The Eye-Opening Employee-Benefits Work Sheet

Image National renews its employees' commitment with this annual review of all the extras they enjoy

Your employees probably don't appreciate you. They see their paychecks, but they disregard all the benefits you fund. Your contributions to their well-being, whether magnanimous or mandated, are likely much more generous than they imagine. Too many small companies demonstrate a coquettish modesty on the subject, as if they were afraid the details would spoil the magic.

Image National (IN) cherishes honesty in its relationship with employees, and honesty has seen that relationship through some trying times. Five years ago IN was a $4.5-million jack-of-all-trades and master of none. The Boise, Idaho, company manufactured custom signs for local accounts and produced display advertising and leased billboards for the regional market.

When Ron Eardley, now president, joined IN, as general manager, in 1988, he focused the company on the more lucrative regional and national sign accounts, like retail chains that open 20 stores a year and provide repeat projects in large numbers. "To succeed with the billboards, we needed to be an ad agency, but we didn't have enough boards. We needed to invest in more equipment and better craftsmen. But that overhead knocked us out of the local market. We couldn't compete with a guy working out of his garage for a $1,500 sign down the street."

Choosing to go national meant walking away from a couple million dollars in small jobs and cutting the work force. Such a dramatic change was bound to shake the remaining employees' faith, and at IN, their faith had already been tested by inconsistent management and performance incentives that inspired only cynicism. "We were asking people to participate and contribute. That would happen only if they trusted the management that was making decisions -- and they didn't."

Eardley's best hope, he believed, was to be forthright. He transformed a halfhearted attempt to share financial data with the employees into an educational responsibility. He has taught employees to understand the numbers on IN's income statement, and he makes sure everyone stays up-to-date by reviewing monthly results in companywide meetings. Benefits costs have a huge impact on the bottom line, so Eardley figures employees should know just how much he spends on them and how to count the ways.

Many companies that do see the value of detailing their contributions to employee-benefits packages leave it to their insurance provider to summarize the information in "personalized" booklets. Eardley considered preparing such summaries, but he decided that it's important for employees to complete the exercise themselves. "It draws their attention, and they have less opportunity to doubt when they've done the math themselves."

Once a year each employee gets a work sheet with the raw data needed to calculate the value of his or her own complete compensation and benefits package.

Lynn Bass, a production worker at IN, fills out the form with his wife. As a dependent on his company health-insurance plan, she has an interest in the process, too. The two were surprised to find that Bass's benefits totaled $12,000 -- he had guessed about half that, maximum. "See," his wife said, "I told you you were worth more!"

Eardley says, "People walk up to me and say, 'I'm just a $10-an-hour guy, but you spent $34,000 on me last year!" The shock wears off, of course, but the recognition endures, and because everyone is familiar with IN's income statement, everybody understands it "when we say, 'We're facing a 40% increase in health coverage, and if it rises like that again next year, you'll have to share the cost.' This form has made a significant difference in employees' understanding and in their trust."

Below is a sample worksheet

ASSOCIATE COMPENSATION AND BENEFITS WORK SHEET

?

ADD:

 $500 Ded. $200 Ded. 

 Assoc. only 1,044 1,116 

 Assoc. + 1 1,992 2,352 

 Assoc. + Fam. 2,532 2,976 

 # Weeks 2 3 4 

 Hr. Rate x 80 120 160 

Ron Eardley describes an hourly associate's work sheet: