Business growth comes with many exciting challenges. One of the most important — and often the most mysterious — is the human resources (HR) benefits package.
Competitive employee benefits help organizations to attract top talent and retain their best workers. To develop an HR benefits package that will achieve those goals, business owners need to consider three things:
- What do employees and candidates want and need?
- What can the business afford to offer?
- What are the business’s regulatory and legal responsibilities?
Smaller businesses can’t afford to assume that attractive benefits are only available to larger companies. Although big corporations may have access to a broader set of options, even the smallest businesses can offer cutting-edge HR benefits.
A Professional Employer Organization (PEO) such as Resourcing Edge can help business owners understand their goals and what’s available. The result is an affordable and competitive HR benefits package.
Advantages of Offering HR Benefits
Employee benefits are opportunities for employers to add value to a position at a comparatively low cost. Many HR benefits are unavailable to private individuals, and those available are expensive.
For example, according to research from the Kaiser Family Foundation, the average premium for privately purchased health insurance is $456. [1] That includes all levels of coverage in the national Marketplace. Individuals with employer coverage pay less than a quarter of that amount — just $111 per year. [2]
Medical and other benefits help employers recruit and keep talented employees. Here’s how.
More Qualified Applicants
According to a 2022 Appcast report, job ads with at least one benefit have a 22% higher application rate. Ads mentioning three specific benefits have the highest application rates. [3]
Additional research identified an attractive compensation package as the top reason candidates choose an employer. Sixty-three percent of North American candidates named salary and benefits as their priority in job hunting, followed closely by work-life balance. [4]
Better Retention
Benefits also boost job satisfaction and engagement, both of which increase retention. In a recent survey, 63% of workers said their benefits package makes them more likely to stay. That percentage increases for employees who are satisfied with their benefits. [5]
Higher Engagement and Productivity
Finally, an attractive benefits package can improve employees’ well-being and engagement. Research has repeatedly linked higher engagement levels to more substantial earnings and faster recovery from difficult economic climates. [6]
Perks vs. Benefits
The literature on workplace compensation refers to “benefits” and “perks.”
According to the Bureau of Labor Statistics (BLS), a benefit is “non-wage compensation provided to employees.” [7] The BLS identified five types of benefits:
- Paid leave
- Premium pay, such as benefits and overtime
- Retirement plans
- Insurance
- Legally mandated benefits, including workers’ compensation
Perks are non-monetary “extras,” such as on-site fitness centers, paid training, and a hybrid work schedule. Although perks work differently than benefits, the distinction isn’t always straightforward. So, for simplicity, we’ll discuss them all as “benefits.”
When Should You Offer HR Benefits?
For many small businesses, the question of “Should I offer benefits?” comes before “Which benefits are best?” Yes, benefits cost money, but here’s when they’re worth the expense:
1. You struggle to recruit or retain talent.
It might be time to upgrade your benefits if you’re having trouble finding the right people for the job — or struggling to keep the ones you have. It will mean a higher investment short term, but you’ll save money in the long run by hiring the right people and helping them stay.
According to the Society for Human Resource Management (SHRM), the typical hiring cost can be three to four times a position’s salary. [8]
2. You have the resources.
It’s wise to offer HR benefits as soon as your budget can sustain them — which may be sooner than you think. As a PEO, Resourcing Edge develops customized solutions for businesses of all sizes.
Resourcing Edge can help you access big-company benefits at a price your budget can handle.
3. You have 50 or more employees
Businesses with 50 or more full-time or full-time equivalent (FTE) employees must offer their employees affordable health plans that meet the minimum value standard or face a penalty. [9]
Which Employee Benefits Should You Offer?
Required Benefits
Some benefits are legally required for all employees. Required benefits include:
- Social Security: Funds retirement income for individuals
- Workers’ compensation: Compensates employees for workplace injuries
- Unemployment insurance: Provides cash assistance to workers who have lost their jobs
- Disability insurance: Required in California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico to protect the wages of workers who become disabled [10]
- Health insurance: Only required for businesses with 50 or more full-time or FTE employees [11]
- Family Medical Leave Act: Also required for businesses with 50 or more full-time employees, allowing up to 12 work weeks of unpaid leave per year for medical reasons [12]
Even if the law doesn’t require you to offer certain benefits, including them in your benefits package can help you attract top talent.
Voluntary Perks
According to research by CEO Monthly, the most attractive perks for employees in 2023 include:
- Financial education and support, including access to discounts
- Physical and mental wellness resources
- Childcare facilities and support
- Flexibility for elder caregivers
- Sustainability perks, including cycling-to-work or work-from-home subsidies [13]
These preferences are common overall, but each workplace is different. Start designing your HR benefits package by learning which benefits your employees want the most. Employee surveys are great places to start.
Hybrid and Remote Work Perks
It’s increasingly clear that hybrid and remote work options have become part of the “new normal.” In January 2022, 77% of workers with remote-capable jobs were working from home at least some of the time, according to Pew Research. [14] Before the pandemic, that number was just 23%.
Of those working from home, more than three-quarters cite personal preference as their primary reason. Many say remote work makes it easier to get their job done without distractions.
Remote work is so popular, people now prioritize this perk in their job searches. In a survey by the Society for Human Resource Management (SHRM), 48% of workers said they would “definitely” look for a remote position for their next job. [15]
Offering a remote perk can help you land top-notch candidates — and may even make the employee search process more manageable. In the Appcast study also discussed earlier, mentioning “remote work” or “work from home” in job ads caused the per-applicant cost to drop by 13% and application rates to increase by 12%.
Not able to offer fully remote work? Hybrid work — partially remote, partially in-office — might be even more popular. A Gallup poll showed that 59% of workers prefer a hybrid option, while 32% prefer a remote option. Only 9% want to be entirely on-site. [16]
According to Gallup, leaders and managers tend to prefer hybrid work to fully remote. Pew Research respondents agreed that being in the office part-time allows for stronger connections with co-workers, while remote work options help with work-life balance.
If your industry allows remote work, talk to your team and figure out what kind of remote work arrangement might make sense.
How to Offer Popular Benefits
According to Glassdoor’s 2023 Hiring Workplace Trends Report, employees consider the most essential HR benefits to be health insurance, paid time off, and retirement plans. [17] Here’s how you can make those work for you and your employees.
Health Insurance
You don’t have to offer health insurance if you have fewer than 50 employees, but it’s a smart idea. Healthcare is consistently the most desired employee benefit, and there are tax advantages for smaller employers.
If you have fewer than 25 FTE employees and meet all other IRS requirements, you can apply for a credit worth 50% of the premiums you pay. [18]
Don’t qualify? A PEO such as Resourcing Edge can help you find plans you can afford. Resourcing Edge is one of the few PEOs to offer a broad range of medical, dental, vision, life, and disability insurance from leading carriers such as MetLife and UnitedHealthcare.
Paid Time Off
Paid time off (PTO) is precisely what it sounds like — compensated time an employee can take away from work. It’s different from vacation or sick time because employees may use it for any purpose. There are three basic types of PTO:
- Discretionary: Employees choose when they take time off, but the employer may set a limit on absences
- Interval: A maximum number of days off that resets after specific periods, such as monthly or quarterly
- Unlimited: Employees may request as many days off as they want
Some employers worry about offering unlimited PTO, but nearly three in four employees feel good about it. [19] Those with unlimited PTO are also more likely to report a healthy work-life balance.
Your HR partner can help you determine a PTO policy that works for you and your team.
Retirement
Retirement benefit plans help employees save for the future, often faster than they could save on their own. One of the most attractive features of a retirement benefit plan is employer matching, in which the business pays into the account at an amount equal to the employee’s contribution.
The best-known employer-sponsored retirement plan is the 401(k), available in two formats. A traditional 401(k) allows employees to make contributions before taxes. As a result, employees only pay taxes when they withdraw. A Roth 401(k) requires account holders to contribute after taxes, but withdrawals are tax-free.
Resourcing Edge offers PEO clients affordable and flexible 401(k) plans with customizable design options. In addition, employers can choose from various eligibility options, company match plans, and more.
Working with Resourcing Edge
Designing and managing a competitive benefits package is a big job, but it’s essential for long-term success. Resourcing Edge can help you create a strategic plan for your business while helping you save money.
Once you’ve created your benefits package, our web-based HR management software makes administration easy for you and your employees. Contact Resourcing Edge to discuss competitive packages today.
SOURCE:
- Kaiser Family Foundation: “Average Marketplace Premiums by Metal Tier, 2018-2023.”
- Kaiser Family Foundation: “2022 Employer Health Benefits Survey.”
- Appcast: “2022 Recruitment Marketing Benchmark Report.”
- Randstad: “Employer Brand Research 2021 Global Report.”
- LIMRA: “Employee Benefits Influence Worker Satisfaction But Lack of Awareness Could Undermine Their Impact.”
- Gallup: “The Benefits of Employee Engagement.”
- U.S. Bureau of Labor Statistics: “Glossary.”
- Society for Human Resource Management: “The Real Costs of Recruitment.”
- Internal Revenue Service: “Affordable Care Act Tax Provisions for Large Employers.”
- Society for Human Resources Management: “Which states require employers to have a short-term disability plan?“
- HealthCare.gov: “How the Affordable Care Act Affects Small Businesses.”
- U.S. Department of Labor: “FMLA Frequently Asked Questions.”
- CEO Monthly: “The 5 Biggest Employee Perks for 2023 After Demand Reaches All-Time High.”
- Pew Research Center: “COVID-19 Pandemic Continues To Reshape Work in America.”
- Society for Human Resource Management: “Nearly Half of Workers Are ‘Definitely Looking’ to Work Remotely.”
- Gallup: “The Future of Hybrid Work: 5 Key Questions Answered With Data.”
- Glassdoor: “Indeed & Glassdoor’s Hiring and Workplace Trends Report 2023.”
- HealthCare.gov: “The Small Business Health Care Tax Credit.”
- Joblist: “How Do Unlimited Vacation Policies Affect Employees? Over 1,000 Employees Weigh In.“
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