4 Steps to Rock Your Small Business Benefits Offering

One of Fireclay Tile’s goals is to offer the best, most beneficial and comprehensive benefits package in the design industry to our 150+ team members. That’s challenging, especially given we are still a relatively small company with many financial needs across each and every department. We do have a few things going for us that […]

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small business benefits packages

One of Fireclay Tile’s goals is to offer the best, most beneficial and comprehensive benefits package in the design industry to our 150+ team members. That’s challenging, especially given we are still a relatively small company with many financial needs across each and every department.

We do have a few things going for us that help ensure that our small business benefits package and our team members are front and center including:

  • We are a B(enefit) Corp, meaning we hold ourselves to a higher standard
  • We are privately owned, and our majority owners (Paul and me) and outside investors fully support our mission and our investment in our people
  • We employ modern and mobile HR software to ensure our benefits administration is seamless (Disclaimer: Fireclay Tile is a customer of Zenefits.)
  • We have a strong Manager of People who helps ensure our team is set up for success

As we entered our Open Enrollment 2018 period, we knew we wanted to go big, but we didn’t know how to make decisions and what budget we had to spend. For any small business, this is a very common feeling. We also knew that we had some big cost increases headed our way in 2019, as both our healthcare and workers comp would likely increase, and we were worried that we may not be able to afford other benefits we wanted to offer.

We developed a four-step methodology to “Rock Our Benefit Offering”, which we believe is broadly applicable to any small business.

1. Identify the True Costs of Your Benefits

If we were a big company (which we are not), we would probably have a team or a person dedicated solely to benefits. But for small companies like Fireclay, i.e. the 99% of businesses out there, we needed a different approach that we could handle within our limited available time.

First, we sat down and crunched the numbers. And when I say numbers, I mean all the numbers. We created a large spreadsheet to take into account each and every benefit we offer, the total cost that both we and our employees bear, as well as the newly proposed costs for the upcoming 2018-2019 benefit period. We got very detailed, looking at not just the benefits people normally think of (healthcare, dental, etc.) but also the many others that have a significant cost such as paid time off and workers compensation that many consider standard or may even be required by law. While I had thought we were strong in our financial understanding of our business and our expenses, never in my ten years at Fireclay had we ever gotten to such detail and seen the true amount we were investing in our team members.

Here is how our analysis looked when it was all said and done in summary format:

2. Use Ratios — Not Dollar Values — to Determine Spend

To give some context, we have a roughly $6.5 million annual payroll, and it turned out we spent about $1 million on benefits in 2018, or roughly $6,800 per employee. Given our average employee earns about $43,000 per year, that’s 16%, a significant investment on top of their salary.

But what was more interesting was that as we looked at the information, then compared what we would pay in the upcoming year vs last year. Then we looked at the additional new benefits we wanted to offer, we were no longer intimidated at the idea of both improving certain benefits and also rolling out entirely new ones. Yes, the additional new benefits were costly, but the additional cost was minor next to the existing spend.

We estimated new benefits would cost us an additional 5%, or $55,000 in addition to cost increases from existing benefits we estimated to be $170,000. That said, when we looked at these dollar amounts in total along with our existing benefits as a percentage of sales, we realized that we would stay consistent from this year to next year, at 6-7% of revenues. The additional spend would be about $225,000, and we were able to gain comfort with that additional spend because of our confidence in increasing sales and profitability. We knew our benefit spend would be in line with the previous year as a ratio rather than as a dollar amount.

3. Consider Inexpensive Benefits With Huge Paybacks

Healthcare is our biggest investment. Yet sadly (and at the same time, fortunately), it’s hardly used by our team members. Yes, there are the annual physicals and occasional needs, but it’s actually pretty rare that someone needs a significant amount of medical attention. However, if something were to go wrong and one of our employees needed medical attention, we always want them to feel supported; therefore, healthcare continues to be worthwhile and necessary.

But let’s look at other fringe benefits that are highly valued by our team but cost far less than healthcare benefits:

Our loan policy is very inexpensive and it has helped save them tens of thousands in interest payments.

  • Life Insurance: This is a very inexpensive benefit, but it offers a huge benefit when needed most.
  • No Interest Loan Policy: Over 5 years, we have provided over $130,000 in no interest loans to our team members, all in increments of $1,000 or less. What’s most amazing is that we have a 99.5% repayment rate, and at any given time we only have $3,000-$8,000 loaned out. The benefit is very, very inexpensive, but the impact on our team members is huge; it has helped save them tens of thousands in interest payments.
  • Maternity and Paternity Leave: Let’s face it,  this is actually a very inexpensive benefit. It took us way too long to design a plan that would make our mothers and fathers whole while they were out due to maternity or paternity leave. Our goal was to encourage our new parents to take time to care for and bond with their newborns — not stressing about finances.
  • Wellness Benefits: This is a new one for us this year. We are giving folks $25/month reimbursement for wellness programs, whether that is gym membership, yoga, meditation, or whatever, as long as it is wellness related. We estimate about ⅓ of our team members will take advantage, so it will cost about $15,000 per year. That’s 3% of what we spend on healthcare insurance, but this will be used all the time by those who use it.
  • Flu Vaccine Clinic: This is a new one for us. We will spend about $2,000-3,000 on this benefit. Yes, it’s expensive, but if we can prevent just a few cases of the flu, that will have a huge ROI on our organization and our teams’ families.
  • Software for Benefits Administration: We can’t stress enough how important it is for any organization of any size to have a great People Management Software system. We use Zenefits and love it. We spend about $5/FTE/month, and that $60 per employee for the year ensures that benefits administration is easy and empowers us to offer all these perks without pain.

Many of these “fringe” benefits cost anywhere from $2,000-30,000 per year. When simply looking at the dollar values, it can be easy to say “no.” But when you consider the significant amount you are already spending, the additional marginal spend for benefits that our team will find truly fantastic is not actually that large. We considered that high fixed cost in benefits to be set, so we looked at this marginal investment as being a high value-add for our team.

4. Market Your Benefits Internally and Externally…All Of Them

It’s critical to market your benefits internally and externally, and to make sure folks truly know the options they have. We have gotten better about this each year, and each year we have more people taking advantage and expressing interest and giving feedback.

A big part of this is having a strong People department who can help organize and manage open enrollment and market these benefits to our team. Don’t be afraid to talk about all the benefits you offer, even the most basic ones. Ensuring people truly see the investment you are making in them goes a long way.

This year our People Department actually partnered with our Marketing department to ensure that our Benefits Guide was branded and looked and felt like Fireclay, and the result is demonstrably better. If you want to see a copy, just let me know. We are big fans of “beg, borrow, and steal,” and when it comes to benefits, if we can help others improve their benefits offerings, we are all in!

In summary, providing great benefits for you and your team is critical. You can’t do everything in year one, but each year you can gradually add more and more, and within a few years you’ll be shocked at how much you are able to do. By seeing the numbers fully and clearly, we were able to make smart decisions and dramatically improve our benefits package, and we hope you consider doing the same for your team.

Our Benefits Offerings:

Here is our comprehensive small business benefits for the 2018-2019 period:

  • Medical – Fireclay covers 85% for employees and 25% for dependents
  • Dental – Fireclay covers 50% for employees
  • Vision – Fireclay covers 50% for employees (NEW)
  • 401k – Fireclay matches employee contributions up to 4% of income
  • Paid Time Off and Holidays – 15 days PTO plus 7 paid holidays
  • Flexible spending accounts (FSAs) – Fireclay makes available FSA accounts for medical or dependent care expenses
  • Health Savings Accounts (HSAs) — Fireclay contributes $75/month for Kaiser Permanente Bronze 60 HMO 4800-40 HDHP employee participants
  • Employee Life Insurance – Fireclay covers 1x salary life insurance for all employees
  • Short (NEW) and Long-term disability (LTD) coverage  – Fireclay provides benefits both short- and long-term disability coverage for employees.
  • Maternity/Paternity Benefits – 12 weeks full pay for Maternity (NEW) and 4 weeks for Paternity plus Fireclay pays for all diapers and wipes for the first month (NEW) and Fireclay will pay for Milk Stork to support breastfeeding while traveling (NEW)
  • Employee Leave Management Assistance – Fireclay covers assistance for employees on leave of absence (NEW)
  • Flu vaccine program at our factory location (NEW)
  • No Interest Loan Policy – Fireclay provides loans up to $1,000 to employees, interest-free
  • Khai Lam Fireclay Tile Family Fund – Fireclay provides $150 per employee and family member for extracurricular activities
  • Tuition Reimbursement – Fireclay will reimburse up to $2,000 per year for employees for continued education related to their role
  • Wellness Benefits – Fireclay will reimburse $25/month for wellness activities (NEW)
  • Bonus Plan – All Fireclay Team members are enrolled in a company-wide Bonus Plan paid out quarterly
  • Stock Option Plan – All Fireclay Team members receive stock options to purchase ownership of Fireclay Tile, managed through Carta.
  • Workers Compensation Coverage – All employees are covered by Workers Compensation to ensure that any accidents that happen on the job are covered. This is mandated in California, but not necessarily in every state, and it’s an important investment that protects our team members.
  • Support for Benefits – Fireclay offers extensive support for benefits through Zenefits and its online portal and mobile app
  • Broker Support for Medical, Dental, and Vision – One Digital, our healthcare broker, has extensive resources to support any needs you might have for medical, dental, or vision purposes

If you have questions about any of these, please do not hesitate to reach out to me or our team at Fireclay Tile!

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