Many small business owners erroneously assume that it’s too expensive, or too complicated, to offer benefits to their employees. But with the right HR support services, administering benefits doesn’t need to be difficult. In fact, small business owners who offer benefits to their staff often see a significant return in investment in terms of being able to hire the best talent, improving employee retention, and much more. Let’s break down everything you need to know about offering small business employee benefits, plus how you can get started today.
The Benefits of Benefits: Why Should Every Small Business Offer Employee Benefits?
Think beyond the salary. While direct compensation is an obviously influential factor for your current and future employees, the overall compensation package — including benefits like health insurance and retirement plans — is important. In fact, according to one nationwide survey, 55% of employees said that affordable benefits was MORE important than their actual salary.
The following sample statistics will catch the attention of any savvy small business owner who wants to attract great employees, reduce employee churn (as you well know, hiring and training new staff is very expensive!) and stand out in the industry:
- Small businesses that offer not just a competitive salary, but also desirable employee benefits, saw a 56% reduction in employee attrition
- Approximately 15% of employees cite poor benefits as the reason they quit their previous job.
- 72% of employees say that better benefits would improve their job satisfaction
- An estimated 80% of people say that they would stay at their current job, if it included benefits, rather than leave for another position that offered much better pay but no benefits
Keep in mind that all of these statistics were conducted shortly before the COVID-19 pandemic swept the globe. With today’s increased economic uncertainty, employee benefits are more valuable than ever to your team!
Benefits Basics 101: Are Small Business Owners Legally Required to Offer Benefits?
Currently, the state of Hawaii is the only state that requires small businesses to offer health insurance to their employees.
When you’re considering how to offer benefits as a small business, other perks that you’re legally required to include by default are:
- Giving your workers time off for jury duty, voting, etc.
- Complying with workers’ compensation laws
- Providing unemployment benefits indirectly through your small business’ unemployment taxes
- Following FMLA rules and regulations
- And complying with other state and federal laws
Other than Hawaii’s health plan mandate for Hawaiian small businesses, anything additional in your state — vision plans, dental plans, retirement plans, etc. — is technically not required. But just because you’re not legally required to offer them doesn’t mean your employees don’t want them!
What Types of Benefits Do Employees Want?
Every state, and every community, has its own unique lifestyle needs. And every small business has its own unique, diverse preferences. If you’re feeling stuck and not sure where to start, some general brainstorming ideas can help you to begin planning how to offer benefits as a small business.
Commonly offered perks and benefits that employees often say that they want include:
- Financial tools to tackle unforeseen bills, such as an employee hardship fund or small loans offered by their employer (more than half of Americans don’t have enough savings to handle an unexpected expense)
- Retirement funds, such as a 401(k) or an IRA (most Americans aren’t saving for their retirement)
- Flexible work options, such as being able to work from home
- Family-focused benefits, such as childcare support or parental leave
- Health and wellness benefits, such as access to gyms, access to dietitians or nutritionists, and rewards for meeting health goals or physical activity milestones
- Employee discounts on company products, services or things in the community
- Health insurance, which may include dental plans, vision plans, life insurance, etc.
Questions to Ask Yourself to Help You Plan Your Small Business Benefits Rollout
Some employee benefits may be very economical to provide. For example, establishing an employee hardship fund may boost job satisfaction and employee morale, but you may not necessarily see any expenses on your bottom line until someone applies for employee assistance.
Likewise, many small benefits, such as free coffee or tea in the workroom, are negligible at most.
However, other employee benefits like health insurance can represent a significant cost for your small business if you don’t plan ahead and ask the right questions:
- How much of the cost of the benefits should your small business absorb? Most companies require their employees to contribute to their health plans so that the business doesn’t burden the entire cost. Requiring co-payments can help winnow out employees who don’t really want this benefit.
- Have you considered the cost of administering benefits? From juggling the paperwork to processing proof of insurability during a claims process, there’s a lot that goes into administering benefits. And avoiding this work, or doing it poorly, can open your small business to significant legal liabilities. This is where outsourcing your benefits administration and HR resources can be very cost-effective and smart.
- Are you providing benefits that your team actually wants? A quick customer survey can help ensure you’re only offering (and therefore paying for) benefits that actually meet your employees’ needs.
How to Choose a Benefits Package or Plan Administrator
When figuring out how to offer employee benefits as a small business, don’t get taken for a ride by unscrupulous agencies or advisors. Keep these pointers in mind to navigate the complex process, especially when it comes to benefits like retirement or health insurance:
- Get quotes. Don’t go with the first option you’re presented with. Shop around and make sure you’re getting a competitive edge.
- Check the benefit plan’s actual insurer (known in the legal world as the “underwriter”). Make sure the insurer is registered and approved in your state. You can also request a report on the insurer’s claim-paying ability rating to ensure you aren’t being scammed.
- Ensure your small business and any insurer you partner with is following all state regulations. For guidance, you can call your local state insurance department and the National Association of Insurance Commissioners
- Get support. You are not the only small business wanting to offer benefits to its staff. Talk to other small business owners in your network. Research complaints and reviews at your local Better Business Bureau. Discuss your concerns with other entrepreneurs.
Navigating the employee benefits process can be complex, but it’s important for your small business success.
At the Avitus Group, our team of experts and HR strategists can help you to avoid the headaches, the paperwork and the legal confusion that often comes with administering benefits and handling workers’ claims.
For more help understanding how you can offer benefits to your employees, contact us today to book a complimentary consultation with one of our small business benefits experts.