How ‘price tag messaging’ can amplify an employee benefits package

Here’s a well-kept secret: Benefits offered to employees cost the company money. If someone on your payroll decided they wanted to start their own business, it would be quite expensive to replace all the benefits employers provide along with employment. Let us look at just a few of these benefits:

1. Health insurance. Years ago, it was taken for granted. As expenses have risen, employees pay a portion of their health insurance premium. According to research, the average cost in 2021 for an employer sponsored health plan was $ 3,331. Employees contribute about 22%. The firm covers the balance. According to ValuePenguin, the average monthly cost for an individual to buy health insurance in New York State is $776/month or $ 9,312/year.
2. Retirement plans. Many firms offer 401(k) plans. Employers typically match up employee contributions up to a certain percentage. The average employer match in 2023 has been 4.7% of an employee’s salary. Meanwhile, employees have been contributing about 8.8%. If an employee earning about $85,000 needed to save entirely on their own, they would need to replace the $4,000 their employer was contributing as a match.
3. Paid vacations. Why do consultants often charge more than hourly employees? Because when they are not working, they are not getting paid. If that same employee earning $85,000 a year did not get two-week’s paid vacation, taking that holiday as unpaid vacation time would cost them about $3,269 in lost income.
4. Life insurance. According to the Bureau of Labor Statistics (March 2022) 57% of workers in private industry have access to life insurance plans. The report shows the percentage is 79% in management roles. Although this type of life insurance is not portable, someone working outside the firm would need to pay to buy the same coverage.
5. Disability insurance. There are times when employees get paid even when they are not at work for a long time. Disability is a grim example. Does the company offer paid maternity leave? The rules might vary by state, but if your firm provides this benefit, it is worth pointing out. According to CNBC, 78% of firms offer short term disability coverage and 63% long term coverage. If you owned your own business instead of working for your employer, this is another expense you would need to cover.
6. Sick days. If you hired someone to clean your house on a weekly basis, would you pay them if they didn’t show up because they called in to the agency and said they were sick? Probably not. Although the federal government does not, generally speaking, have a requirement in this area, 79% of US workers could get sick leave if necessary. The average available is eight days a year for full time employees. Your company probably pays you on days you stay home because you are sick.

What do benefits cost?

Employee benefits can be likened to unseen compensation. Employers pay the expense, yet employees might not use them if they don’t need them, are unaware or do not take advantage of them. The Bureau of Labor Statistics reported in December 2022, total compensation costs for civilian workers averaged $42.48/hour. Wages and salaries were $29.32 and benefits added $13.17. On percentage terms, that’s 69% and 31%.

Your employees may be very aware of the 69% you are paying them, but do they know about the 31% paid for benefits, the unseen portion?

How do employers get this point across?

Imagine you were invited to a wedding. You spent big to provide a nice present. Would you deliver the gift anonymously? Would you leave your gift on a table without attaching a card or note? The answer is obviously no. Here’s a news flash – Neither would your employees. If they were spending money, they would want the recipient to know who the gift is from!

Related: Employee loyalty program? It’s a way to raise worker awareness of company benefits

There are many ways you could get this message across:  If your firm has an eNewsletter for employees, you could highlight one benefit every month and explain its value in dollar terms. You could put together a personalized benefits summary for every employee and discuss it at their annual performance review. If you hold big quarterly or annual employee meetings, you could have someone from HR do a presentation that “puts a price tag on benefits.” This is the “gift card” letting the recipient know who this “package” is from.

Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor” is available on Amazon.