Many owners who have offered retirement plans point out that employees who might never have saved anything at all for retirement now have considerable savings as a result of the benefit.
“I have guys with over $100,000 in their 401(k) and they’d never have that if they were working for somebody else as a subcontractor,” Winn points out. Some of his installers, he says, have been with the company for as long as 15 to 20 years. “The average person who’s been with me for five or six years has more than $100,000,” Dillon says, “and my contribution is 35% of that. So why are they going to go anywhere else?”
Organizations looking to counter heavy sales turnover would be well-served by setting up a retirement plan. “For us,” Mullion says, “there is a lot of stability in a solid core of guys.”
Profit-sharing — still rare at home improvement companies — builds even greater loyalty and longevity. At Unique Window & Door, Dillon calls the company profit-sharing program “the icing on the cake” of a benefits package that includes medical, dental, vision, and 401(k). And, he says, it is also the benefit that employees talk about the most. When the company makes money, so do they.
BEGIN WITH THE END IN MIND As much as contractors and consultants agree on the value of benefits, they also agree that for smaller businesses, benefits can be difficult to afford. Typically, total benefits costs equal about 35% of payroll. Medical insurance is by far the most expensive item, and those costs have been increasing twice as fast as wages or inflation. Last year the average annual premium for employer-sponsored health insurance was $12,680 for family coverage, according to survey information issued by Kaiser Family Foundation, with workers paying $3,354 of that. Premiums for employer-sponsored health insurance rose 5% in 2007, after increasing 7.7% in 2006.
And the cost of benefits is more difficult to manage, since you can’t control when, or by how much, costs will go up. But, experts say, you can manage for them, as you can with any other overhead expense.
“It’s called ‘insurance’ for a reason,” Ronza says. “If we stay healthy, we aren’t going to use it.” He advises contractors to look at their benefits package “like you’d look at the cost of roofing tiles or gasoline. They’re all costs of doing business. You can either control them, or let them surprise you at the end of the month.”
Whether or not to offer benefits and just how generous those benefits will be comes down to what kind of company you want to have. “If I could have found me, I would have worked for me,” Dillon says. “I wanted to create a company that I would work for till I retired. That was my vision from the start. And I didn’t mind 80-hour weeks 15 years ago. But I didn’t want to do it for the rest of my life.”
