Adobe Stock
A good business owner is a servant and a good shepherd. Being a servant to the customers and clients is fundamentally good for business. Every great salesperson knows that offering your company’s product or service as a solution to someone’s problem, want, or need is the secret to great success. Top businesses are known for their great customer service.
Gary Logan
Wes Shannon
Likewise, being a good shepherd to the employees of the company is equally a sound business practice. I have been surprised over the years when I have witnessed business owners who treat their employees with harshness, cruelty, and disrespect. These same business owners will say that their employees cannot be trusted, they are lazy, quit often, file bogus workers compensation claims, steal from the company and a variety of other maladies. The whole time these business owners don’t make the connection that their mistreatment of the employees is a contributing factor for the problems the owner is having.
A great example is the 1919 Black Sox scandal where the Chicago White Sox players allegedly colluded to lose the 1919 World Series for money paid to them by a gambler, Arnold Rothstein.
The players were so angry with their team’s owner, Charles Comiskey, because of his harsh treatment and under pay.
Comiskey started charging his players for the laundry service to clean their uniforms. The players decided to wear dirty uniforms for weeks before Comiskey gave in and started providing laundry service again for free. Because Comiskey was so tight with his money spent on his employees they felt motivated to “sell out” to Rothstein and as a result nearly lost the team for Comiskey.
Comiskey was not a good shepherd.
Today, it makes a great deal of sense for employers to provide employee benefits like health insurance, life insurance, disability insurance, and retirement benefits for their employees. I propose it makes the best sense to not only offer these benefits but to provide them at no cost to the employees and their families.
Yes, I understand health insurance is very expensive. However, a small business owner who says they cannot afford to pay it for their employees is actually paying more. Here is a list of reasons why it is cheaper and better for the employer to pay all of the employee benefits:
- The dollars paid for employee benefits, including the coverage for the employee’s dependents, is a tax-deductible business expense to the company and not taxable to the employee. A 40-something aged employee with a spouse and two kids would pay around $3,366 per month for health and dental insurance for the entire family. This comes to $40,392 per year. Now if the employer doesn’t pay it the employee will have to pay it out of his pocket or go without coverage. If the employer paid this much additional salary for the employee to buy coverage the $40,392 of salary would cost the employer an additional $3,029.40 in FICA matching. Plus, the additional salary would be charged for workers compensation premiums and unemployment premiums. Costing maybe as much as $4,000-$5,000 total over the premium costs. If the employe will accept less salary for this coverage the cost is actually less because the employee would be paying the extra $3,029.40 in payroll taxes plus additional income taxes.
- The cost of an employee who is anxious about a sick family member at home will cost the employer greatly in performance and absenteeism of the employee. Reductions in productivity are very hard to quantify but are still expensive. Absenteeism and increased turnover are actually easier to determine quantitatively and prove to be extremely costly.
- Good morale is one of the best assets of a company and leads to better customer service and adds greatly to sales and profit. Equally as bad is poor morale. Employee benefits paid by the employer increase morale and make employees feel more appreciated.
- Having employees protected in times of catastrophic losses of health or life and their family's protection can remove feelings of guilt and shame that the business owner may experience if there was no insurance protection. I saw this early in my career when a business owner who had never provided any benefits to his employees had his closest employee who had become his friend get ill with a life-ending disease. The owner ended up going out of business because of the loss of this person and the owner's guilt that drove him to near bankruptcy trying to provide funds to the employee's family during and after the illness. The business owner told me, “My heart isn’t in this anymore.”
- Finally, not only is it good for business but it is good for society that working families are covered for healthcare expenses. People with good health insurance get better healthcare earlier than those without insurance and healthier workers are more productive which is good for our total economy.
My advice for our business clients is to seek the help of an employee benefits specialist to design a benefit package for all of your employees and your company to make you a good shepherd. Not all insurance agents can do this but primarily those who specialize in employee benefits. Never underestimate the value of a professional. The costs of nonprofessional services are often much higher.
Wes Shannon CFP® is a Certified Financial Planning Professional for Brazos Wealth Advisors in Fort Worth.