Creating a Solid Benefits Package
There is a well-known shortage of qualified technicians entering the collision repair industry. And the limited numbers of quality craftsmen who remain are in high demand. It’s a good idea for shop operators to do everything they can to offer the most attractive work opportunities to catch the attention of recent school graduates and veterans looking to change employers, says Paul Ruiter, U.S. general counsel and human resources director for Gerber Collision & Glass.
“As our industry continues to evolve and mature, people are going to have higher expectations of shop owners,” Ruiter says. “You need to demonstrate that you’re among the best businesses in the industry to make employees and their families happy.”
That means adding a comprehensive benefits package to your employee offering to help your staff with medical and financial needs. It’s something that can set your shop apart from the competition, as solid benefits offerings aren’t terribly common among collision repair businesses.
“Benefits plans are a reflection of the quality of your business and the type of environment you want to create,” Ruiter says. “The market is tight for acquiring talented people. Offering benefits clearly distinguishes you from other shops people could choose to work for.”
When thinking about your benefits package, try to provide as diverse an offering as possible, Ruiter says. Consider elements that will assist with your employees immediately, later in life, and post-retirement.
“This is a life-cycle concept, where you try to support your staff right now and also give them opportunities for the future,” Ruiter says.
Mark Murphy, employee benefits practice leader for Althans Insurance Agency, says the most basic, yet most important, benefit to offer is health insurance. Offer policies for medical, dental and vision.
Murphy suggests offering multiple health plans (at least two) for employees to choose from. If you employ a mix of young and older people, your staff may have a wide variety of personal needs. For example, a 30-year-old employee without a family or health conditions has different coverage needs compared with a 55-year-old employee who deals with those life circumstances.
“That allows individual employees to select the most important, effective coverage for them,” Murphy says. “Young people may want to gravitate toward plans where they contribute less money though payroll deductions.”
Shop Example: Bob Waldron, owner of Waldron’s Auto Body CARSTAR with two locations in Marlborough, Mass., and Lancaster, Mass., offers dental insurance and three types of health insurance for his 30 employees: a single plan, a 1+1 plan and a family plan.
The family plan costs $1,100 a month, the 1+1 plan costs $500 a month and the single plan costs $375 a month. Waldron covers 75 percent of the cost, as well as half of each employee’s $1,000 deductible.
Income Support Opportunities
This includes things such as disability, accident and life insurance policies. Employees can participate with these types of insurance plans on an a-la-carte basis through third-party providers.
Ruiter says disability insurance is among the most important types of income support opportunities to make available. Many shop employees don’t have the resources to sustain injuries or medical problems that keep them away from work for extended periods of time.
Shop Example: Waldron offers disability insurance, dismemberment insurance and life insurance through AFLAC so employees have access to income continuation when they’re not actively at work. He covers 75 percent of those costs.
Murphy says there is currently very high demand for retirement plans among small businesses with 10–20 employees. There are several options available with various business and employee contribution structures—Simple IRAs, Roth IRAs, and 401(k) plans. It’s recently become a more affordable benefit for shops to provide as the cost of plan administration, testing and record keeping has dropped dramatically over the last decade.
Shop Example: Waldron established a 401(k) plan that allows employees to make contributions through payroll deductions, as well as purchase various stocks and bonds. He matches employee contributions based on their length of service to the company—up to 3 percent of annual income for new employees, and up to 5 percent after four years of employment.
Employee benefits expand beyond third-party insurance-type policies, says Daren Fristoe, president of The Fristoe Group Inc. Get creative and look for ways to add to the employee’s growth. Consider implementing policies for paid time off (PTO), sick leave, paid training, recognition or incentive programs, and team bonuses.
Shop Example: Waldron offers PTO based on longevity of employment. Employees start by earning 1.2 hours of PTO per week during their first year.
Waldron also pays for each technician’s training, an annual investment of roughly $20,000.
Attract the Right Workers
There will be an employer benefits mandate under the new federal health care law, which takes effect January 2014. But that mandate only applies to businesses with at least 51 full-time employees, so the average collision repair shop still won’t have any governmental requirements.
Still, it’s good practice for small businesses. Fristoe says benefits offered carry just as much weight as monetary compensation when employees choose where to work.
“You have to find ways to keep your talent. We’re in an extremely competitive environment, and this is one important area where you can help yourself,” Fristoe says. “You want to make your shop a great place to work across the board. Don’t give people reasons to leave, or not come to you at all, with lack of a benefits program.”
Jay Williams, aftermarket program director for Althans Insurance Agency, who has worked with several collision industry shops, says you will not only attract and retain any worker, you’ll attract the right workers—the ones who are established in the community, show up every day, work hard and produce solid results.
“Workers gravitate toward businesses with above average benefits because they’re looking for stability in life,” Williams says. “The career-minded individuals tend to have families, be committed in the industry, active in associations, and participate in training. Those are the people who want benefits, and the type of staff you’re more likely to attract.”
Although Waldron hasn’t tallied up his total investment for each benefit he provides, the health plan alone is an annual expense of about $160,000. It’s a big chunk of money, but he says the investment is worth it to prevent costly turnover.
“I’m not moving this company forward by myself. I need people who are capable of buying into my company long-term,” Waldron says, noting that his benefits are a key retainer of several employees with 20-plus years of service. “You can’t find people who are willing to take their job seriously for cheap money. You only get the right people if you offer what they need.”
Adding a benefits program to your business is an investment. Predicting that investment, however, is nearly impossible until you start investigating your options, Murphy says.
He says the cost of health, dental and vision plans differ widely between every U.S. state due to various laws and government regulations. For example, New England and West Coast states tend to be more expensive because insurance products are more heavily regulated. The cost also depends on the demographics of your workforce. Your shop has to go through an underwriting process, which dictates your exposure and premiums.
Waldron sends his insurance coverage out for bid annually to ensure he’s getting the best possible rates. He approaches several insurance companies for price quotes based on his staff’s size, insurance loss ratio, location, ages and health history.
Manage Your Benefits
The number of benefits options available to employers can be mind-numbing, even for small businesses with small numbers of employees. In addition, there are several variables to consider specific to your business and staff.
Waldron employs a part-time human resources manager to oversee that effort and help develop the best approach. But most shops don’t have the luxury of having a human resources manager on staff, so it’s a good idea to consult with a professional benefits broker to avoid moving in the wrong direction.
Williams says brokers will help you select the most appropriate, cost-effective plan based on your desired financial commitment, contribution ratio and tax considerations.
They also help reassess your plan annually to ensure you’re getting the most for your money, provide administrative support, and offer business comparisons to identify how your benefits offering stacks up against competing shops.