Small business leaders face unique challenges around attracting and retaining competitive talent. When larger corporations often seem to have the upper hand in resources, how do you level the playing field? The answer may lie in offering a robust employee benefits package.
Benefits are known to contribute significantly to an organization’s culture as well as employee job satisfaction and retention. Among employers, 40% find that workers leave their job for an organization that offers better employee benefits, according to a Forbes Advisor study.
It can be challenging to determine what kinds of benefits will resonate most with your target workforce. However, with a few considerations, small businesses can tailor a package that meets the needs of the modern worker while aligning with the more limited resources of a smaller organization.
Safeguard employee well-being with comprehensive health insurance
Health insurance is no longer a one-size-fits-all benefit — it’s often a deciding factor for potential employees based on their specific needs and priorities. Providing comprehensive health insurance plans, including medical, dental, and vision coverage, demonstrates that you’re invested in the well-being of your team. It also helps cultivate a work environment where employees feel valued and secure.
In traditional group plans, employers cover a portion of the premiums, and employees are responsible for the remainder. The most common types of traditional group plans are:
- Health maintenance organizations (HMOs) - HMOs are network-based plans that often require members to choose a primary care physician (PCP) and get referrals to see specialists. This model is generally more affordable but often comes with limited choices for healthcare providers.
- Preferred provider organizations (PPOs) - Compared to HMOs, PPOs offer patients more flexibility when choosing healthcare providers, but may come with higher premiums. PPO plans typically don’t require a designated PCP, and patients don’t need a referral to see a specialist.
- Point of Service (POS) plans - These combine elements of both HMO and PPO plans. In a POS plan, patients choose a PCP from a list of participating providers, but they’re also given the flexibility to use out-of-network providers at an additional cost.
- Exclusive provider organizations (EPOs) - A type of managed care health insurance plan, EPOs require policyholders to access all non-emergency medical care from healthcare providers within a specified network. In contrast to other plans, out-of-network care tends not to be covered at all, except in emergency situations.
- High-deductible health plans (HDHPs) - HDHPs offer lower premiums and higher deductibles compared to other plans, and are a viable option for people who don’t require frequent medical services. In 2023, HDHPs have a minimum annual deductible of $1,500 for an individual and $3,000 for a family. They can also be paired with a health savings account (HSA) to cover qualified medical expenses tax-free.
So how do you decide? Start by considering the demographics and needs of your team. For example, younger teams may prefer the low premiums of an HDHP, while a more diverse age group might appreciate the flexibility of a PPO.
Build for the future with retirement savings plans
Offering retirement savings plans like a 401(k) or Simplified Employee Pension (SEP) IRA is about more than helping your employees save for their golden years. It also contributes to your business’s competitive edge. With only 40% of Americans feeling that their retirement savings are on track — according to The Motley Fool — it’s a pressing concern for many employees.
Consider these common retirement savings offerings:
- 401(k) plans - Possibly the most recognized retirement plan, a 401(k) allows employees to contribute a portion of their salaries before taxes. Organizations can enhance this benefit by offering employer contributions or a matching program.
- Simplified Employee Pension (SEP) IRA - Designed for small businesses, SEP IRAs are relatively easy to set up and come with lower operating costs. Employers can contribute up to 25% of an employee’s salary — a generous way to help your team save.
Additional considerations around your retirement savings offerings are:
- Employer contributions - You can choose to make regular contributions (flat rate or salary percentage) to your employees’ accounts regardless of whether they contribute.
- Matching programs - A popular option; you match employee contributions up to a certain percentage. For example, you might offer a 100% match for the first 3% of each employee’s salary that they contribute.
- Investment choices - Providing a range of investment options — including stocks, bonds, and mutual funds — helps make the package even more attractive. It’s common to offer a diversified set of options that can cater to varying risk tolerances.
Foster work-life integration with paid time off (PTO) policies
Cultivating a healthy work-life integration is a delicate dance for organizations these days, especially with hybrid and remote work models often bleeding into personal time. Which is why being able to fully distance oneself from work on occasion is even more critical.
Various research studies indicate that employees who are able to detach from work experience lower levels of stress, increased job satisfaction, and higher levels of well-being. By offering paid time off (PTO), your employees have the opportunity to rest and rejuvenate, so they can return to work with renewed energy and focus.
Here are three common approaches to consider:
- Traditional PTO model - Employers allocate a certain number of days for different types of leave: vacation days, sick days, and personal days. For example, you could offer 10 vacation days, 5 sick days, and 3 personal days per year.
- Flexible PTO policy - A more common approach in recent years, flexible PTO combines all types of leave into a single pool with a total number of maximum PTO days. Employees can use their days as they see fit, regardless of the purpose. This simplifies PTO and gives employees greater control over their time off.
- Unlimited PTO - This is an increasingly popular model, especially in the technology industry. Employees can take off as many days as they need each year, with approval from their supervisor. While this model may not seem feasible for smaller companies, research shows that employees take off about the same amount of time — or less — than those with traditional or flexible PTO models.
When developing your PTO policy, consider factors like accrual rates (how quickly employees earn PTO) and carryover and payout policies (whether unused days can be rolled over to the next year).
Redefine the 9-to-5 with flexible work arrangements
A diverse workforce tends to be attracted to flexible work arrangements, often thriving under these circumstances. Research by Buffer showed that 70% of remote workers are able to do focused work more easily. Flexible work arrangements can also help workers reduce commuting time and expenses, and empower employees with more autonomy over their schedules. Some popular flexible work options include:
- Remote work - Employees can work from a location other than the office, whether it’s at home, a café or coworking space, or even another country.
- Flexible hours - Employees have the freedom to start and end their workday at varying times, as long as they complete their required hours.
- Hybrid work - Employees spend some time working from a centralized office and the rest of their work hours working from a remote location like their house. Organizations often offer hybrid work as a compromise between a fully remote and fully in-office work model.
- Compressed workweek - In this model, employees work the same number of hours but on fewer days. The most common option is four 10-hour days instead of five 8-hour days.
Offering flexible work arrangements helps you invest in your employees' well-being and also fosters a culture of trust and transparency.
Invest in holistic well-being with employee wellness programs
Investing in wellness programs is a smart business decision. Harvard medical research found that, for every dollar spent on wellness programs, medical costs fall by about $3.27 and costs associated with absenteeism fall by around $2.73.
To make wellness programs appealing to a diverse workforce, variety is key:
- Gym memberships - Complimentary gym memberships or access to an office gym can make it easier for people to prioritize physical fitness.
- Wellness challenges - Create a friendly competition by setting health and fitness goals (like walking a certain number of steps each day) that encourage employees to be more active.
- Mental health resources - Offering resources like mindfulness apps, stress management workshops, or even in-house therapy can go a long way in supporting mental well-being.
- Employee assistance programs (EAPs) - These employer-sponsored programs provide confidential consultations and resources for both work and personal issues, from stress to financial planning and legal concerns.
By focusing on both physical and mental wellness, you can cultivate a workplace culture that values health and well-being.
Foster employee growth with professional development opportunities
An employee's growth is symbiotically linked with the growth of your business. While only 40% of employers offer some sort of professional growth program, 74% of employees reported that the absence of professional development opportunities limits their full potential at work. Employees are clearly yearning for more growth offerings. Here are some methods to consider:
- Training programs - Equip employees with new skills and knowledge relevant to their roles.
- Continuing education support - Offer tuition reimbursement or flexible work hours for employees to pursue further education.
- Mentorship opportunities - Pair less experienced employees with seasoned professionals to help fast-track learning and offer networking opportunities.
- Professional certification funding - Providing financial support for industries that require such certifications can help employees move up the career ladder.
Investing in professional development is like planting a seed. It may take time to see the full benefits, but when you do, the growth can be exponential.
Help employees build secure futures with financial wellness support
Managing finances is a concern that extends well beyond the paycheck. In our latest SecureSave study, 77% of people said stress about finances has a negative impact on their job performance. Providing financial wellness support can alleviate some of this burden, helping your employees stay focused and productive.
Here are some avenues to explore:
- Financial education workshops - Typically cover topics like budgeting, investment basics, or retirement planning.
- Access to financial planning tools - Subsidizing or offering free access to digital tools like budgeting apps can make a tangible difference in their financial health.
- Emergency savings accounts (ESAs) - Employer-sponsored ESAs can be a lifeline for employees facing unexpected financial challenges. If you’re able to match contributions, it can help further encourage fiscal responsibility.
- Debt management assistance - Provide resources or bring in experts to help employees navigate debt reduction strategies.
By adding financial wellness to your small business benefits package, you can make a statement that the well-being of your team extends beyond the four walls of the workplace.
Building competitive small business employee benefits
Small businesses face unique challenges in attracting and retaining top talent, but with a comprehensive benefits package, you can overcome many of these challenges. From offering comprehensive health insurance options to creating robust financial wellness programs, every choice you make contributes to a healthy and empowering work environment.
It's essential to remember that what works for one company might not work for another. Take the time to do your research, understand the specific needs of your employees, and consider all available options. Sometimes, small tweaks to your benefits package can make a significant impact, helping your small business start attracting top-tier talent.