When you’re growing a small business, you need to be able to hire smart, talented people. The most talented people will be recruited by multiple businesses and it’s likely some of those competitors might be larger corporations. To recruit and retain the best employees, you will have to make a compelling offer in terms of culture, compensation, and employee benefits.

Six questions about small business employee benefits asked and answered 

The Clutch 2019 Small Business Benefits Survey revealed 47% of small businesses offer a benefits package, and companies with more than 11 employees were more likely to provide benefits. Most small businesses have a smaller budget for employee benefits than larger corporations. With limited money to spend, you’ll have to get creative to assemble a benefits package that satisfies employees while fitting the budget. 

How can you decide what mix of benefits offers the greatest return on investment in terms of employee retention and wellbeing? Let’s examine some of small business owners’ most common questions about the employee benefits mix and explore how to go the extra mile to create a valuable offering.

1. Do employees prefer a larger paycheck or better benefits?

Small business owners know what they can afford to spend on labor costs, including compensation, training and benefits. Many business owners have wondered whether it would make more sense to pay employees a higher salary instead of offering a benefits package. This is a tricky question to answer, because the truth is most employees would like higher pay and better benefits. A study by Aflac asked workers what employers could do to retain them. Across every generation, the top answer was better pay, but second on the list was improving the benefits package. In the same survey, 60% of respondents said they’d be likely to accept a job with lower pay but better benefits. 

2. I don’t have an HR staff. Who can help me select and administer benefits?

According to the Clutch 2019 Small Business Benefits Survey, 47% of small businesses offer a benefits package, so if you can afford benefits, you will be able to compete better for talent.

But when you’re busy grinding to build your business, how can you find the time to shop and compare benefits? Thirty percent of small businesses do not have any formal HR resources. Fortunately, you don’t have to hire an HR manager to offer employer benefits. A benefits broker can do the research for you, based on your budget and objectives. They will present you with options and help advise you on the best choices. Your broker will be able to negotiate the best rates and ensure that your plan design is compliant and compelling.

To find a good benefits broker, ask for recommendations from business associates, including other small business owners, your vendors and suppliers, and any consultants or service providers you work with. Your local Chamber of Commerce is a good place to network with other business leaders and the professionals at your local chapter of the Society for Human Resources Managers (SHRM) will know benefits brokers, too.

3. Health insurance is expensive. Do I need to offer it?

No matter the size of your business, employer-sponsored health insurance should be the core benefit in your mix. According to the Kaiser Family Foundation, 56% of small businesses and 99% of large corporations provide employees with health insurance. Prospective employees value health insurance over all other benefits, so you need to include it if you can.

Health insurance is a big investment; the average annual employer-sponsored health insurance premiums in 2019 were $7,188 for single coverage and $20,576 for family coverage. Employers usually pay part of the health insurance premiums, often a very great percentage of the total cost. The 2019 Kaiser data showed that small businesses paid 84% of single coverage premiums and 60% of family coverage premiums, with employees paying the remainder.

Let your budget guide your decision about how much to contribute. Obviously employees are looking for jobs that include a generous employer contribution. But they also want coverage from a good insurance company and a plan with comprehensive rather than minimal benefits. A benefits broker can help you find the best balance. Along with health coverage, many employers include dental and optical insurance.

4. After health insurance, what other benefits should I provide?

The most common small business employee benefits are health insurance, followed by retirement plans, family leave, and paid time off (PTO). You may also want to consider short and/or long term disability insurance and life insurance.

The only limitations to your benefits package are your budget and your ability to get creative. Even if you have a very small budget, there are many perks that cost little or nothing to provide, but make employees feel valued.

5. What’s the case for tuition reimbursement programs?

Training and development is an area where the dollars spent should pay dividends for your business as well as your employees. Survey after survey shows that today’s employees want education, from on the job training programs to college degrees. They value professional certifications that offer them the opportunity to raise their salaries. 

There are many ways you can support employees in career development, from offering full or partial tuition reimbursement to providing computer based training and paying for professional certifications. If you can’t afford to fully subsidize education, create a policy that pays a partial percentage; it will still be valued by employees. Use an agreement to ensure that employees remain with the company for some period of time after receiving the benefit, otherwise they have to pay it back.

6. How can I create more value on a small budget?

Once you’ve covered as many of the major benefits as you can budget, it’s time to get creative. Here are a few ideas:

  • Flexibility to work remotely at least part of the time has a high perceived value, especially among younger generations of workers. 

  • Employees love time off, so carefully structure your paid leave policy. 

  • If your office is downtown, commuter benefits, such as train and bus passes or parking, can be relatively inexpensive, but greatly appreciated. 

  • Memberships to gyms or wholesale clubs don’t cost a lot and may contribute to employee health and financial wellbeing.

  • You can often arrange for discounts from local businesses at no cost to your business. Whether it’s free delivery from the local sandwich shop or 10% off at the coffee shop downstairs, employees appreciate the little perks.

  • Voluntary benefits platforms can make all kinds of goods and services available to your employees, at their cost. Popular options include pet insurance and cyber insurance 

Ask for employee feedback to create a better benefits mix

One of the most common mistakes by small business owners is failing to ask employees what is most important to them when it comes to benefits. To learn what employees value, create a quick survey several months before open enrollment begins and list 10 to 15 potential benefits that you would be willing to consider offering. Ask them to rank the benefits in order of importance and ask an open-ended question to encourage additional ideas and feedback. 

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