Increasing the Value of Your Business For Sale

For the past few decades, a single paradigm has dominated most of corporate America: that employee compensation (wages, but also benefit packages and other wage-equivalent items) were an expense to be minimized. But that paradigm is not appropriate for most businesses. If you are a business that wants employees that offer value, you need to show them that you respect the value that they bring to the table, and this means offering them something of value in return. Business Valuation

There are several options in that arena. You could offer higher wages. You could offer more vacation, more autonomy, or more flexibility in scheduling. You could also offer a greater variety of health insurance, retirement funds, or other benefit packages. The question becomes which of these incentives are the most effective for inspiring productivity and loyalty?

Benefits Packages and Retention/Acquisition

Looking over Towers Watson’s 2013/2014 Global Benefit Attitudes Survey, we pulled out a few salient points.

  1. Employees look to their employers as their primary sources of health care coverage and retirement savings…
  2. …but those benefits only meaningfully affect retention rates and productivity when they meet the needs of the employees they are offered to.
  3. Health care benefit packages are more important to attracting new workers and retaining old workers than retirement packages are.

In other words, when it comes to benefit packages, the best tool for attracting new workers and retaining old ones is the offer of a health care benefit package that meets the actual health-care needs of the employee or applicant.

So what constitutes ‘meeting the needs’ of the typical employee? That depends largely on your demographics. If your average worker is young, hungry, and healthy, you are better off seeking out a midrange health plan; if your staff is mostly of the approaching-retirement age, you might find that the mid-range plans will not meet their needs.

Use common sense (and an employee survey if necessary), and obviously do not harm the health of your company finances over it. However, recognize that a health care plan that keeps your employees from worrying about their next trip to the emergency room means a lot more than just their peace of mind. It means your employees stick around, and that means greater peace of mind for your HR department (and your bottom line).

Benefits Packages and Productivity

Most examinations of the interaction between benefit packages and productivity look at the intrinsic factor of motivation. But in so doing, they overlook a powerful fact: only one kind of benefit package also directly affects productivity by enabling the employee to be present, focused, and energized more consistently: health care.

To that end, offering health care benefit packages that encourage employees to develop healthy lifestyles (e.g. proper diet, rest, exercise, and so on) have eight times as much employee engagement as those who do not, according to the World Economic Forum.

In short, if the intent is for your company to use its benefit packages to retain their best employees and ‘subsidize’ productivity, a health care plan that incentivizes healthy choices and otherwise meets the month-to-month health care needs of each employee is the most effective way to achieve that end. Moreover, those same benefit packages will make your employees feel like your company respects their commitment and hard work.

A strong health care benefits plan is important for one other reason as well; enhancing the resale value of your business. At some point, it there may come a time when you need to speak with a business intermediary about selling your company. A stable employee staff is a major selling point, and will go a long way toward setting your business apart from others in your industry, thus positioning you to draw multiple attractive offers when it comes time to sell.

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