It’s 2020, and the cost of doing business in the pro AV world is rising, and margins aren’t getting much wider.
Margins on hardware are disappearing and skilled laborers and technicians are hard to find. When they do come around, your firm better have the resources to hire and retain that employee, especially if your company is a small or medium-sized business like most integration firms.
If your benefits package is lackluster, then you run the risk of losing that employee to a larger organization that can afford better benefits — especially health insurance.
If your benefits package is lackluster, then you run the risk of losing that employee to a larger organization that can afford better benefits — especially health insurance.
Unfortunately, health care costs are rising and small AV integration firms like Wisconsin-based Lifeline Audio Visual Technologies have little to no control over those costs that rise about 10% every year.
“The challenge is this goes right to my bottom line,” says Lifeline President Scott Wright.
That’s five digits every year that Wright and his company basically have to absorb in a market with already tight margins.
“Name one other expense in life that goes up 10% every year and is something that you can’t cut out of your personal or business budget,” Wright says. “I can’t think of any.”
Healthcare offerings decline in pro AV
These rising costs are apparently leading to a decrease in the amount of NSCA member companies offering health insurance.
According to the organization’s 2019 Compensation and Benefits Survey, 84.7% of NSCA member companies offer health insurance to all or some full-time employees, while 10% offer to all or some part-time employees and 5.3% either don’t offer health insurance or didn’t respond.
For full-time employees, that number is down considerably from the 98.8% of 2010 respondents that said they offer health insurance to all or some employees.
For small companies that can’t afford such large increases, they have to find other places in the organization to cut. That could be advertising or travel, but then your firm might stagnate and not be able to complete projects further away.
Aside from trying to save on utility expenses by purchasing energy efficient systems, Wright floated cutting the insurance expense on his company, but that opens him to more risk.
However, cutting into employee benefits could have a drastic impact on morale in an industry that has struggled with low wages for entry-level technicians.
“I could go to a different plan or a higher deductible but this will only disappoint my employees and give them a reason to look for other employment,” he said.
This is when small firms should rally around the power of industry trade groups like AVIXA and NSCA to try to find better options for their member companies, Wright said.
The industry’s efforts to push for an association health plan
Both NSCA and AVIXA have explored industry health plans to help their member companies better manage these rising costs, with the latter making a push in 2018 to establish an association health plan.
Read Next: AVIXA Invites Members to Join Forces in an Effort to Find Health Insurance Discounts
However, there apparently wasn’t enough interest. The organization worked with human resources consulting firm Mercer, but not enough companies expressed an interest for the plan to move forward.
That effort came after feedback from member companies about the rising costs of healthcare.
AVIXA felt it was in an unique position to create such a plan and thereby enable company members to potentially save money through aggregating a volume purchase on health care, rather than company members buying health care just for their business as they do now,” the organization said in a statement.
According to AVIXA, the majority of system integrators pay more than half of insurance premiums, while 14% cover them completely.
At firms with more than 100 employees, 46% of them pay at least 75% of premiums. Single-digit employee firms aren’t able to offer the same benefits, as only 15% of those firms pay at least 75% of premiums.
AVIXA cites a Harvard Business Review survey of 2,000 U.S. professionals that found 88% of employees would consider taking a pay cut to work for an organization offering better health, dental and vision insurance.
The organization is still hoping it can get enough member firms interested, but for now, integrators are on their own when it comes to finding health insurance.
Get creative and outsource your HR
NSCA partners with professional employer organization (PEO) Insperity to provide human resources and administrative services to small and medium-sized businesses.
Through the partnership, NSCA members can streamline their administrative human resources functions through Insperity, saving on personnel costs and time.
In an interview, senior human resources specialist Michael Timmes billed the firm as an “all-encompassing package” that can help small integrators offer better benefits to help recruit and retrain skilled workers.
The organization packages its human resources solutions together to include to help consolidate some costs for smaller companies, Timmes said.
When Al Sheppard and his business partner were looking at health insurance options when they formed Florida-based integration firm Innovative Collaboration six years ago, they were looking at costs of over $1,000 a month per employee (they had only a handful of employees at the time).
The small company, now of about 20 employees, found TriNet, a firm like Insperity that administers payroll and health benefits.
According to Sheppard, his firm is now able to offer a wide selection of health plans to all full-time employees, and some of those plans are paid completely by the company.
“It literally allows us to have the benefits selection of a gargantuan corporation,” he said. “We can walk it and offer employees health, dental, vision, short-term disability, long-term disability, long-term care, family plans and spousal plans, tailored to all 50 states.”
Employees can not only choose from different plans, but different insurance providers.
Currently, AV economists say the industry is not too consolidated, but it is becoming more competitive.
If health care costs are holding your company back from greatness, consider reaching out to your trade organization and asking about association health plans or a PEO like Insperity or TriNet.
