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Boss Blog: April 12, 2017

Does Your Employer offer Benefits???? They Should!!

I have worked at many places during my lifetime, all 32 years of it. My first job was cutting lawns when I was 14. The next summer I worked at a Coffee Time Donuts in Brampton, Ontario, which was torture! From the ages of 16-18, I worked in a warehouse in Mississauga driving a forklift. I went off to university and smartened up a bit. I realized a great way to make cash without getting my hands dirty was waiting tables. During my days at Western University in London, Ontario it was my method of making quick cash and a lot of it. I made so much cash that I kept serving for 12 more years, political science isn’t what it used to be. The one thing all the jobs I did during those years had in common, was that they offered nothing in terms of benefits. Now at the old age of 32, I realize how important it is to have benefits. Having lived with and without group benefits, I feel I have a decent perspective on this subject. In this post, I will go over the positives and negatives of providing your employees with a group plan.

The most common excuse and really the only one, for an employer not getting group benefits is cost. I can empathize with that. Running a business is tough and definitely costly at times. When it comes to employee benefits I think it should be looked at little differently. Many employers will state that their business’ greatest asset is the building or even the equipment. In my opinion, the greatest asset any business has is its employees. Good employees can make you immensely successful. Bad employees can ruin you. When it comes to group benefits I think it is necessary to look at the ROI, return on investment. I see providing employee benefits as an investment, an investment in your workforce. Here are three reasons why every employer should offer benefits.

1) It is not as expensive as you might think

Group Benefits are totally customizable. As an owner, you can choose exactly what you want to offer your employees. Benefits can include medical, dental, life insurance, paramedical, optometry, chiropractic, massage therapy, disability and many others. Obviously the more costly the benefit, the more expensive it is for the employer. Standard plans can cost as little as $60 per month per employee. That is just 2 dollars per day for each worker.  In my opinion, good employees are worth at least that much. If they aren’t worth that much then why do they work for you anyway, right?

2) Group benefits are a taxable benefit for the employer

Employers are always looking for ways to bring down their taxable income. Finding any deduction they can is paramount. Providing employee benefits is a tax deductible expense. So although you spend money providing these benefits, you, in turn, bring down your taxable income. That’s real savings back in your pocket every April.

3) The intangibles are priceless

One thing every employer worries about is employee retention. Training new employees is a heavy cost. Losing quality employees costs even more! Building a company mantra based on worker happiness is priceless. An easy way to do that is to offer benefits. Employees are more likely to choose and then stay for the long term at a job that offers benefits. It is hard to equate that in dollars but I will try.

Say it costs you $500 dollars to train a new employee, (5 shifts x $100). Your normal staff turnover per year is %25. If you have 20 staff members that will mean you lose 5 every year. That’s $2500 every year to train new staff. Any staff member you retain is direct savings in your pocket. In some cases, employees will even leave a job for another just because they offer benefits. Losing a key employee is a costly loss. Often times that employee has talent that will take 2 others to equal. Company morale is at a premium and cannot be equated in dollars. That alone is worth it in my eyes.

I will speak for myself, but many agree. I personally would take a pay decrease to have benefits. I also would take a pay decrease knowing that there were profit sharing or employer matching RRSP possibilities. Having those systems in place shows me that my boss actually cares about my well-being and that is huge to me. Younger employees are coming from a place where they were covered under their parent’s plan until they left school. Now that they are in the workforce it is important for them to work for an employer that is invested in them. Culture is vital when it comes to attracting and retaining talent. As a current employee and future employer, I know where I stand on this subject. I’ve always believed in the motto: You have to spend money to make money. As an employer, you need to ask yourself this question: What do you believe in?

https://budgetboss.ca/boss-blog-four-cornerstones-financial-freedom/

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Joseph James Francis is a Financial Advisor. You can find him on various social media platforms and at www.budgetboss.ca.

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