Because of the young average  employee age at Work at Play, getting buy-in for a benefits plan was a challenge in the years following the company’s 1999 creation, says Mandy Eagles Gratton. Management didn’t want to go to the trouble and expense when interest was lacking. In those early days, the company had just eight employees, all of whom worked from home and were content with just the paycheque and flexible work arrangement. She says it wasn’t until she joined the Vancouver-based digital marketing agency as HR manager in 2005 that the critical mass needed to implement a plan began to take shape.

“At that point, we had a lot more staff and a slightly higher average age. People were starting to have families and had a lot more interest in health and dental,” says Eagles Gratton.

New contracts with large clients such as Viacom and Mattel had prompted rapid growth, and Eagles Gratton says the company realized that in order to attract the top talent it would require in a competitive industry, it needed an attractive compensation package. “For people who are coming from outside, from companies that we’re trying to compete with, especially in a very niche kind of position, that [benefits package] is something that’s really good to be able to offer.”

Statistics certainly indicate that people are looking for benefits from their employers. According to the Randstad Workmonitor, published in December 2010, 49% of Canadians surveyed indicated that their benefits increased over the previous year, and 61% expected their benefits to improve in 2011. And, in an environment that is moving toward growth and hiring after a period of recessionary retraction, the ability of smaller companies to compete for talent against their larger competitors is going to be vital to their continued success.

Mike McClenahan, CEO of Benefits By Design (BBD) in Port Coquitlam, B.C., a third-party administrator and a small employer in its own right, says small companies that don’t have a benefits plan in place—or aren’t, at least, in the process of developing one—risk being left behind as the economy continues its upward trend.

“Ultimately, [benefits are] a tool that can be used to attract and retain the right people. As much as I think we’re still in an employer-driven marketplace right now, stats show that Canada is going to be facing a significant shortage of workers within the next
20 years. So I think employers at their peril will revel in this temporary market without being more forward-thinking,” he says.

Plan Tips for Small Business

1. Put something in place. In an increasingly competitive hiring market, companies offering benefits have an advantage over those that don’t. Group benefits and retirement plans demonstrate that a company cares about its employees’ present and future.

2. Focus on the basics. Offering life and basic health coverage will protect a company’s employee assets while also providing greater budget control. You can always add on to this benefits base in the future.

3. Ease of implementation and administration is key. A 20-person company may have only one HR staff member, if any. Service providers have begun offering simple turnkey plan solutions for small businesses with limited resources. Also, a good benefits consultant can help a small business design a plan to suit its needs.

4. Make it needs based. Determining what employees want from a plan means understanding company demographics. Employees in their 20s may not value comprehensive health benefits. Similarly, an older demographic will likely see the need for a group retirement plan. “A benefit is perceived only as a benefit if it’s something employees can see they’re getting value out of,” says Mandy Eagles Gratton, HR manager with Work at Play in Vancouver.

5. Employees can be good plan consumers. Benefits and group retirement plans are great tools for building a productive and healthy workforce. But they also represent costs for a company. Employee co-payments can help keep plan costs in check, and communications can arm employees with key cost-saving knowledge. “Instead of being just users and spectators of the plan, employers have to get employees more engaged with it,” says Mike McClenahan, CEO of Benefits By Design in Port Coquitlam, B.C.

Of course, for a small organization, deciding to cover employees for health costs and offer a retirement savings option is one thing. Figuring out how to actually implement these plans in a sustainable and cost-effective way is another challenge altogether.

“A benefits plan is a pretty important element of any employer’s offering to employees,” says Marc Avaria, vice-president, group small business, group benefits, with Manulife Financial. “But it’s a consideration for a business, especially a small business, because there is an expense to it.”

Avaria says the biggest challenge with regard to benefits for a small company is getting it past the perception that a benefits plan is expensive. He says that a company with 10 employees would typically have a benefits plan premium of $18,000 to $20,000.

“That’s not an insignificant investment on the part of a small company,” says Avaria. “But there are a lot of options and choices to how they provide those benefits.”

McClenahan says that when he assumed the role of CEO at BBD in 1998, the company had just seven or eight employees and offered what he would call “the Cadillac” of benefits plans, including full health coverage and no co-pay. He says that while the plan was an attractive tool in the company’s early days to ensure that its key talent base stuck with the company, as BBD has grown, it has had to reassess plan costs and find creative solutions to manage them. Some of these solutions have included cost-sharing and a healthcare spending account introduced a couple of years ago.

“This goes back to that idea of making your employees better consumers of the plan. For example, we’re big believers—both for our own plan and promoting it externally—of things like managed drug formularies; we’ve had one of those instituted for about eight years,” he says.

Eagles Gratton says she struggled initially to find a benefits plan for Work at Play because many of the providers she contacted weren’t able to offer a cost-effective solution for a firm with so few lives. She eventually joined a benefits plan offered by the British Columbia Technology Industry Association (BCTIA), which covers most drugs up to 100%. Work at Play covers its employee premiums and doesn’t charge deductibles. Eagles Gratton says that through its partnership with BCTIA, the company is able to offer benefits such as these, which she says would be comparable to any Fortune 500 company.

“If BCTIA didn’t have this program for us to join, we’d probably not be able to offer the no co-pay to our employees. The costs become really expensive.”

Retirement solutions
While many small Canadian companies have found ways to offer employee benefits, retirement savings options are less common. According to an April 2010 Canadian Federation of Independent Business report, Securing the Future, 78% of surveyed small and medium enterprises indicated they do not offer a retirement savings plan. Asked why not, 49% said such plans are not affordable; 22% said the financial risk to their business was too great.

Halifax-based engineering firm CBCL Ltd. has been in operation since 1952 and has had a DB pension plan in place since 1958. Kent Lane, the company’s director of corporate affairs and technology, says the plan has proven an important tool in attracting key employees. CBCL grew from 85 employees in 1995 to 300 today and has appeared on Progress magazine’s list of the Atlantic provinces’ 101 most successful companies for 17 consecutive years.

“Engineering is kind of an odd industry. I’m not sure that all the engineering firms, at all levels from small to large, have pension plans. So it’s a big selling feature when it comes to trying to attract the higher-end employees,” says Lane.

But he says the pension plan has performed “fair to poor” through the recession, and company management has realized that the financial pressure it places on the company means CBCL will likely have to soon join the trend of switching to a DC option.

“We have to make sure we make significant enough profits to allow us to fund the plan. It’s a pressure on our profitability. Shareholders look at profits, and, obviously, a piece of that has to go to funding the plan on
a regular basis.”

According to Eagles Gratton, the next benefit offered by Work at Play will likely be some sort of retirement plan. This has been discussed within the company for a number of years but has been on the back burner largely because of the young employee demographic, which is now slowly shifting upward.

She says the issue was discussed with employees at last year’s annual retreat. “One of the things that seemed to be compelling to the staff was share options or some sort of buy-in to the company, rather than a group RRSP,” she says.

Jeff Aarssen, vice-president, group retirement services, sales and marketing, with Great-West Life, says the improving economy—and Canadians’ growing understanding of the need for retirement savings—will put increasing pressure on small businesses to offer programs. And he says that for small firms looking to differentiate themselves, the sooner they implement a retirement savings plan, the better.

“The most practical solution for a small organization is simply to put a program in place. The power of compound interest and time is a very meaningful mechanism in allowing people to have adequate retirement income,” he says.

Culture is key
While group benefits and retirement savings options are important tools for small businesses looking to attract and retain top talent, many successful small firms will tell you that company culture is at least equally vital.

“Compensation and financial rewards are important, but rarely are they No. 1 on an employee’s list. Opportunities for growth, a direct relationship with your manager and a greater desire to be part of something more tend to attract a certain individual,” says McClenahan.

He says the ability of BBD to create a culture where everyone feels valued has been instrumental in ensuring that employees stay and grow with the company. He says one of the rewards BBD’s employees view with the highest regard is not a monetary item at all. The company’s Star Program allows any employee to nominate a co-worker who he or she feels has helped the company. Nominated employees are recognized with a star.

“While somebody might look and say, ‘That’s just a hokey little star,’ people here are quite proud of the recognition that comes from their fellow employees, as opposed to, say, your manager,” he says.

The team at Work at Play has also learned that long-term success relies on a positive corporate culture. Eagles Gratton says that while the company is looking toward growth for the future—both in its employee plans and its bottom line—management has agreed that growth cannot come at the expense of the “boutique firm” culture that exists at Work at Play. The firm is looking at 2012 for possible expansion but will likely opt to open a branch office in another city rather than trying to grow past the 30- to 35-employee point at its current location.

“We try to be cutting edge in what we do. I think that makes people happy to be at work. Our whole philosophy, even around the name Work at Play, is not that work is one thing and play is another, but that work is your play. We try to embrace that in everything we do.”

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Related links
Size matters: Telelink talks benefits, EAP
Q&A: The benefits of a benefits consultant

Copyright © 2020 Transcontinental Media G.P. This article first appeared in Benefits Canada.

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