If you're struggling to attract and retain talented employees, your benefits might need some work. Having a standout employee benefits package is essential for any business looking to thrive, but is particularly important for small organizations that can experience higher employee turnover. As of July 2024, the U.S. Bureau of Labor Statistics1 reports that small employers with 10 to 49 employees have a turnover rate of 4.4%, while larger employers with 50 to 249 employees have a turnover rate of 3.7%.
While you may think that only large corporations can afford lavish perks, some top employee benefits can work for a small workforce and budget. However, many small business owners overlook the importance of a well-rounded benefits package. Therefore, they miss out on the chance to create a more engaged and loyal workforce.
In this article, we’ll explore several examples of common employee benefits that can enhance employee satisfaction, entice job seekers, and help your company flourish.
In this blog post, you'll learn the following:
- What types of employee benefits are most appealing to modern employees.
- The two ways you can structure your employee benefits.
- How you can afford to offer healthcare coverage to your employees as a small employer.
If it's your first time offering employee benefits, offering the perks your current and potential employees want is vital. While ping pong tables and bean bag chairs are fun, they may not be the kind of things your employees care about most.
According to our 2024 Employee Benefits Survey, the most popular employee benefits are:
Some other types of benefits you can offer your employees include pet insurance, financial literacy programs, employee discounts, and employee stock options.
Once you choose the types of employee benefits you want to offer, you're ready to decide how you want to structure them.
In general, employers have two different ways to structure, contribute, and offer benefits to employees:
Depending on the type of benefits you're hoping to offer, you can offer all organizational-oriented benefits, all consumer-oriented, or a mix of both. Let's go over each in more detail.
Organizational-oriented benefits are the kind of benefits that are employer-owned and employer-selected. You offer your employees a specific or defined benefit of your choosing, and employees simply choose whether they want to opt in or out. Employees don't get any choice in the type of plan or benefit.
Common examples of organizational-oriented benefits include:
Consumer-oriented benefits are the kind of benefits that are employer-funded but employee-selected. Here, you'll offer employees a set dollar amount to spend on their own (also known as an employer contribution). This allows them to customize their benefits to what they want and need. This empowers employees to make their own medical care decisions that make sense for them and their families.
Popular types of consumer-oriented benefits include:
In recent years, personalized benefits have become popular options for offering employees a wide array of perks. Every worker is different and has unique wants and needs. Instead of offering traditional one-size-fits-all benefits, you offer your employees a monthly allowance and empower them to use it on the things that matter most to them. This makes them highly attractive benefits to both job applicants and current employees.
While employers traditionally offer medical insurance as an organizational-oriented benefit, more employers are putting healthcare decisions back into the hands of their employees. They can accomplish this by offering HRAs to cover their medical expenses.
An HRA is a formal, IRS-approved health benefit that offers more flexibility for employees and more budget control for employers.
Through an HRA, you can reimburse your employees for their individual health insurance premiums and more than 200 types of qualifying healthcare costs with pre-tax dollars.
Three of the most popular types of HRAs are:
With an HRA, your employees can reduce the financial burden or costly medical bills and keep themselves and their families healthy and happy.
If you want to create attractive benefits packages that appeal to highly skilled workers and retain current employees, you need to offer a wide range of benefit offerings. A comprehensive benefits package full of traditional perks and wellness benefits can be costly. Thankfully, there's an easier way to provide different kinds of common employee benefit offerings.
With employee stipends, you can give your workers a monthly allowance to cover expenses. This can be for things such as remote work, gym memberships, tuition, and other perks.
For example, let's say you decide to offer eligible employees a $400 monthly allowance for health and wellness expenses. Your employees can decide how they want to split their allowance. They could use the money on gym memberships, therapy, a spa day, or any other expenses. A stipend can improve their work-life balance and well-being.
This empowers your employees to use their monthly allowance on what matters most to them while you retain complete cost control.
While most stipends count as taxable income. But some fringe benefits, such as tuition reimbursement and mileage reimbursement, are tax-free. You'll want to consult with a tax professional to determine your tax liability based on the benefits you choose to offer.
When it comes to attracting and retaining talent, small businesses often need to offer more than just competitive salaries. Employee benefits play a crucial role in enhancing job satisfaction and fostering loyalty among staff. By building out your employee benefits package with the popular benefits listed in this article, you'll be well on your way to improving employee retention and recruitment at your organization.
If you're ready to offer personalized mandatory and voluntary benefits to your staff, PeopleKeep can help. Our HRA administration software makes it easy to set up and manage your health benefit in just minutes each month.
This post was originally published on November 8, 2018. It was last updated on September 5, 2024.