How Most Businesses Do Employee Benefits Wrong - And How To Improve

7 simple employee benefits mistakes you can avoid


Employee benefits are commonly offered by both small and large businesses as a way to incentivize new talent, reward existing employees, and give employees protection against illness and injury so they can work healthier, and longer. Unfortunately, there are many ways your employee benefits program can go wrong, and you’ll need to be vigilant against those mistakes if you want to make the most of your offerings.

The Biggest Mistakes

These are some of the biggest mistakes companies make:

1. Failing to shop around. Shopping around for the best quote is one of the most important steps of the process. Not only will it give you the opportunity to find the best price for your most important benefits, it will also allow you to get a feel for what other partners and service packages are out there. Without that research, you could end up paying too much or landing a low-quality partner; aim to look up at least three or four alternatives.

2. Offering benefits your employees don’t want or need. You may also misalign your company goals with your employees’ goals, by offering packages employees aren’t interested in, or neglecting services that are important to them. If you want to incentivize your talent properly, conduct employee interviews to find out what they’re really interested in, or do some research on your competitors to find out what they’re offering their employees.

3. Setting a budget irresponsibly. Setting a budget for employee benefits can be tricky; you’ll want to pay enough to give your employees quality care, but not so much that it drags down your entire HR budget. Forecasting costs is complicated, so estimate conservatively, and draw your numbers from reliable sources. If the numbers don’t work, your plan will collapse.

4. Neglecting employee education. Your employees may have a fantastic health insurance package, but do they know much about it? Part of your responsibility as an employer or HR manager is to educate your employees on their own benefits packages, and let them know how they’ll best be used. This will increase your employees’ appreciation for these packages, and help them get the most out of them.

5. Underestimating compliance. Don’t forget, all your programs need to be in compliance with the law—and it’s easy to underestimate how much effort this requires. You’ll need to do a thorough review to ensure you’re meeting standards for the Affordable Care Act, COBRA, ERISA, and other legal mandates.

6. Having the wrong people in charge. Who’s in charge of overseeing your employee benefits management? Which consultants or partners are you working with? If you choose someone inexperienced, or someone not fully invested in making the best choices for your company and employees, your benefits program will become a disaster.

7. Not updating your plans every year. Your employees, your company’s budget, regulatory demands, and market conditions will all go through significant changes every year. You can’t keep the exact same benefits package and expect it to stay relevant throughout these changes; instead, commit to auditing and/or updating your plans annually.

Key Tenets for Improvement

So how can you move past these challenges and mistakes? The biggest factor here is experience; the longer you provide benefits to your employees, and the more experiences you have when offering them, the better you’ll be able to perform.

Beyond that:

- Take benefits seriously. First, don’t think of your employee benefits as a basic item on your task list; invest some time and energy into your decisions if you want to make them effectively.

- Hire an expert. You can’t do employee benefits well unless you have someone experienced on your team. If you can’t find someone to bring on full-time, work with a consultant who can offer that expertise.

- Leave room for flexibility. Don’t lock yourself into anything for too long. Leave ample room for adjustment so you can revise your policies as needed.

Benefits are complicated, but they aren’t impossible to master. Commit yourself to offering a better benefits package, and one that best suits your company’s needs, and both you and your employees will be better for it.

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