It’s easy to fall into the trap of thinking that offering your employees benefits is beyond what your small business can afford. The reality that you want to stay competitive and keep your best employees. To do this, you need to offer them support beyond their income.
Get creative with what you offer your employees; start-ups are known for being good at this, offering wild perks. But that’s not where you should start. You need to cover core benefits to stay competitive alongside other employers. You need to ensure that everyone in your company is happy.
So what are the four major types of employee benefits? And how can you them put into place to attract—and keep—skilled employees?
Pay for as Much Healthcare Coverage as You Can Afford
Offering your employees health insurance is required if you have at least 50 full-time employees. If your company is smaller than that, you might be tempted to try and cut costs, but that only works in the short term. Your people need to have insurance. If they can’t get it through you, they’ll find another job where they do receive it.
The good news is there are options that give both you and your employees flexibility. You can choose either the state-run Small Business Health Options Program (SHOP) or turn to a private health exchange. In both instances, you pay as much as you can afford per employee. Based on how much you pay, your employees get access to a certain tier of coverage from which they can pick their plan.
Both of these options offer unique benefits. Offered by the government, SHOP often comes with a significant tax credit. You’ll find a wider variety of plans in the SHOP marketplace. Private health exchanges tend to offer a more limited array of better quality plans. They also have customer service agents to guide you or your employees through picking a plan.
You could buy healthcare coverage straight from a provider, but this is not as simple as it seems. Many providers do not sell directly. You also lose the marketplace and process guidance that SHOP or a private exchange offer.
Offer a Retirement Plan that Makes Sense for Your Employees
Common financial wisdom reminds us all to save for the future by investing in our retirement. if you want your employees to care about your company’s long-term success, you need to care about theirs. A good retirement plan offers your employees security for their future. This is hard to walk away from, and so you can hope to retain your company talent.
Picking a retirement plan may seem daunting. There are different levels of contribution available, each with their own benefits. It only gets trickier when you factor in taxation. Fortunately, the IRS has set up a comprehensive resource to guide you and your employees through every step. Even a solo entrepreneur can find the resources for a retirement plan.
What sorts of considerations do you need to keep in mind? You need to know how much you can afford to contribute. Part of what determines what plan you pick is what percentage you can afford to give. You also need to consider how much of an administrative burden you can afford. Some of the more attractive plans do have extra paperwork or considerations. You need to make sure you can realistically afford them.
Give Your Employees Paid Time Off
The quality of your employees’ non-work time has a direct impact on their productivity. It is in your company’s best interest to offer sensible plans for time off.
Everyone needs adequate time off to recharge, so you have to offer vacation time. Paid holidays in addition to that are a bit of a no-brainer since most of the business world shuts down on major holidays anyway. The recent trend has been increasing paid holidays, streamlining company time off.
You have a legal obligation to offer Jury duty and military reserve training. But there are lots of other options for paid time off; you should pick the one that best fits your people’s needs. Sick leave encourages self-care and also prevents illness from spreading around the office. Cut your losses and let people recuperate alone at home. Flex-time helps your employees focus when they’re at work. They can adjust their schedule and stay on top of non-work commitments such as picking up their kids from school.
Sabbaticals are a more competitive option for time off. It’s often reserved for people higher up in the organizational chart, such as executives, who have spent more time with the company. Sabbaticals give employees the time to pursue a personal project or even further their education. Your most skilled employees likely have rich interests outside of work. Supporting them in their pursuits is one of the best ways to motivate them and maintain high achievement.
Reward Good Performance
Your employees need to know that their skills and efforts are appreciated. The more directly you relate the reward to their work, the more directly you incentivize high performance. Team members who are happy with how their efforts are rewarded are less likely to look elsewhere for a job, meaning you retain top talent. In fact, unfair compensation is one of the top reported reasons for burnout, which in turn is a key reason for employee loss.
Any performance bonus program you implement needs to be clearly defined and explained. Everyone must have fair access to earning the bonuses or else they will not be the positive motivators you hope for. Performance bonuses will only work as part of an existing, regular performance review system.
An important thing to keep in mind is how performance rewards are taxed. Depending on your company’s classification, you might have some flexibility in when you report the bonus to the IRS versus when you pay it. You also need to be conscious of how you withhold taxes for your employees, based on how you pay out the bonus. Recent tax code changes might offer you credits that help make it easier to afford bonuses.
Happy employees are more productive, and one way to keep people happy is to take care of their needs. We’ve covered the four major types of employee benefits you need to offer to be competitive. The next step is to discuss directly with your employees what they need and want. There is no substitute for a direct line of communication with your people. If you want to keep them on board, they need to know they are seen and heard.