As a growing business, you may be wondering which employee benefits to offer — and when.
If you’re struggling to retain the best workers and attract new talent, it’s time to start thinking about competitive employee benefits. But this task requires a delicate balancing act of managing costs, complying with regulations, and satisfying employee needs.
It’s important to be strategic about which benefits to offer your employees and when, regardless of your company size or budget. While larger organizations may have access to more extensive and expensive benefits, small and midsize business owners shouldn’t assume that quality benefits are out of reach.
Advantages of Offering Employee Benefits
Because employers can access benefits unavailable (or extremely costly) to employees individually, a benefits program is a great way to add value for relatively low cost.
Employee benefits aid in employee recruitment and retention, and are important for creating satisfied, healthy, and engaged employees. Certain benefits may also be tax deductible.
According to the Society for Human Resource Management (SHRM), “organizations that use benefits as a strategic tool for recruiting and retaining talent reported better overall company performance and above-average effectiveness in recruitment and retention compared with organizations that did not.”
- Company performance: 58% vs. 34%
- Effectiveness in recruitment: 19% vs. 8%
- Effectiveness in retention: 28% vs. 11%
Perks vs. Benefits
Benefits refer to “non-wage compensation provided to employees” (Bureau of Labor Statistics). If the employer doesn’t provide these employee benefits, employees would probably have to fund them on their own.
Perks are also a form of non-wage compensation, but they’re more about the company’s culture and values — things like free food, merchandise discounts, and fitness centers.
While perks are different from benefits, the line can blur. Because they are both forms of non-cash compensation, we are including perks and benefits under one umbrella.
Which Employee Benefits Should I Offer?
What benefits do your employees want the most? Developing a strategic benefits package for your employees will depend on factors such as size, budget, worker demographics, culture, and more.
Before we go over different types of benefits and when you should start offering them, let’s review the required benefits first:
- Social Security – provides retirement income to employees
- Workers’ Compensation – compensates employees injured on the job
- Unemployment Insurance – protects employees’ wages from job loss
- Family Medical Leave Act (FMLA)– provides unpaid leave for medical needs (to employees in companies with more than 50 employees and who have worked 1,250 hours in the 12 months prior to the leave)
- Disability Insurance – required in California, Hawaii, New Jersey, New York, Puerto Rico, and Rhode Island
- Health Insurance – only for companies with 50 or more full-time employees
When it comes to voluntary benefits, such as retirement plans and tuition reimbursement, it’s important to select the benefits that are most important to your employees. Because every organization is different, perhaps the best way to know which benefits to offer is to survey your employees.
However, most people are looking for health insurance, dental/vision insurance, a retirement plan such as a 401(k), and paid time off.
When Should I Offer Employee Benefits?
1. You struggle to hire or retain talent.
One sign that it may be time to expand your benefits offerings is if you are having a hard time hiring or retaining talent. Remember, the cost of replacing an employee ranges from about one-fifth to more than one-and-a-half times the employee’s salary.
You should never struggle to find and keep good workers. Look at similar companies in your industry and see what they are offering to get a good gauge of what your employees want.
2. It’s financially viable.
Failing to provide employee benefits may boost the bottom line in the short term, but it can hinder long-term growth and success. As soon as it becomes financially practical, start considering employee benefits.
As soon as you have the ability to offer benefits to your employees, you should start investigating your options. Partner with a PEO like Resourcing Edge to gain access to big-business benefits at a price you can afford.
3. You have 50 or more full-time employees.
At a certain point, your business may be required to offer health insurance benefits. The Affordable Care Act (ACA) requires applicable large employers (ALE) with 50 or more full-time employees to offer access to health insurance. While the law requires you to offer access through your business, it does not mandate that you bear the entire cost of this benefit.
There is a penalty of $2,000 per year for every employee that is not offered “affordable” coverage that meets the minimum value and affordability standards.
Additionally, employers with 50 or more employees within 75 miles are required to grant up to 12 weeks of FMLA, job-protected leave to employees who have worked 1,250 hours during the 12 months prior to the start of the leave (Department of Labor).
Which benefits you should offer and when depends on your business. But to keep it simple, you want to offer as many benefits as you can, as soon as you can.
Common Employee Benefits and When to Offer Them
Health insurance is consistently the most desired benefit, and it comes as no surprise that it’s the most expensive as well.
The high price of benefits, especially medical insurance, can intimidate cost-conscious business owners. Fortunately, through a PEO partnership, insurance plans and prices that are normally only available to large corporations can be made available to you as well.
If most of your workforce is under 26, however, health insurance may not be the best benefit to offer. You may want to consider other benefits and perks, such as subsidized training, help with student loans, flexible work arrangements, and more vacation days.
While offering health insurance can be a challenge, high-quality national dental, vision, disability, and life insurance plans are more attainable than you think.
Even if you aren’t required to offer health insurance through your business, it may be a good idea anyway. You may be available to a tax credit for contributing at least 50% of health insurance premiums.
Resourcing Edge is one of a select few PEOs to offer a wide assortment of national medical, dental, vision, disability, and life insurance plans from the nation’s best carriers, including UnitedHealthcare, MetLife, Assurity Life Insurance Company, and MassMutual.
Paid Time Off (PTO)
While there is no federal or state law that requires employers to provide paid or unpaid vacation time to employees, most employers choose to offer some PTO to remain competitive and improve morale. If you do offer PTO, however, it must comply with state law. By partnering with a PEO like Resourcing Edge, HR professionals will work with you to build a fully compliant PTO policy.
With your HR partner, you can determine how much leave your employees are eligible for and how they can request PTO. While there are different ways to set up PTO plans, including unlimited PTO, typically employees are given a certain amount of PTO days or hours that they can use for any purpose.
When retirement benefit plans are mentioned, most people think of a 401(k). Traditional 401(k) plans allow employees to make pretax contributions, while Roth 401(k) plans allow employees to contribute after-tax dollars.
Offering a matching contribution for retirement plans is very attractive in the eyes of employees. Matching contributions often provide the incentive employees need to start saving for retirement.
Resourcing Edge also offers PEO clients an affordable retirement plan with flexible plan features, including safe harbor and profit sharing and customizable 401(k) plan design options, involving eligibility options, company match, vesting schedules, and more.
Other Benefits and Perks to Consider
While health care and retirement benefits are the most sought after, there are plenty of other high-value perks to consider, such as flexible work arrangements, wellness programs, equity help, and educational opportunities.
Percentage of employees who said the following perks would be taken into consideration when choosing a job:
- Flexible hours: 88%
- More vacation time: 80%
- Work-from-home option: 80%
- Student loan assistance: 48%
- Paid maternity/paternity leave: 42%
- Free gym membership: 39%
- Free snacks: 32%
- Weekly free outings: 24%
The trick is to find the benefits that are most meaningful to your employees and then work with an employee benefits specialist to strike the right balance.
Offering and managing competitive benefits is a big struggle for some companies but it’s absolutely necessary for long-term success. A PEO like Resourcing Edge can help design a strategic and competitive benefits plan for your business while saving you money on health insurance, retirement, and other benefits.
With our web-based HR management software, employees can enroll online where they can see all the benefits available to them, showing how much the company is truly invested in them. All of your high-quality benefits are managed online through our HR system.
Contact Resourcing Edge to discuss the competitive packages available to your business.