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The Benefit of Benefits
3 ways a benefits plan can improve your company’s bottom line

Employers have been known to introduce benefits plans for a number of reasons. Some see the plans as a tax-effective way to compensate employees. Others are attracted by a tool that can support families in a time of need.

But the plans can also help to improve a company’s bottom line.

Consider these factors that should be included in discussions at budget time:

1. Benefits plans are a powerful recruiting and retention tool

A benefits plan can be the deciding factor when a worker is considering one job offer over another. In the 2012 Sanofi Canada Healthcare Survey, for example, 61% of employees said health benefits offered a “strong incentive” to stay with their current employers. In the 2011 edition of the survey, 59% of workers said they would rather keep their benefits than receive an extra $10,000 in cash.

The price of the related premiums can appear quite affordable when they’re compared to the true costs of replacing a departing employee – such as the price of the recruiting process, extra training for newly hired employees, and any lost productivity in between.

Sure, the interest will vary between different age groups. Younger employees who still feel invincible will be less likely than their older counterparts to recognize the value of something like prescription drug programs. But there is no mistaking that older workers represent a growing share of Canada’s workforce. A mere one in 10 Canadian workers was 55 years old in 2001. Thanks to the Baby Boom, about one in four employees are projected to fit that description by 2031.

This means benefits will play an increasing role in the recruiting process.

One way to enhance the plan as a retention tool is to share the related information with employees. Some companies distribute regular statements which show the value of an employee’s salary alongside the value of individual benefits. These regular reminders might keep an employee from being lured away by the promise of a higher salary alone.

Benefits consultants can offer their own reminders. When called in to inform employees about changes to a plan, or steps they can take to protect the benefits, I always take the time to show how well their benefits compare to overall industry benchmarks.

Many people are surprised to learn how much better their plans compare to those in other workplaces.

2. Injured employees can return to work more quickly if they receive the proper care

Injured employees may require physiotherapy, massages or chiropractic adjustments to secure a speedy recovery, but these treatments over and above traditional hospitalization can require out-of-pocket payments.

Cash-strapped employees who lack benefits plans to offset these costs – or to help pay for a full course of medication -- may choose to skip some of the best available treatment options. This can delay their return to work.

The longer these employees are absent, the more that workplace productivity can suffer.

3. Healthy employees help to reduce the cost of absenteeism

The Conference Board of Canada has concluded that unplanned absences cost Canadian employers about $7.4 billion per year – or about $572 per employee. To compound matters, absenteeism is on the rise. Statistics Canada has determined that the average Canadian worker was absent about 9.3 days in 2011, up from 8.5 days just a decade ago.

Employee wellness programs which encourage factors like mental health, exercise, weight loss, proper diets, and an end to smoking can lead to healthier employees who require less time off work because of illness or injuries.

They can even help to minimize the health risks that lead to unwanted claims which result in higher premiums.

Is there a topic that you would like me to address in a future edition of the Buzz? A burning question about benefits plans that has always been hanging over your head? Let me know. Drop a quick email to billz@callerygroup.com.

Top Tips:

  • Calculate the value of an employee’s overall compensation package, including both salary and benefits. Many employees will be surprised by the size of the combined number. This can be a powerful retention tool.
  • Consider tracking the cost of absenteeism. The price of an employee wellness program which encourages factors like mental health, exercise, proper diets and healthy living can help to reduce time off work because of illness or injuries.
  • Invite your benefits consultant to meet with employees to review any changes in the plan, steps to protect benefits, and the value of the company’s benefits plan when compared to wider benchmarks.

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The Buzz Bits
Miscellaneous links to interesting benefits information

What you need to know about your medicines

Drug shortages that exist today: Canadian Drug Shortage Database

The facts on generic drugs: Canadian Generic Pharmaceutical Association

Benefits philosophy 101: Benefits Canada

Do you know what drives benefits costs?: smallbizadvisor

Protect yourself in the age of information: Durham Regional Police

Cheque fraud mitigation partnership: RBC Royal Bank

2012 Sanofi Canada Healthcare Survey

Community Ethics, Big City Expertise

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