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mployee benefits are often the key to attracting and retaining top talent. The benefits you provide beyond paid wages, such as health insurance, retirement plans, and paid vacation, can give you a competitive edge in today’s business environment.
Providing your employees with a comprehensive benefits package can also improve their satisfaction, engagement, and productivity. Additionally, you can take advantage of tax breaks, such as deducting the cost of providing health insurance.
Keep reading to get our guide to employee benefits, including factors to consider when choosing the best benefits for your employees.
Types of employee benefits
In recent years, some high-profile companies have started offering trendy perks, like taco trucks at lunch and on-site massages. However, for most employees, basic benefits are the most important to them, such as healthcare, retirement, and paid family and medical leave. In the U.S., the onus is typically on the employer to provide these benefits.
You can offer various types of health insurance plans for your employees and their families including:
- Fee-for-service plans, in which healthcare providers are paid based on services. While these plans used to be very popular, they’re now the fifth-most popular type of health insurance policy.
- Health maintenance organizations (HMO), in which healthcare is provided for a fixed monthly fee.
- Preferred provider organizations (PPO), in which healthcare is provided for a discounted fee.
- High-deductible health plans coupled with healthcare savings accounts, which require patients to pay a high deductible but allow them to use a tax-deferred savings account to pay for healthcare expenses.
While company-provided pensions are still a perk in some industries, most companies provide access to retirement plans such as 401(k)s, which allow your employees to save for retirement. You can increase the incentive for employees to save by matching a certain percentage of their contributions.
Paid time off
Paid time off (PTO) includes vacation, sick days, holiday pay, parental leave, and any other type of paid absence. Although it’s still fairly rare, some companies offer unlimited PTO, providing that vacation time doesn’t interfere with an employee’s ability to get their job done. Other companies offer accrued PTO, which is PTO that employees earn over time.
Other benefits include life insurance, disability insurance, and wellness programs like health coaching and mental health support.
Employees value being able to work from home and work flexible hours. According to a survey by SHRM, 70% of companies now offer at least some form of flexible working conditions. Offering flexibility can save you money by cutting your overhead costs.
Factors to consider when choosing employee benefits
Although employee benefits can significantly add to your hiring budget, a competitive benefits package will help you attract the best candidates. Consider this a talent acquisition expense!
This is often the top consideration when choosing employee benefits. Doing some research can help you set a realistic budget.
Look into what benefits your competitors are offering workers in similar roles. For an accurate assessment, remember that those competing businesses should be parallel to yours in size and be located in your area. Additionally, research general benefits trends for your industry to get a comprehensive picture of standard benefits packages.
Consider what benefits your employees need and want the most before you choose a package. As the workplace evolves, employees’ benefits preferences shift. You may need to offer on-site and remote workers different benefits.
While some benefits, such as insurance and retirement benefits, will serve both types of workers, remote workers can’t take advantage of benefits only available at physical office locations. If you run a hybrid or remote-first company, aim to craft a benefits package that works for all of your employees.
Compliance with laws and regulations
The benefits you offer your employees must comply with applicable labor laws. In this age of remote work, there’s an extra layer of complexity since your employees may not live in the same jurisdiction in which your business is located. Generally, you must follow the labor laws of the geographical area where your employees live, even if they differ from the laws where your business is based.
Finally, consider your business goals. Do you want to improve employee morale? Offering flexible work hours or half-days on Fridays may help. If you run a tech business, you’ll want to attract the best tech candidates by offering a competitive package with benefits like unlimited PTO and remote work options.
Focusing on strategic business goals when developing and communicating your benefits package can help improve overall performance, employee retention and satisfaction, and recruitment. Start by considering how your benefits can further your business and workforce objectives.
Determining the best employee benefits for your small business
Deciding what benefits to offer your employees can be a complex process. However, it doesn’t have to be overwhelming if you break it into manageable steps.
Analyzing the needs of your employees
Start by researching what your employees need the most. Get informed on the standards in your industry to ensure you’re offering the right mix of benefits. In addition to collecting data on industry trends and what your competitors are offering, you can analyze the following data for more information:
- Questions employees have asked in the past year about benefits
- Candidate questions about benefits
- Exit interview comments related to benefits
- Usage rates for current benefits
- Workforce demographics—for instance, if your employees are older, they may place more value on retirement plan options than parental leave
Comparing the cost and ROI of different benefits
Some benefits will provide a better return on your investment than others. For instance, health wellness benefits have been found to provide a 600% ROI compared to a 129% ROI for tuition reimbursement.
Consider the cost over time, not just the initial investment. In addition, determine how the expense will affect other business aspects, such as recruiting new employees. Cost savings from higher employee recruitment and retention rates may offset the expense of providing better benefits.
Getting input from employees
Employee surveys and focus groups are a great starting point for finding out what benefits are valuable to your workforce. But don’t overlook other methods for soliciting feedback, such as:
- Digital suggestion boxes
- Performance reviews
- One-on-one meetings
- Third-party surveys
Consulting a benefits advisor or benefits broker
A professional advisor can give you insights into trends and best practices for developing small business employee benefits packages, helping you stay competitive and attractive to new candidates. They’ll also tell you if a proposed package is a good deal, negotiate with insurance providers, and find the best plans for your budget.
Implementing and communicating employee benefits
Once you’ve procured employee benefits, you need to implement a signup process and let employees know how to access them.
Ensuring compliance with relevant regulations
Ensure your benefits packages comply with all applicable laws and regulations, such as the Affordable Care Act, to avoid legal issues such as fines and penalties. You may need to work with legal counsel and other experts to maintain compliance.
Communicating benefits to employees
To get the most strategic advantage from your benefits messaging, relate it back to your company culture and values. While the most effective type of communication will depend on factors such as your staff size and employee demographics, consider the following options:
- Benefits fair
- One-on-one meetings
- Internal email blasts
- All-hands meetings
- Employee portals
Tracking usage and evaluating the package’s success
After your benefits programs are in place, tracking usage will help you determine their success and make improvements for future iterations. Some metrics used to measure the success of your benefits package include:
- Utilization rates
- Employee performance indicators, such as task completion rate or profit per employee
- Staff turnover rates
- Employee satisfaction survey
Providing competitive employee benefits for your employees that help you achieve your strategic business goals doesn’t have to be overwhelming. Consider what you want to accomplish with your benefits program and evaluate your employees’ needs to determine what you should offer.
Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.
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