Talking BenefitsPosted: February 25, 2019
As a supervisor, you are asked to evaluate and compensate all of the employees in your organization. When it comes to compensation discussions, if you are only talking about salary, you are doing a disservice to both your employees and your organization. Benefits are a portion of compensation too often undersold by supervisors and, therefore, undervalued by employees. As a supervisor, part of your job is to retain employees and you can’t do that job right if the employees don’t understand and value the total compensation they are receiving. I can hear everyone saying, “but isn’t that HR’s job – to explain the value of benefits?” My answer is yes and it is your job too. In fact, as a CPA, we are often in a better position than HR to understand and explain the financial aspect of benefits, let alone other supervisors.
Simply put, there is no excuse for not spending time helping your staff understand the value of their benefits. Well, there is one excuse – you don’t understand how the benefits work either. If that is the case, it is time to bone up on the benefits your organization offers. Here are a few things to make sure you understand and explain to your employees.
Does your company offer a 401(k) plan? Is there a company match? How does the match work? How much does the employee need to contribute to get the maximum match available to him/her? If you aren’t explaining this, you are letting your employee leave money on the table that he/she could be earning. After those basics, you need to go a little deeper. What are the investment options in the 401(k) plan? What are the fees? If you don’t like the answers, you should be advocating with HR to give all of the organization’s employees better choices. It doesn’t have to be a big company to have good choices and a good price for employees.
The next question is about medical benefits. Does your company only offer one choice or are there options? If options are available, you need to understand the differences. What are the differences in deductibles, co-insurance and employee contributions, and what do employees get for those differences? Your employees get to make the choice, but if you can’t even tell them the differences, how are they supposed to choose?
The next question depends on the kind of medical plans available. If your company offers a high-deductible plan, then it might also offer a Health Savings Account (HSA) benefit. HSAs are great, but you have to be able to explain the triple tax benefit of HSAs – a tax deduction on amounts contributed, no taxes on earnings and no taxes when amounts are withdrawn if the withdrawals are used to pay for medical expenses. That is a better tax deal than a traditional or Roth 401(k) and one that CPA supervisors have a better chance to explain than any other supervisor in the world.
You also need to understand other benefits that may be offered – disability insurance, life insurance, flexible spending accounts. Some may be great deals and others may not depending on each employee’s individual circumstances. The key is to know what is offered, because if you can’t help your employees value their benefits, your employees might leave for a different organization that doesn’t even offer as much value and then you are both worse off.