Benefits: What you need to know

Why are benefits important, and what should you consider when developing a benefit plan for your organization? Benefits constitute a significant portion of employee compensation costs, but having a competitive benefit package is vital to recruiting and retaining the best employees. The best benefit programs are those that align with an organization’s business strategy and compensation philosophy. For example, flexible benefit/cafeteria plans provide a means for employers to offer employees a customized benefit package while saving taxes for both the employer and employees. Employers also have to account for other certain major benefits, such as Social Security, Medicare, workers’ compensation, and unemployment compensation, which are mandated by law.

Getting the most out of a benefit program, especially in the long run, requires aligning benefit programs with an organization's overall business strategy and compensation philosophy. Benefit planning inevitably involves trade-offs between an ideal package and one that will maximize the desired impact at an affordable price. The three most important factors that must be weighed are:

Strategic planning allows employers to take the initiative in balancing employees' needs with a budget. It can involve taking advantage of new tools, such as electronic plan administration, and offering new benefits beyond the traditional health, disability, and life insurance and retirement plans ...