Perks have
nothing to do with spirited cheerleaders, retention ponds, or coffee.
These enticements or perquisites–benefits that can run the
gamut from health insurance to child care to pet insurance–are
essential for attracting and preventing top-notch employees from
taking flight.
By Jack Beardwood
Whether you have a small
company or a huge corporation, more often than not benefits are
the first thing that a job applicant asks about during an interview.
Kenneth D. Fisher, director
of human resources (HR) for Geneva Rock Products Inc. of Orem, UT,
says they offer the best benefits and the highest wages in the state.
"For that expense we are trying to attract the very best people
we can come up with–[those with the] most solid work history,
the best driving records, the most experienced operators.
"We can be kind
of picky and choosy that way because we get a lot of applications.
Because we're paying that extra amount, we want to make sure
we have the very best people and we keep the very best people. Not
only attract them, but retain them. That's the purpose of every
benefit program we have. At least half a dozen retire every year,
[people] who spent their entire career or many years working for
the company. And for that loyalty we want to reward them with good
benefits."
The 800-employee firm
offers a full benefit package that includes health insurance, vacation,
and pension. Its nonunion employees have a similar health plan as
its union workers who have union-negotiated medical care. The big
difference is that the union employees pay a $100 deductible, while
nonunion employees are hit with a $200 charge.
So what should contractors
do to get the most for their human resources bucks? Fisher suggests
that companies stick with the basics. "They need good health
insurance, they need retirement, and they need vacation benefits.
Those are the three basics that people need. There's a lot
of other programs that are beneficial, but I would say don't
have so many programs that none of them is really that good; they
are just borderline-quality programs. Make sure the basic programs
you have are good benefits, and then expect good work for what you
pay for."
He also suggests that
firms save money in the long run by spending a little extra money
on making sure they make the right hire. At Geneva, they conduct
reference checks, the applicant undergoes a panel interview, and
at least two interviews are conducted. "We spend more during
the hiring process, but we want to be as picky as we can and get
absolutely the very best people because we want to keep them. We
want to avoid the one-season worker. We want to hire someone who
can be a career employee.
"They understand
our system. We screen out those people who are not willing to follow
direction or work under the guidelines we set. And those who are
are willing to stay with us know it's the best job they can
get in this industry."
Among the programs Geneva
has decided not to go with are employee counseling and child care.
"We're always keeping our eyes open. We are examining
those right now to see if they are a true value. That's one
thing we've been cautious of. We are not going to just jump
on any benefit bandwagon that happens to come along. We want to
make sure it's a true benefit and that you're receiving
what your dollar is paying for."
"There are employers
who do not provide hardly any benefits, and I think they're
pretty much hiring whoever is not hired by the really competitive
companies," continues Fisher. "I think you pay the price
with higher turnover, perhaps more individual employee problems.
And what we're trying to do by paying good benefits is to hire
the cream of the crop and make sure we're getting the best
employee available."
In addition to performing
road construction projects, Geneva Rock Products is Utah's
largest Redi-Mix supplier. It produces sand and gravel for other
companies and also has its own asphalt plant.
Flexibility Is Important
For a more comprehensive
package of benefits, there is Zachry Construction Corporation, headquartered
in San Antonio, TX. Among its perks is a gymnasium that is under
construction.
John Rodrigue, benefits
manager, says the best thing to do is to constantly be on the lookout
for the best benefit plans and continually assess your overall package
to see if it fits the needs of your firm's employees. "Probably
the best suggestion is to value shop for your benefits, because
benefits are costly. It's hard to determine if you are really
retaining and attracting people because of your benefits. It's
like building a gym: Sure people are going to use it and it's
going to make people more healthy, but how much does that save you
on medical bills? It's an unknown. It's hard to determine
the value of your benefits. We know it helps attract and retain
employees, but to quantify that is the problem."
According to Rodrigue,
in addition to hoping to attract and retain employees, the reason
for offering benefits is happier, healthier employees have fewer
accidents and do a better job. "If an employee can concentrate
on his work instead of worrying about ‘How am I going to be
able to pay for my son's broken arm?', he'll be a
much better worker. That's the whole idea behind all of this."
He recommends that companies–especially
small firms–that cannot afford to provide a comprehensive package
should concentrate on providing health insurance. "If you had
to have just one benefit, I think medical insurance is probably
the most important because employees are concerned about the rising
cost of health care, and if they at least have medical insurance,
they will feel a little more at ease."
Among the programs Zachry
has decided not to pursue are pet insurance and legal assistance.
"I don't feel that our employees are litigious that much,"
says Rodrigue. "You can use it for wills and things like that,
but I didn't think we could get our bang for the buck like
you could for medical or dental insurance."
The company offers three
different medical plans, two different dental plans, a vision plan,
a cancer plan (a supplement to the medical plan for out-of-pocket
expenses), an accidental death and dismemberment plan, group term
life insurance at no cost to the employees, and voluntary term life
for up to five times their salary.
Also on the table is
a flexible spending account, where employees can put money aside
to cover such expenses as orthodontia or day care. Also known as
Section 125, because it is covered in Section 125 of the Tax Code,
the program allows the money to be set aside without taxes being
taken.
If that's not enough,
they also have a retirement benefit plan. The company puts in 2%
of the annual salary into the account. Employees are vested in five
years, another incentive for people to stick around. Their 401(k)
is matched dollar for dollar on the first 1% and 50 cents on the
dollar for the next 3%.
Zachry, which employs
more than 15,000 people, has a road division, a power division,
and a maintenance division. It conducts road projects, builds power
plants and refineries, and performs maintenance duties at various
plants, including refineries and paper mills.
"A lot of companies
are going through downsizing," observes Rodrigue. "You
need to focus your attention on retaining your valuable employees,
and the best strategy to do that is to offer some benefits that
maybe are better than your competitors'."
One of the Main Challenges
Is Finding Qualified Help
Viborg Sand and Gravel
in Paso Robles, CA, a firm with 15-20 employees, is similar to a
small family. While all it offers at present is health, in the past
it aided employees with a number of nontraditional boosts, including
helping with a down payment on the purchase of a home.
"We've had
a hard time the last couple of years," admits Debbie Viborg,
office manager-administrator, who owns the business along with her
husband Paul. "We've really had difficulty keeping quality
employees and just getting them. I know our truck drivers alone–the
work ethic they have been turning out in the last 10 or 15 years–they
want to learn all they can and they want to go to the next person
who offers them maybe 50 cents or a dollar more an hour.
"They don't
look at the longevity we offer them: During the wintertime when
it's slow and a lot of companies are laying people off because
of the rain, we keep our guys busy because they have families to
support. That's when we do a lot of maintenance on our equipment–the
heavy-duty maintenance, other than what our mechanic does. And we
build new equipment, our new barricades. We try to keep them full-time
even during the rainy season."
She agrees that health
insurance is essential. "Most of our employees have families,
and they look more for benefits than they look for an hourly wage
or a salary. That's the first thing they ask when they come
in the door: ‘Do you provide benefits?' When we advertise
for new employees, that's what we put in the ad."
The Viborgs are looking
into providing a 401(k) for three employees who have logged almost
one year with the company. "The problem with our business is
people are so transient," says Debbie. "They come for
six, seven, or eight months and then they leave. It's hard
to offer a big benefit like a 401(k), a cafeteria plan, or any of
those types until you get somebody who has been with you for some
time."
She says it's all
a strategy to keep a permanent, stable work force. "Just knowing
that if a certain job comes up, having them stable, you can take
any job you'd like and know you'll have the work force
behind you to be able to complete the job in a timely manner and
in a professional manner knowing that they know their stuff. Once
they've worked with us for a certain amount of time, because
we are a family-oriented company, one of the best things is knowing
we can take time off and our employees will be able to handle things
while we're gone."
Debbie and Paul have
the same health benefits as the employees. They also have a 401(k).
"We're all on one big package. It's not like some
companies where the employers have a better package than the employees.
We're all in it together. We've looked at dental and vision,
and so far for what you pay and what you get, you can't even
compare it. We look at new things all the time. We've helped
our employees not so much in benefits as in loaning them money so
they can buy a house–that kind of thing–because they worked
for us for so long. They've been good to us, and we try to
help them as much as we can in what every way we can. It's
not necessarily in an organized manner, but whatever they need we
usually try to help them with."
Should You Consider
Professional Assistance?
Sim Bernstein of Sim
Bernstein Associates, an HR consulting firm in Stamford, CT, says
the key to getting the most for your dollar is to concentrate on
overall employee needs. "In construction, I assume there are
a lot of males, not highly educated–except middle management
and above–and a lot of them may have child-care problems, single-parent
problems. Bring that into your thinking. Expand your thinking about
these employees and what they need, because one of the most expensive
costs is turnover. In other words, you get someone and–let's
say the learning curve is six months to get him up and running–if
they leave in eight months, you've spent a fortune already."
An attractive benefits
package is essential. "The compensation package today must
include things like a deferred compensation plan, which is relatively
inexpensive for the employer," advises Bernstein. "A lot
of them don't know about it. You need a 401(k). Some employers
make matching contributions. The major cost for an employer is health
insurance. It is critical that even a small employer have an adequate
health insurance package for their employees."
How to do it affordably?
He suggests that firms constantly shop around. "Call several
insurance companies or brokers, and you don't have to reinvent
the wheel. They are out there. They are only too happy to supply
different plans at different costs. But it is one of the fastest-rising
cost centers in the employment field. So even if you have health
insurance today, it won't be unusual for your carrier to say,
‘Well, next year the rates are going up 15%'–well
beyond inflation and everything else. So you have to constantly
test the market as far as your health insurance plans. Costs are
getting out of hand. All they do is tell you about the increases
and expect you to pay it."
Bernstein also suggests
that a professional be brought in. "Regardless of the field
you are working in, human resources is usually not taken seriously,
and by not taking it seriously, it becomes very costly. I'm
not looking to boost my profession, because we have as many stiffs
in HR as you have in any other field. But you need somebody who
knows the state of the law, who knows the rules and regulations
by which the game must be played. This would be especially true
for the small and medium-sized. I would assume the larger would
have an HR function, while the small and medium might not."
He says a smaller company
should hire a consulting firm that specializes in benefits. "In
today's market, not only do you have to make sure that your
salaries are competitive, but also that your total compensation
package is attractive. I keep hearing something that was unknown
to me. I keep hearing sign-on bonuses, and I thought that was limited
to professional athletes. More and more, what I am hearing about
is an incentive to bring people in, offering them a sign-on bonus
if they stay for six months or a year."
Bernstein emphasizes
the need to make good hiring choices upfront. "If you don't
go out looking for the right people, you certainly aren't going
to find your needs. In the litigious society we live in, if you
make incorrect hiring decisions, you can pay dearly for your mistakes."
No matter what size your
company, Marc Teichman, an HR consultant with more than 20 years'
experience, strongly recommends that firms hire either an HR specialist
or a professional consultant. "If you are a small company that's
just starting up, you have to look at a firm that has expertise
in starting an HR department. The size of the consulting firm that
one outsources to would not make a difference; it's the experience
of the company."
The owner of myHRDoctor,
which is also operated out of Stamford, CT, Teichman suggests that
contractors find a firm that can provide for the specialized needs
of the construction industry. "What you would really want if
you are starting up a small company is someone who does not necessarily
specialize in a particular function but, rather, someone who is
a generalist in nature."
In addition to negotiating
benefits packages, human-relations people provide a multitude of
services, including legal compliance; setting up policies, practices,
and procedures; recruiting; negotiating union contracts; and making
sure that the company doesn't run afoul of OSHA requirements,
workers' compensation, nondiscrimination laws, sexual harassment,
state disability laws, and the Fair Labor Standards Act.
Writer Jack Beardwood
has more than 20 years' professional experience working with
newspapers and magazines.
|
