frankly, a change that most employers are not considering but should, are changes in schedules. Examples include:
- Employing more part-timers.
- Moving to different shifts and days worked.
- Allowing flex schedules wherein an employee can identify the times that they work during the day. However, it is strongly suggested that these times be fixed and not allow employees to come and go within a time range as they please.
- Creative scheduling to include few hours worked seems to be a very "hot" trend amongst employees.
The bottom line is that you are spending a significant amount of money on benefits. Wages are more difficult to control given market pressures. However, there are significant opportunities to re-evaluate benefits provided. Simply start by asking your employees and certainly SESCO can not only conduct the survey on your behalf to ensure validated results, but also subsequently advise on follow-up action plans.
Presidents' Leadership Council Survey on Recruitment and Retention
Finding and retaining top talent for small business leaders is more difficult than ever. Lori Dann, founder of the Presidents’ Leadership Council, an exclusive forum for small-business presidents, CEOs and partners have articulated eight (8) ways smaller employers can compete and retain top talent.
- Hire for potential over experience. Consider hiring a candidate based on their personality and behavior, i.e., a capable learner with initiative and integrity who can be taught the job responsibilities. They will be grateful for the opportunity and might be more loyal to the company in return.
- Pay more attention to transferrable and soft skills than quantifiable qualifications gained through training. These are less measurable than hard skills but include essential qualities, such as negotiation, problem-solving, listening, teamwork, confidence, adaptability and empathy.
- Don't draw hard lines around work-history gaps. Gaps in work history are usually attributed to the candidate tending to non-career-related responsibilities that likely have enriched that person in some way. Explore the possibility.
- Provide growth opportunities. Every candidate wants to understand what they must know to do the job, how they will be supported, and what opportunities are available for growth.
- Be a mentor. The greatest benefit to working for a small business is the opportunity for mentorship. Imagine hiring a candidate who meets points 1-5 above and then teaching that person the job, the business, the methodologies employed, and even an entire industry. Not only will they be set up for a long and successful career, but tremendous loyalty will also be built.
- Allow for job crafting. Be open to letting employees adjust their work parameters to align with their skills and preferences, while still meeting company expectations.
- Offer low or no-cost employee benefits, such as a voluntary benefits menu, savings program, employee assistance program, additional PTO (paid time off), or tuition reimbursement for work-related education.
"Feedback we get from our membership is that in today's very competitive world to find talent, small employers have to find other ways to make their jobs more appealing to candidates," said Dann. "Oddly, it isn't necessarily about money anymore. There are lots of reasons people choose a job, and that's the trick — figuring out just what those reasons are."
SESCO's Employee Satisfaction Program Overview
SESCO’s Satisfaction Survey has been validated by the University of Tennessee and is the only satisfaction survey on the market that has a validation rating. The rating is 92.7.
Since it was professionally developed and field-tested among hundreds of organizations over the past 78 years, the core survey questions in eighteen (18) attitude categories are reinforced by our national norms. Comparison of the individual question and attitude category results of your organization with our national norms will add a tremendous dimension to your evaluation, comparison and reporting of the survey results and feedback with your managers and employees throughout the organization.
Additionally, when future surveys are conducted, our program allows for on-going analysis and comparison of your survey results and progress. In essence, we establish your personalized data bank providing benchmarking from survey to survey.
The core purpose of our Management/Employee Satisfaction Survey is to provide you and other members of your management team a candid insight and understanding into your employees’ opinions, feelings and perceptions in key areas of their work life environment. The survey findings will accurately profile the employee satisfaction status of your organization.
SESCO’s Satisfaction Survey provides a comprehensive system for not only conducting feedback to participants following the initial administration of the survey, but also a very hands-on approach to assisting you and your management team, as requested, in developing follow-up action plans so that corrective action can be defined, and results-oriented action plans developed. Our professional consultants are human resource and organizational development specialists and offer extensive hands-on experience in assessing survey data to ensure the process is meaningful.
The more employees feel that their opinions, suggestions and ideas are appreciated and welcomed, the more genuine job performance, satisfaction and good morale they will observe. This high morale equates to increased retention and productivity.
Special Thanks to New SESCO Clients!
Bill Page Honda / Bill Page Imports, Inc.
Falls Church, VA
Raj-Al Moultrie, LLC
Euro Car Clinic
Signal Hill, CA
Nielsen Builders, Inc.
Hailey Auto Clinic
Midwest First Star, Inc.
Heart of Appalachia
St. Paul, VA
Johnson City, TN
Real Autohaus Automotive
SESCO Client Feedback
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Featured SESCO Client
Ocean State Innovations
OSI has distinguished itself as the premier global source for textile products and services. Ocean State Innovations continues as a leader in the textile industry for the U.S. Military and brings that same innovative textile expertise to many commercial market segments such as medical, industrial, automotive and traditional apparel. OSI offers a wide range of stock fabrics as well as the willingness to provide individual customer developments.
"As leaders in our industry, we strive for ingenuity and excellence in everything we do for our clients. The dedication of our employees is a major key to our success. This sets us aside from the competition."
~ Ben Galpen, Co-Founder of 1947 LLC & Partner at Ocean State Innovations
OSI sells the following brands: MULTICAM, Curv Tactical, CORDURA, GlenGuard, ITW Military Products.
Divisions include Brand & Oppenheimer, Performance Textiles, 1947 LLC, P&B Textiles, ColorWorks, Cutting Edge Texstyles.
Based in Portsmouth, Rhode Island, SESCO is very proud to provide our professional human resource and employment law services to OSI.