You have a small growing business and want to provide employee benefits, but between the administrative undertaking and the cost, it’s an intimidating idea. So where do you start? How do you keep it manageable and affordable while doing your best for your team?
The Bureau of Labor Statistics reports that the average cost of benefits per employee in private companies is $12.19 per hour—nearly 30% of the cost of an employee. This adds up quickly, especially for small business owners for whom every dollar counts!
Taking on these expenses can be daunting, but consider the bigger picture: Offering a solid benefits package can strengthen your business and save money in the long run, thanks to increased loyalty, higher productivity, and reduced turnover. And you can always build on them as your business grows and you can afford to offer more.
Read on for tips on implementing employee benefits on a budget and which benefits and perks to focus on first.
Tips for Implementing Employee Benefits on a Budget
Before you decide exactly what employee benefits you can and should offer, do some research and planning both among your team and the competition. Having an understanding of what others in your industry are offering, the cost of specific benefits, and what your employees want will help you set up an efficient benefits package.
Follow these tips to get started:
- Know what employee benefits are required. These depend on federal, state, and local laws. Required benefits might include unemployment insurance, workers’ compensation, and disability insurance.
- Start by offering the basics. If you’re creating a benefits package for the first time, start with those that most employees are looking for: health insurance, retirement plan, and paid time off (PTO).
- Offer what you can afford. Don’t try to implement too much at once—set goals and a budget, then stick to them. Remember, you can always expand your benefits down the road.
- Give employees a timeline. If you currently offer no or limited benefits, create a plan so you can tell your team when new benefits will be available. This gives them an idea of what they can look forward to instead of leaving them wondering.
- Look for affordable benefits and perks. In other words, start with those that have the least impact on your bottom line, such as PTO and flexible schedules (more on these below).
- Survey employees to find out what benefits they would value most. Yep, ask them what they want—it’s as simple as that! This shows you care about their overall well-being and ensures you don’t waste money on benefits that won’t be used.
Staying transparent with your team and true to your budget will give you a solid foundation for your employee benefits.
6 Employee Benefits & Perks to Prioritize
So, what employee benefits should you offer first? Consider the essentials every employee wants, those that don’t cost more, and low-cost perks that will make a meaningful difference for your team members.
1. Health Insurance
On average, businesses spend $3.04 per hour per employee on insurance. You are not required to provide health insurance until you have 50 or more full-time employees (or full-time equivalents) under the Affordable Care Act. However, it’s what most people look for first—they at least want to ensure they have this essential need covered. After all, healthcare costs are rising, making insurance a main concern.
Keep things more affordable for your company by opting for a high-deductible health plan (HDHP)—employees will have to pay more in premiums, but you can offset this by providing a health spending account (HSA) option and making a contribution that fits your business’s budget.
Another option is joining a professional employer organization (PEO), which provides your employees with health insurance under a PEO-sponsored health plan and saves you the administrative costs of offering your own.
Or if you’re simply not in a position to provide insurance yet, consider giving employees a reimbursement to subsidize their marketplace plans. This allows you to budget an amount you can afford while still offering a benefit to your team.
2. Retirement Plan
Next on many employees’ lists? Cost-effective retirement planning. Give employees the option to save toward their retirement by making contributions with every paycheck with a 401(k) (or 403(b) if you’re a nonprofit).
You can make an employer match, in which you match up to a certain percentage of the employee’s contribution. If a match is not in your current budget, you can always start by offering the 401(k) without a match and opt to add one later.
Not to mention, adding employee benefits like a 401(k) offers tax benefits for your business. Ask your tax accountant what type of retirement account is the best fit for your business and employees.
3. Paid Leave & Flexible Schedules
Speaking of those benefits that don’t hit your bottom line, offering paid leave and flexible schedules is a cost-effective and competitive benefit since another priority for today’s talent is flexibility.
Employees now expect more than the minimal time off for national holidays, sick leave, and bereavement. They want an employer that respects their work-life balance, allowing them to care for their families, tend to other responsibilities, enjoy their favorite activities, and simply unplug when they need to. Many employers are staying ahead of the curve with unlimited PTO or a generous policy with a rollover option.
On top of paid leave, consider ways you can make your team members’ lives easier with flexible schedules. From letting employees set their own hours to the up-and-coming four-day workweek, there are plenty of ways to get creative and provide employees with the other most valuable commodity: time!
4. Remote Work
On that note, why not consider giving employees the option to work remotely? The last few years have changed the working landscape, proving that telecommuting is not just possible but comes with many benefits. And because of that, a growing portion of the workforce prefers to work from home.
In fact, 65% of workers want to work remotely all the time, while 32% would like a hybrid schedule. Plus, 71% note that working from home provides work-life balance. It’s becoming a non-negotiable employee benefit—and employers who haven’t embraced it yet could fall behind.
Of course, implementing remote or hybrid work depends on your business, and it may be more conducive for some roles than others. Remote work also comes with its own challenges, so it’s essential to create a policy and think outside the box regarding employee productivity and connection.
Overall, however, virtual work shows that you trust your team and gives them even more flexibility. And in the case of a company that goes fully remote, it can significantly reduce overhead!
5. Home Office Stipend
If you do have a virtual team, you can also provide a home office stipend. Your business will probably equip employees with equipment like computers, software, and phones (if applicable), directly. But what else could they use to be more productive and comfortable while working from home?
Perhaps workers could use office furniture that promotes their health, like an ergonomic chair or standing desk. Whatever their preferences, you can give them a home office stipend to support their wellness while allowing them to get what they want and need.
If you’re a small business on a budget, you can set the same amount for each employee. Be sure to clearly communicate this to new hires and in your benefits paperwork.
Impactful Fringe Benefits
Finally, when you’re looking for ways to help employees in a way that will support both their finances and overall well-being, fringe benefits can be affordable yet impactful. You can determine what perks your team members would most appreciate and how much you can afford to budget. Plus, there are many unique benefits you can offer!
Fringe benefits can include various wellness, financial, family, and everyday needs, such as:
- Gym memberships
- Daycare
- Healthy lunches
- Pet insurance (many health insurance providers now offer this)
- Employee Assistance Program (EAP)
- On-site classes (e.g., cooking, health/nutrition, fitness, creative classes, etc.)
Even if your business is not ready to cover these costs 100%, you can provide stipends or partial subsidies for these needs. Or, partner with local businesses to pass on discounts and deals to your employees.
You could also consider implementing lifestyle spending accounts, which cover many of the above expenses not typically covered by healthcare. LSAs provide significant flexibility for both employers and employees, allowing you to contribute what you can afford to each employee’s account and employees to choose how they spend those funds. Learn more about LSAs and how to set them up.
Implement a Cost-effective & Competitive Benefits Package
Creating a standout benefits package on a budget can be challenging—and no, you may not be able to compete with big companies. However, you can stand out by offering the flexibility and element of personal care that many large corporations can’t.
Your employees are your most valuable asset, which means they’re your most important investment! Investing in essential benefits is no longer an option for employers who want to stand out and acquire the market’s top talent. More than 50% would leave their current jobs for new opportunities with better benefits.
But keep in mind you can implement employee benefits one at a time. Get a clear view of your budget, what options are available to you, and the costs. Then, come up with a plan for when and how you’ll build your benefits package.
Do you need guidance launching new employee benefits and perks? Our HR consultants will be happy to help you help your humans! Contact us today at 603-818-4131 or info@bluelionllc.com to learn more.
The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.
