What are employee benefits, and how can you leverage them to entice job seekers, motivate employees and retain top talent?
In terms of human resource management, employee benefits are compensation provided in addition to base pay or wages. They’re considered part of the employer’s total compensation costs. Types of employee benefits range, from health insurance and leave to those that promote overall job satisfaction and work-life balance. Some benefits are optional; others are mandatory. What are employee benefits that you can offer to motivate employees and entice job seekers? Let’s explore the territory.
Why are employee benefits important?
A competitive compensation package with an attractive employee benefits package can be crucial to strategic business development. Business owners leverage benefits to put forward an attractive job offer, retain employees and grow their businesses. So offering benefits can help you attract and keep the best talent on your team — your most valuable asset.
What types of employee benefits do small businesses offer?
More common offerings include health benefits, paid time off, and a retirement plan or pension plan for eligible employees. Some companies offer profit sharing and stock options. Other benefits packages might include child care, college debt relief, legal insurance, pet insurance, or wellness programs for employees and family members.
Some are legally required benefits, while others are voluntary benefits that simply further employee satisfaction. Even though certain benefits are voluntary, they’re worth considering as they can help you avoid indirect costs associated with losing good employees. Here are some employee benefits examples:
Legally required benefits that all employers must provide
- Time off for jury duty, voting, and doing military service.
- Compliance with workers compensation regulations.
- Paying federal and state taxes for unemployment insurance.
- Payments toward state short-term disability insurance.
- Compliance with the Family and Medical Leave Act (FMLA).
Health insurance benefits
These are among the most common employee benefit coverage types. They go a long way to ensuring employees and their families get important healthcare services for a more manageable cost. That can help them rest easy about their financial security. Health insurance benefits can cover the following:
- Wellness programs.
- Employee assistance program (mental health counseling).
While not all small business employers are required to provide these programs, it makes good business sense to do so if possible. Also important to note is that the Affordable Care Act requires companies with 50 or more full-time employees to offer medical insurance.
Paid time off (PTO)
Paid time off includes things like providing a certain number of days each year for sick leave, paid vacation leave, paid parental leave, bereavement time, etc. This helps promote employees’ work-life balance between time on the job and their personal lives, which can actually boost productivity. Paid leave is an important benefit according to labor statistics. The Harvard Business Review reports that rested, vacationed employees are more productive than stressed ones.¹
Continuing education benefits
Among the best employee benefits that also provide fringe benefits for your small business is continuing education. Consider paying for extra training and course credits for employees who want to further their skill sets. Or offer planning services that help employees map out educational paths for career development. This can boost your employees’ productivity in the near term. It can also result in a higher level of employee engagement and long-term loyalty because you are investing in them and their future.
Creating a college debt relief program can also fit into this category. It’s another way to show appreciation for your employees, and you can customize it strategically.
Flexible hours and on-the-job benefits
Many employees truly appreciate benefit plans that include flexible hours and the option to work remote when necessary. Again this creates a healthier work-life balance, as neither their work nor personal lives need suffer when complications arise.
Retirement plans are another great example of an employee benefit that even younger employees find attractive. And they can set you apart from your competition in the hiring process. Consider a 401(k) or even a Roth 401(k), a sort of hybrid Roth IRA and 401(k). For small businesses, a Simplified Employee Pension plan, or SEP, is also an option.
What are employee benefits that your small business can offer?
Most benefits you offer need not be covered by you in full. Even partial allowances and contributions on your part add value. Think about attracting and retaining employees you value and what you can currently afford to that end. Ultimately the right benefits package should deliver a return on your investment as you develop a strong, happy, healthy workforce.
Whatever employee benefits you offer, include the details in your employee handbook so your employees understand the specifics of policies and enrollment. Clue them in to how to reinvest in themselves with your investment in them. Consider arranging periodic lunch-and-learn sessions featuring outside experts, internal HR pros, and Q&A for that purpose.
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1 Take a Vacation to Boost Your Productivity, Harvard Business Review