Benefits often key to keeping best employees
By Beverly L. Rotan
USDAIRBS Agricultural Economist
Editor's Note: This article is excerpted from
RRS Research Report 189, available on line
at www.rurdev.usda.gov, or in hard copy for
$5 (order by calling (202)720-8381).
n today's economy, many companies are downsizing their labor force, creating a greater need to keep the most productive employees on board. In order to retain the best employees, cooperatives try to keep pace with the salaries and benefit packages offered by other employers, while still keeping their costs down.
One way to do this is to evaluate benefit plans. Look at employee needs, expectations and eligibility, cost escalation, tax considerations, benefit quality and the benefits packages offered by competitors. Interview employees, consult government agencies, read various benefit publications, compare benefits of like-businesses and monitor benefit activities of other businesses in the area. What benefits are essential and how will they be financed? Will they be paid for by the cooperative or the employee? Or will the cost be shared? In this article, references to "benefits" include retirement benefits; health, life and disability insurance, and educational assistance.
The study included the following job categories: 1) chief executive officer (CEO), president or general manager; 2) office manager, accountant or controller; 3) division manager; 4) field representative; and 5) sales representative. Most benefits were extended across all job categories. Differences in how cooperatives finance their benefits are examined, based on cooperative type, region and size.
Benefits by cooperative type
Many cooperatives of all types paid for life and disability insurance and educational assistance, while health insurance and retirement cost was covered by both the cooperative and employee for all employee groups (table 1). The exceptions were dairy and"other" cooperatives. In these cases, the cooperative paid solely for the retirement of general managers, office managers, field representatives and sales reps. This trend has remained unchanged for a number of years. The largest percentage of cooperatives paid retirement insurance for general managers, office managers and sales representatives.
"Other" benefits usually offered were paid vacations and sick days, first-class travel, use of a company car and mileage reimbursement (private car when on cooperative business). The availability of these benefits were more broadly spread across all cooperative types and job groups. By cooperative type, at least one-fourth or more indicated general and office managers were paid for vacations and sick days. First-class travel was offered only to general managers.
Mileage reimbursement for all employees in grain and farm supply cooperatives were more evenly distributed, but responses were limited.
Benefits by region
Most cooperatives in all regions said retirement was paid by both the employee and cooperative. Health insurance percentages were almost evenly distributed between the cooperative paying all benefits to being shared by both. Education
assistance was more likely paid for by the cooperative in the Great Lakes states. Life and disability insurance was usually paid for by cooperatives in all regions.
Other benefits or "perks," such as paid vacations/holidays and sick days, were paid by the cooperative. Paid training or mileage (private car) was the next largest percentage in all employee groups. First-class travel privileges were quite limited.
With a few exceptions, large majorities of co-ops in all sales size groups (small, medium, large and super) paid the entire cost for life and disability insurance. Smaller majorities in most size groups also shouldered the cost for educational assistance. A majority of co-ops paid the entire cost of health insurance in all but the super-sized group (see table 19 in the on-line version of this article). Retirement cost was largely shared by co-ops and employees in all five job categories and all sizes groups.
Rethinking benefit payments
From a financial standpoint, cooperatives may need to rethink how benefits are paid. Trends show that benefit costs once paid solely by the cooperative are now usually being shared with the employee. Conversely, some cooperatives that previously shared-costs are now covering it all. In other cases, some said co-ops that in the past shared the cost with staff for benefits have now been shifted entirely to employees.
Cooperative leaders must look at internal and external influences when setting salaries and benefits and use all available resources. Look at today's society. Try keeping pace with other businesses' salaries and benefit packages, avoid
employee turnover, and adapt salaries and benefits to remain competitive.
Here are some significant survey findings:
- Most employees in the five job categories surveyed had bachelor's or associate's degrees.
- job responsibility was ranked as the most important factor for setting salary by a majority of respondents for all job categories. Performance ranked next.
- Thirty-four percent of the co-ops surveyed said all of their employees received bonuses, usually based on the financial performance of the cooperative.
- Cooperatives were more likely to pay for life and disability insurance and educational assistance for the general and office managers. Retirement benefits were usually shared by the employee and the cooperative. More responses indicated that programs of locals were tied to their regional's retirement plan.
- Directors were usually paid per diem for travel while on cooperative business along with a fee for attending board meetings. Annual expenses for directors ranged from $1,200 to $6,000.
- The East/South Central region had the highest salaries for all job categories, except for sales representatives in the West.
