Management Matters: Are employee benefits worth the cost?
When it comes to offering employee benefits, Russo Marine sticks out in a crowd. Not only does the dealership, with about 40 full-time employees and half a dozen part-time staff, provide the standard medical insurance, paid vacation, paid holidays and paid sick days, but it goes beyond what even top employers provide as perks to employees.
Among its most appealing benefits, Russo Marine offers a 401(k) profit-sharing program, in which each employee receives an annual profit-share bonus in their 401(k). That is coupled with a CSI bonus that rewards each employee — from interns to seasoned veterans — up to 6 percent of their wages for exemplary CSI scores.
On top of that, the dealership mails a “Wow Card” to every boat-buying customer, asking them to mail it back to president and CEO Larry Russo when an employee provides excellent service. Russo then posts those within the dealership and personally delivers a $25 gift card to the employee. 107 were awarded in 2013.
Russo Marine’s Blue Cross health care is also paid 100 percent by the dealership. Its uniform and clothing program, training and education program are also employer funded. The dealership also offers an employee referral/recruitment bonus program, annual reimbursement for personal development training and a boat sales referral bonus program. Employees are also given an annual cost of living wage increase to coincide with inflation.
Worth the investment
Add it up, and Russo Marine invests a lot into its employees, but Larry Russo says the cost and effort are worth the returns. The benefits create a workforce that’s not only loyal, but truly dedicated to the dealership’s success.
“Everybody that works here adheres to our programs and our culture and embraces the customer because they’re not showing up for work complaining about their wages, complaining about their compensation because we take good care of them,” Russo said. “That’s all people want. They want job security, they want a good wage, and they want recognition for a job well done.”
Russo Marine’s employees not only show up each day, but they come focused on performance, because that’s how they’re rewarded. The benefits program also helps the dealership retain and recruit top talent.
“When we’re trying to hire someone, and we tell them we’ve got automatic cost of living raises, we’ve got performance pay based on CSI scores, we’ve got the Wow Card program, we’ve got the 401(k) profit-sharing program, it’s music to their ears when we want to hire somebody,” Russo said.
An additional benefit, one that’s not obvious on the surface, is annual employee surveying done through the Marine Five Star Dealer Certification program. It allows Russo Marine to look at its programs each year and analyze their success with the employees.
“The average employee would not see that as a benefit, but it truly is a benefit,” Russo said. “You’ll hear from so many people that they hate their job because nobody every reached out to them.”
Though offering the range of benefits that Russo Marine provides isn’t in the budget for all dealerships, providing at least a minimal number of benefits makes an employer more competitive in the job market.
The Small Business Administration reports benefits like Social Security taxes, Workers’ Compensation, Disability Insurance and Family and Medical Leave Act are required. But those such as health insurance (to be required for some companies by 2015, see this article from GE Capital), vacation time, paid holidays and sick leave should be considered to remain competitive, according to 360degrees of Financial Literacy from the American Institute of CPAs. The group also recommends considering long-term and short-term disability coverage, group life insurance, dental and vision care, and contributing to or matching employees' retirement contributions. Fringe benefits, such as gift cards, sports tickets, etc., are also on the table. However, the group cautions that employers should only offer what they can afford.
According to a study by LIMRA, a worldwide research, consulting and professional development organization, only 44 percent of businesses with fewer than 100 employees offer health insurance. However, the percentage increases with the number of employees. Nearly three-quarters (72 percent) of those with 10-24 employees offer health insurance. That number jumps to 81 percent for 25-49 employees and 84 percent for 50-99 employees. Other common benefits include prescription drug coverage (40 percent of small businesses), dental (25 percent), life insurance (25 percent) and vision (21 percent).
However, with only 47 percent of businesses with fewer than 100 employees offering any kind of benefit, perks overall have dropped to their lowest level in two decades of LIMRA research.
"The recession has had an impact on smaller employers’ ability to offer benefits, particularly those with fewer than 10 employees,” said Kim Landry, research analyst, LIMRA Product Research. “The weak economy caused a lot of small firms to close, while the new firms cropping up to replace them are less likely to offer benefits. Many small businesses are also hesitant to add new benefits until the economy improves.”
However, with fewer benefits offered, attracting high-quality prospects may be difficult for some companies.
“Heading the list of must-have benefits is medical insurance, but many job applicants also demand a retirement plan, disability insurance and more. Tell these applicants no benefits are offered, and often top-flight candidates will head for the door,” reported Entrepreneur magazine.