By Bill Price
Employee benefits or perks should be designed to encourage employees to remain on the job, think favorably about the company, and generally improve employee welfare. This is not a time to follow the status quo by just doing what is popular. Benefits should meet the needs of your employees, who may very well have a different set of needs or culture from your competitors. As an example, employees in high tech or computer related industries (as my son is) would greatly appreciate being given free software or the latest computer tablet. However, this benefit is less valued in the oil and gas business, where they likely would more appreciate a certain type of truck. Some employees may look forward to an all-expense-paid fishing trip to Baja; however, oilfield workers often don’t fish and probably don’t need even more time away from home. Therefore, some thought should clearly be given to this matter. Optimally, employee benefits should be something the company can provide inexpensively, as compared to the typical costs for the same goods or services on the open consumer market. For example, insurance companies can offer supplemental insurance at a lower cost to the employee than can non-insurance companies. Without a doubt we have a wide variety of businesses in the oil and gas industry, so there is no optimal benefit to offer. Companies also have a variety of job descriptions, income levels, family statuses, education levels, and maturity levels. This is why employers should consider a flexible plan whereby the employee can choose among a variety of benefits that they desire. Begin with a core set of benefits that all employees must obtain—such as health insurance. A health plan is often presented with a dollar value placed on each separate benefit, with a maximum total value allowed. Complicated, isn’t it?
Some employee benefits are actually required by law and they are paid by the employer, so the employee should made aware of this benefit provided to them at no cost, such as unemployment insurance and the employer portion of social security benefits. Overtime pay is not an optional benefit but is required by the FLSA Wage and Hour act. All other benefits are optional. Workers compensation is required in most states, but is optional in most instances in Texas. It is required in Oklahoma, Louisiana, North Dakota, and New Mexico. There are a myriad of rules covering workers comp, the most important of which is a limitation of liability to the employer. While many Texas industries do not participate in workers comp (restaurants, for instance) it is unwise for oil and gas service companies to bypass this product. This topic is better covered in another article.
Contrary to popular belief by employees, most time off leave is optional under FLSA. FMLA is required and mandates employers to provide up to 6 weeks of unpaid time off for certain health events. This includes sick days, holidays, vacation time, and perhaps breaks during the day (these may be required under OSHA in some instances). Breaks during the day of more than about 15 minutes may require the employee to clock out—in other words, you as employer do not have to pay for a lunch break. However, if you allow an employee to work during the lunch break (this may include sitting at a desk and answering a phone) you do have to compensate them. The same laws apply to Texas employers, but may vary in other states. Obviously this does not apply to an exempt salaried employee.
Employee health insurance is essentially required under the Affordable Care Act (aka ACA or Obmacare) if you have more than 25 employees. Recent surveys indicate only 35 percent of employers with fewer than 10 employees offer health insurance for employees. However, more than 90 percent of larger employers do offer health insurance. Most firms offer more than one type of insurance, as indicated in the chart at the bottom of this page.
Maybe you have a retirement plan that specifies that you contribute a certain amount to the employee. These are fairly standard, but you need to remind the employee of the true value every now and then. You should provide a customized handout at the end of the year. I am aware of two employees here that left to take a job paying 15,000 more per year. They are now re-applying for their old job because they didn’t really calculate the actual cost or value of their benefits.
Some of those benefits may include education. As a university dean I am aware of many students who are attending UTPB because of employer-provided scholarships that range in value between $1,000 to $5,000 per year. Obviously there should be strings attached to this, such as a certain time payback. You as employer may only allow scholarships for certain degrees useful to your firm. Certainly there should be a grade requirement. More liberal companies offer this to family members as well. Remember that when the degree starts, it takes at least four years to complete, so the employee is inclined to stay. This was my thinking a few years back, when my son was attending college. Education may also include a two-year technical degree or maybe even a seminar of short duration.
Just about every company offers free coffee because it is so cheap. But could you go a little further and offer free cokes, pastries? While you are at it why not have breakfast brought in? After all, most companies with field workers cover meal expenses anyway. Think of the camaraderie this could generate in the morning.
Younger workers value their pickup truck. If it is a company truck, do you allow some customization, such as brush guards and extra lights? Then again, rather than a company truck, consider an allowance instead. Free fuel cards and car washes are now becoming commonplace. It is becoming common for employees to use the company vehicle for personal use, with free gas.
The chart in the top right corner of this page represents a fairly common benefit arrangement for an hourly service worker earning $20 per hour with 10 hours of overtime. Notice that a huge proportion of compensation is the overtime-and-other category. Many employees consider overtime as a benefit. The “other” category typically includes personal use of a company truck with a fuel card.
It is interesting to compare this hourly worker with an executive earning a $250,000 per year salary. Even though the benefits are at a much higher rate, the overall percent of the compensation is now less than 25 percent. The point is that benefits are of much more value to the hourly worker.
In many of the more active oil and gas plays, housing availability is at a critical level. This is solved by offering company subsidized apartments and housing. Some workers bring their own house in the form of a fifth wheel or travel camper, although I am not aware of any company providing this as a permanent arrangement. Of course, temporary lodging on site could be at a local hotel or man camp.
Some of the more unusual benefits I am hearing about include hunting leases, lodge use, shopping trips, concert and game tickets, and child care at work. A fitness center membership has the advantage of encouraging healthier employees. Many companies offer a free lunch during crunch time. Depending on the employees, you could go further by offering haircuts, massages, pedicures, and free tax help.
According to HR World, the founders of Google know the formula: More benefits means happier employees, happier employees means more company loyalty, and more company loyalty means increased profits.
Dr. Bill Price is the Associate Dean and a Professor of Management at The University of Texas of the Permian Basin. He has previously held several positions in human resource management and other leadership roles. He has taught various courses in human resources and has published a number of articles in the areas of human resource management and strategy. He can be reached at firstname.lastname@example.org.