One of the biggest financial decisions for business owners.

No surprise here...

One of the biggest challenges and expenses for business owners is employee compensation. What you pay your employees is a big deal, and it may be a bigger deal than you know. According to a recent Randstad survey, 55% of employees left a job because they found better benefits elsewhere. That is no laughing matter, especially when you consider how much of an investment each employee is and how much work you did to procure them as employees in the first place.

How often do you recalculate your business budget? And when you recalculate that budget, do you also recalculate employee compensation? For those that are just getting their feet wet with newly becoming an entrepreneur, employee compensation is a big deal and you should really take time to consider what to include in your employee benefits package. Employee compensation varies depending on which industry you are in. And employee salary is just a slice of the pie, you also need to consider fringe benefits as well.

I suggest you take a look at IRS publication 5137, Fringe Benefit Guide. This document is a great resource for helping you reach your objective when it comes to employee compensation. In this document, the IRS defines a fringe benefit as a form of pay (including property, services, cash, or cash equivalent) in addition to stated pay for the performance of services.

Just to give you an idea of how much you should contribute to employee benefits it should sit somewhere around 40% of business revenue (for some industries this figure is as high as 80%). About 20% of an employee's salary should go towards fringe benefits which include, but are not limited to social security, worker's compensation, health insurance, and paid time off, according to Nerd Wallet.

Many businesses understand, that employees are the first customers of a business. And likewise, it takes much more effort to attract and acquire a prospective employee than it takes to retain an existing one. Some employers have a hard time deciding on whether to offer health insurance to employees. According to a Glassdoor study, 67% of job seekers consider salary to be a top factor in considering whether or not to take a job. Also, take into consideration what your competitors are offering. Being competitive in your market is more than products and services. Being competitive includes employee retention as well.

In recent years, one of the only reasons employees haven't quit their jobs is because of healthcare. A survey done by YouGov for Policygenius shows that 33% of workers who get employer-sponsored health insurance would likely quit if they were not offered health insurance.

So be sure to take this in, 33% of employees would quit if no health insurance is available, and 67% of job seekers consider salary as a top factor. It is important that employers stay engaged with the health of their employees. Simply because one of the oldest tools used to retain employees, can avert unnecessary problems that can devastate any business.

Likewise, it is important for employees to be proactive when it comes to their own healthcare needs for themselves and their families. Without your employees, it can be difficult to run a successful business, if not impossible. If you offer health insurance, be an advocate for that healthcare plan by encouraging employees to be proactive about their health, this can prove to have positive effects. Not only does this keep them engaged in their health, but it can also reduce the cost of your worker's compensation in the long run.

There are two reasons why employees are not engaged with their health care. One reason is the lack of a culture of promoting a healthy lifestyle to employees. The second reason is that they don't fully understand the value-added services that can assist them in making healthier choices in their life. It is important that you and your employees know exactly what their employee benefits have to offer. These services can transform your company's culture, maintain employee retention and increase employee morale.

If an employee suffers a serious physical injury at work, the event can have lasting effects that can have just as much of an impact on their emotional state. A lack of independence and the grief that comes with a catastrophic event can lead to a cycle of depression and other behavioral health factors. On the other hand, such benefits could help prevent employees that had an injury at home over the weekend from coming to work and faking a workplace injury.

Be Proactive with Your Employee Benefits

Lack of employee benefits reduces morale and promotes distrust between employees and employers. Stressors like socioeconomic standings and lack of proper treatment can delay recovery, and your employees' readiness to return to work. Whether a key employee or not this is bad for business.

Getting the right benefits in place doesn't have to cost your business as much as one may think. When health insurance is coupled with value-added benefits the company can offer rich benefits while maintaining a competitive edge. Value-added benefits are voluntary supplements that work with their major medical insurance. With voluntary benefits, the business owner can contribute or allow the employees to purchase policies that make sense to them. A package with a high deductible may be good to lighten the financial burden of the business, but is it really the best thing for your employees? Can a benefits package really help if your employees can't afford to use it?

By adding voluntary benefits to the package, employees will have the opportunity to use them to offset the cost of their high deductible plan and gain added benefits for their families at a low cost. When offered as part of a benefits package employees will be placed on a group rate, and the employer has the options of paying for the added benefits, contributing to a portion of the benefits, or not contributing at all.

Supplementary benefits are a tool that many small business owners don't utilize enough to retain current employees or attract promising prospects. Give employees an option to leverage their health benefits as well as protect their income in case of an unfortunate event. It can prevent unnecessary claims against worker's compensation, that can affect your company and your bottom line.