The truth is that employee compensation discussion should be more expansive.
“Franchise owners require more than just salary, important as that is, to get employees in the door,” said Lauren Hanat, a partner at HORNE in Gulfport, Mississippi. “With high employee turnover rates in the franchising industry, franchise owners need to plug into the incentives side of the employee compensation issue.
“Even if the employee never uses a specific benefit, building incentives to encourage employee hiring and longevity is critical to franchises owners. Those owners need benefits to recruit and keep good workers.”
Franchise employees – and business owners – agree.
- According to Glassdoor, 63% of job hunters say they “hone in” on employee benefits when searching for a job.
- A study by the Society of Human Resource Management states that 92% of employees view their benefits as “important” to job satisfaction.
- Data from Built In shows that losing an employee can cost up to twice the staffer’s annual salary. The study cites employee retention, acquisition training and loss of engagement as some of the largest unrecoverable financial losses for business owners.
For franchisers, a path to a successful employee benefits plan
While franchise owners are generally aware how employees value benefits, the challenging part is creating the plan and getting it off the ground.
After all, small franchise organizations usually can’t offer employees comprehensive benefits that larger corporations do. To better compete for talent, franchisers need to be creative, selective and disciplined when pulling together an employee benefits plan.
“The key is knowing your market and knowing what benefits (you) really need,” said Emily Parrish Miller, a Franchise partner at HORNE in Mobile, Alabama. “Recognize the risks involved if you don’t get the benefits picture right, as well. Many franchise industries, such as restaurants and retail, suffer high turnover rates. A good employee benefits program can keep good employees around for a longer period of time.”
To structure a solid and comprehensive employee benefits plan, franchise owners should take the following action steps.
Establish what you can afford to pay. Before creating an employee benefits plan, franchisers should do what any head of household does at the kitchen table and establish a budget.
Any small business has financial limits, and benefits are no exception. Start by listing the benefits that will cost the most (like a 401k plan, dental insurance or a health care plan) and wind your way down to the least expensive employee benefits (like commuting assistance, employee discounts or paid volunteer time.)
Since most large-scale employee benefits come with tax benefits to the franchise owner, it’s a good idea to bring a third-party employee benefits and accounting specialist in to help you build and scale your benefit plan budget. That way, you get an accurate price point for each benefit and can factor that in to your company’s operational expenses.
A case in point. Data from the U.S. Bureau of Labor Statistics estimates that an employee who makes $35 an hour in salary will cost a business owner about an extra $13 in employee benefits.
These benefits should top your “to-do” list. Chances are high that a franchise owner is operating on a budget with a razor-thin line between profit and loss. Thus, every dollar counts when you build an employee benefits program.
That’s why business owners must decide which employee benefits are a luxury and which are a necessity. Those in the latter category need to be prioritized in any franchise business employee benefits package.
Knowing the options to prioritize largely depends on what employees want most and what business owners can pay. Typically, the “must-have” employee benefits include:
Health care insurance (preferably with a dental plan option). Most employee health care plans operate on a 50-50 basis, with the employer and employee splitting the cost evenly. While health care insurance plan costs vary, depending on features and size, franchise owners should make health care a main staple of their employee benefits package to stay competitive.
Retirement savings plans. If a franchise owner wants to keep top talent, that owner must offer a financial incentive to employees that goes beyond salary for the long haul. That’s where a retirement savings program, bolstered by a 401k or 403b plan can help.
While up-front costs can be high for a company-sponsored retirement plan (especially for services like investment plan management and servicing fees), the employee covers most of the actual plan investment costs with regular contributions. A franchiser can throw in a sweetener like 401k matching up to a specific amount of employee plan contributions, which is usually capped at 6%.
Paid time off. By offering a paid time off feature in your employee benefits package, brand-building franchise owners can earn loyalty and long-term employment from valued workers. Basically, paid time off means covering the cost of holidays, sick days and vacation periods.
Trading some moderate up-front costs for happier and more productive long-term employees should be a no-brainer for franchise owners looking for more stability and loyalty from their staff members.
Know the difference between benefits and perks. While franchise managers can add perks like wellness benefits, professional training, food and beverage, public transit payments or flexible work schedules, those perks are lower on the list than the “big three” employee benefits listed above.
Offer them if you can, but don’t prioritize company perks as an employee benefit. Your employees will know the difference.
Complete and introduce your benefits plan
Once you’ve developed a budget and chosen your plan components, it’s time to roll out your employee benefits plans to your team.
In this phase, franchise owners should be talking to employee benefit plan partners. That includes “all-inclusive” third-party human resources/employee benefit services companies who will pull the plan together for you or the individual companies (i.e., specific health care providers or retirement investment plan management companies, for example). Work with your partners to ensure all the boxes are checked on your employee benefits plan.
When the plans are complete, it’s time to bring employees on board. Do so by explaining the employee benefits package to them in a formal presentation with brochures, videos and “town hall-like” meetings.
Encourage current and follow-up questions and make any plan partners available to answer specific questions. It’s also a good idea to work with your technology support team to build an employee benefit plan-specific web portal where the plan is laid out in detail and where key contact specialists can be reached if an employee has any questions.
Additionally, make sure to promote your new employee benefits package on your company website, on any job search engines under your company’s name and on social media. Today’s franchise business job applicant is increasingly tech-savvy, so reaching out to candidates via web, social media, email or even text once the job application is filed can boost your chances of reaching the best employment talent.
After that, it’s just a matter of getting staffers to sign the paperwork, establish a start date and get the benefits plan up and rolling.
HORNE Franchise can help you design a benefits plan that will help attract and keep your employees. Contact us today to find out how.