My reader email tells me that there is a need for more articles on staff management, so I'll keep them coming. I've had several requests for more information on employment benefits and I'll cover that in this tip article.
An excellent benefit package
I think it's extremely important to offer great employment benefits to full time staff in your practice. I realize that payroll costs are already very high for most practices and in this economy, everyone is looking to reduce expenses, but we have to look at the big picture. You can't build a great practice without an excellent staff and you can't recruit and retain an excellent staff without very good compensation.
We use the term total compensation or compensation package to refer to all expenses that go to an employee. It includes salary plus the value of all fringe benefits, such as health insurance, paid vacation, uniforms (if provided) and every other item paid for by the practice on behalf of employees.
Your practice is an employer and it must compete with all other employers for employees. If we look at the landscape of employers, the excellent ones provide good wages and good benefits. It is the norm. No one who is smart and ambitious wants to work for a company that doesn't provide good benefits. They won't think of that job as long term. People who want to make their job a career look for companies that provide benefits. Benefits are even more important for employees who earn less than $50,000 per year because they can ill afford to pay for extras.
New practices may have to wait to expand their benefit package to include the more expensive items like health insurance, but it's smart to set it as a goal. Established practitioners who want to grow their practice should find a way to budget for an excellent benefit package. So what is an excellent benefit package? It's subjective, but people tend to know it when they see it. I'll provide some food for thought.
When we speak of employment benefits, the biggest component is health insurance. To some, it's synonymous. This benefit is highly valued by the general public and all practices should strive to provide it. It's tempting to presume that your employees don't need health insurance because they have a spouse who provides it, but health insurance is rarely free for dependents. In fact it is usually very expensive.
Health insurance is a complex enough topic that I'll cover it in a separate article.
Here is a list of some of the usual employment benefits that are provided by eye care practices. I'll cover most of these in more detail in the next tip, including citing some specific examples on how to structure each one. Of course, opinions on what benefits to offer will vary. This list is not exhaustive, nor is it necessary to provide all of them. Review the list and make a note of what your practice offers and which ones you would like to offer.
- Health insurance
- Paid time off (personal days / sick days)
- Paid vacation
- Paid holidays
- Eye care benefits
- Continuing education
- Retirement fund
- Dental insurance
- Life insurance
- Disability insurance
A description of each benefit should be included in your office policy manual. Employment policies must be provided fairly and equally to all employees and we just can't rely on memory. It is certainly possible to offer different benefits to different groups of employees. This allows the employer to make changes without taking away benefits from existing employees.
Additional payments are made on behalf of employees for matching of social security withholdings and workers compensation insurance, but since those items are mandated by law they are not usually considered a benefit. But they are part of the total compensation package.
Annual compensation summary
I don't think employees truly know the dollar value of all their benefits, so I furnish each of them with a private summary sheet that details all amounts paid on their behalf each year. It includes all wages, but also itemizes all the other benefits and lists the dollar amounts paid. A grand total is provided, which is quite a bit more impressive than the IRS W-2 form or the annual salary figure alone. Employees generally don't react much to this statement of value, but I think it makes a subtle impression that their employer pays for many items besides wages.