When we begin working with our small and medium-sized business clients, we take the time to understand how they compensate their employees. Business owners provide us with their employee census, which outlines the employees’ base salaries. But, a company’s overall compensation package – or total rewards offering – also includes the employee benefits package. Competitive salaries and a comprehensive benefits package, both traditional and unique, are key parts of your employee attraction and retention strategy.
What Are Employee Benefits?
Simply put, employee benefits or additional perks or advantages companies provide – and generally, pay for – to their employees in addition to their standard base pay. Often meant to enhance the employee experience, employee benefits are additional methods by which a company can attract, engage and motivate its employees. What employers choose to provide is influenced by a number of factors, including company size, industry, location and local, state, and federal guidelines.
What Are Some Common Employee Benefits?
Although employee benefits aren’t a “one size fits all” approach, there are some benefits offerings employees come to expect when seeking employment. Different benefits offerings influence someone’s decision to work for or remain at an employer. Job seekers consider base salary, but also evaluate the employee benefits packages as another piece of the overall compensation puzzle. Below are some benefits employers should consider offering as they establish their employer brand in a complex job market, where employee acquisition and retention is proving to be a challenge.
Health Insurance
Offer health insurance coverage to employees and their dependents, helping to cover the cost of insurance premiums. Health insurance also includes dental and vision insurance. As the employer, you decide how generous you want to be in what percentage of the premiums you will cover.
Paid Time Off (PTO)
Paid Time Off is the time you provide employees to disconnect from work. Generally, PTO is broken into three buckets – vacation time, sick time, and paid company holidays. Mandatory paid sick leave laws are growing in popularity, so employers are required to provide paid sick time. Employers typically use federal holidays as a guideline for paid company holidays, but you can enhance your paid holidays schedule to provide greater opportunities for your employees to log off. Standard vacation allotments vary from company to company. Ultimately, you decide your vacation offering based on how you want to support employee wellness while not interfering with business continuity. Standard vacation packages start at three weeks, with employers increasing vacation time allotments based on tenure.
Retirement
Employers often provide retirement savings plans. As with all benefits packages, the employer can dictate their level of involvement with the plan. Some companies solely offer the mechanism by which employees can contribute to a 401K or similar plan, while others will offer some type of employer-contributed match. Helping employees save for their future demonstrates your company’s investment in an employee’s long-term growth. Companies further along in their growth can also consider long-term incentive plans and deferred profit-sharing opportunities, with those funds being deposited into the employee’s retirement fund.
Flexible Working Hours
As companies are poised to make a decision on in-office, hybrid or fully remote work, flexible working hours are another benefit making its way into total rewards packages. You allow your employees to have greater freedom over their work schedules. In order to successfully implement flexible work arrangements, businesses need to commit to creating a company where success is based on deliverables, not on presence. Flexible work has a direct impact on your employees’ lives, in that they are saving money on commuting costs.
Other Benefits
Depending on your company’s maturity, financial status, and desire to be progressive, you can offer additional, creative employee benefits outside of what people have come to expect from their employer. Some companies are standing out in the job market by offering child care assistance, tuition reimbursement programs and/or wellness benefits, like gym memberships or reimbursement for fitness activities. When implementing innovative employee benefits programs, work with an experienced benefits consulting firm and a skilled HR consulting firm, like Red Clover, in ensuring these programs are aligned with best practices and all applicable benefits and employment laws.
How to Determine What Benefits to Offer Your Employees
Determining the best benefits for your organization in a small business requires understanding your workforce and their unique needs and how you want to position yourself as an employer of choice on the job market. Although job seekers put a significant emphasis on base salary, they also consider employer-provided benefits when deciding to accept a job. There are a number of things for an employer to consider when deciding on employee benefits programs you think will enhance your employee experience.
Evaluate Budget
Implementing benefits costs money. And they are the employee perk that once you provide them, it’s nearly impossible to take them back. When evaluating your potential benefit offerings, evaluate their costs and if the business can sustain those costs in the immediate term and in the future. Additionally, if you plan on passing on the majority of the costs onto your employees, consider that impact on them. If taking advantage of company benefits has a large impact on employees’ take home pay, they may not take advantage of the programs, and you’re left asking why did you even bother offering them in the first place?
Assess Your Employee Census
By having a comprehensive employee census, you understand the demographic make up of your workforce. Different people in different stages of their careers may have a greater need for one benefit over another. You can’t necessarily please everyone, and you don’t want to develop a benefits plan that disproportionately benefits a specific population, but understanding who makes up your workforce provides greater insight into what benefits may provide greater value.
Seek Insight From Your Employees
To better understand what your employees want in a benefits program, ask them. Hold focus groups to understand what benefits would enhance their experience. A word of caution, though. We always advise our clients – “Don’t ask the question if you aren’t ready to hear the answer?” Be ready to explain to employees why you made the benefits decisions you did, especially if they are in direct conflict with what was proposed when you requested input. Treat information gathering sessions like these as just that, and never make guarantees you will be able to implement everything that’s discussed during these meetings.
Consider Industry Standards
If the goal of providing progressive employee benefits is to remain competitive with other employers in your industry, benchmark against them to see how you measure up with your benefit offerings. You may not be able to offer the same benefits as larger competitors, but understanding what they offer provides a baseline by which you can compare and potentially set aspirational goals. You may not be able to offer the same as your competitors now, but you may be able to do it later as your company grows.
How Small Businesses Can Manage Their Employee Benefits
If you’ve never provided employee benefits before, the path to managing them is pretty straightforward. First, determine the benefit needs of your organization and develop a benefits plan that will meet those needs. Work with brokers to vet a number of providers to make the best decision for your business. They will also provide guidance on remaining compliant in your benefits offerings. Communicate with your employees and walk them through the open enrollment process. Once you’ve completed that process, ensure proper integration into your payroll and HRIS systems. Employers should continuously stay up to date with changes in employment law and the benefits landscape to review and revise their employee benefits programs. Evaluate your program’s effectiveness by surveying employees each year and make adjustments and improvements as needed – and if your company can afford it.
How an HR Consultant Can Help Manage Your Employee Benefits
Not only do HR consultants have unique insight into how employee benefits impact your employee brand, but they also have developed relationships with benefits brokers to define and implement effective and unique benefits programs for your business. Although at Red Clover, we focus on transformational change and support of your HR function, we also have direct, practical experience in the tactical side of things; including benefits vetting, administration, and management. Connect with us to get the discussion started.
Photo Credit – Photo by Priscilla Du Preez on Unsplash
