Whether in a small business or a large corporation, employee benefits are of crucial concern both for employers and employees. While they surely require financial input, they tend to bring about much more in terms of productivity, loyalty, talent retention, and more.
In this article, we will show how small businesses can prosper by offering comprehensive employee benefits, as well as review different types of benefits that suit smaller companies.
What are employee benefits?
Employee benefits, as the name suggests, are all the additional offerings and perks that employees get as a part of their employment agreement. These benefits come as an addition to salary or wages.
Generally, employee benefits can be divided into two types: compulsory (mandatory) and voluntary. The compulsory ones stem from various federal, state, and local government laws, hence, compliance is crucial and necessary. The voluntary benefits are entirely dependent on the employer’s choice and make up an attractive part of a job offer.
Do small businesses need employee benefits?
Understanding the advantages that employee benefits bring for both employers and employees can be a great starting point for business owners. Let’s dive in.
Employee benefits: How employers can benefit from perks
The following list aims to highlight the positive impact of small business benefits from the perspective of an employer.
Productivity and engagement
Employee benefits have a positive impact on engagement. What’s more, productivity and engagement go hand in hand, such that engaged teams are more productive and innovative. This directly translates to business growth.
Providing employee benefits can boost staff morale and foster employee loyalty. As benefits are an important part of the employment package, satisfied employees are more willing to stay in their current job for longer if their salary and benefits meet their expectations.
Attractive employment offer and reputation
Employee benefits have become a new norm and represent an attractive element of a job offer. Being upfront with a list of benefits when posting an advertisement is not uncommon
and one job opportunity can be preferred over a similar one solely based on the added value benefits.
Employee benefits: How employees can benefit from perks
The following list highlights the main elements of how those benefits positively affect various areas of employees’ lives.
A competitive salary and comprehensive benefits package, and thoughtful rewards and recognition programs often rank among the primary drivers of job satisfaction. It is crucial for employees to know that they are valued. When employees’ compensation aligns with their contribution, their overall job satisfaction tends to significantly increase.
Quality of life: Supporting health and well-being
The employee-oriented work environment has shifted the focus from job-related skills to the person’s importance. It is evident that when an individual’s health is impacted, it affects other aspects of their life, including work.
By providing benefits that prioritize employee health and well-being, organizations enable their employees to show up more effectively at work. Having a well-balanced life is crucial for fostering creativity, efficiency, responsibility, and proactivity in the workplace. Imbalance, on the other hand, leads to burnout and diminishes the overall quality of life. And comprehensive benefits play a crucial role in safeguarding this balance, ensuring that each vital aspect of an employee’s life receives the necessary attention and care.
Offering benefits is an expression of a strong company culture, which promotes teamwork, community, and inclusivity, and boosts employee engagement. Companies with a strong culture can experience a remarkable increase in employee engagement as it makes employees feel they work at a place that is congruent with who they are as a person.
Looking for more advantages? Read 12 research-backed benefits of employee engagement for small businesses.
Mandatory employee benefits
The benefits that are required by law might not be really thought of as benefits, since every employer should be compliant with them. Yet they are, as they are offered over and beyond a salary or wages. It is important for employers to be familiar with those laws and regulations, as compliance failure oftentimes leads to hefty penalties.
Let’s now have a closer look at compulsory employee benefits that must be offered by employers in the US.
Starting from 2019, there is no mandatory health insurance at the federal level. However, employers with 50 or more employees (or full-time equivalent employees) must provide health insurance under the Affordable Care Act (ACA) and be affordable (less than 9.12% of your household income for a monthly premium of the lowest-cost plan), and offer minimum value (i.e. cover at least 60% of the total cost of medical services).
Employers with 20+ employees also need to add the continuation of health coverage after losing eligibility provided by COBRA (the Consolidated Omnibus Budget Reconciliation Act). It relates to a range of circumstances with health coverage extended for a limited period of time.
Family and Medical Leave
The Family and Medical Leave Act (FMLA) is another federal-level law that allows employees unpaid leave from work for up to 12 weeks under special circumstances. Similarly to the above acts, it applies only to businesses of 50 or more employees who have worked with that employer for a specified number of months/hours.
State-mandated Workers’ Compensation insurance applies to almost all states across the country. It is triggered in the event of injury or sickness that was caused by the job and usually covers medical bills, ongoing care, rehabilitation, and other types of reimbursements (for instance, some elements of lost wage coverage).
Other types of compliance
There are other types of mandatory programs that employers need to participate in like the Social Security and Medicare federal programs or, depending on the state, disability insurance and others.
Voluntary benefits to offer your workers and employees
Now let’s turn to the most popular benefits that small businesses can offer their employees as well as review some of the new and emerging ways to enhance productivity and engagement at work through crafted benefits.
Health insurance benefits
The staple of a good employee benefits package are health insurance benefits. Most employees expect robust health insurance coverage, so that makes it a natural starting point.
There are many affordable packages for small businesses on the market, so you can choose the one that suits you and your employees best.
Primary health insurance
Every health plan covers a specific number of services and depending on its type. Some providers offer flexibility for your company that your workers can choose quite different plans depending on their needs, others offer a common coverage for all your employees.
Supplemental health insurance
This type of health insurance offers services above and beyond your basic coverage. This will depend on the specific provider but can include: dental care, mental health, disability insurance, hospital indemnity insurance, and many more.
Psychological health employee benefits
The distinction between mental health and well-being benefits can at times seem blurry as they both are concerned with how we feel. Here, we are going to speak about mental health benefits as measures that help us restore our health, while well-being benefits will concentrate on staying in a positive place.
Mental health benefits
Psychotherapy, whether individual or group therapy, might be offered for those in need. Depending on the nature of the job, some work positions are simply more mentally taxing than others, so having stress relief-guided groups might be a great way to support such workers. Sometimes even creating a time and space for mindfulness meditation or just rest and relaxation offers a great place to recharge ‘batteries’ when work seems too hectic.
Mental health days allotted to each of your employees on top of their usual sick leave or holiday quotas are a great idea too. This can even help in counteracting the crippling elements of job burnout.
Designing your work environment in such a way that it improves your employees’ well-being is the main goal of a large array of well-being benefits.
Well-being benefits can be broadly thought of as ways to create a more balanced life. For example, if many of your employees have children, offering childcare services might be a great safety net for them in situations where they can’t arrange last-minute care for their children. The same is true for providing volunteering opportunities where employees can become part of something bigger.
Another example of well-being benefits is offering remote work, hybrid work, or flexible working hours, which many employers now heavily lean on, ultimately showing greater productivity.
Now we’re entering a terrain of financial benefits that can span many different approaches from direct or indirect help to delayed or immediate financial assistance. While there are limitless ways in which an employer could contribute to an employee’s financial situation on top of the salary or wages, we will review the most sought-after financial benefits available.
Retirement plans benefit
Employers have many choices of retirement plans for their employees like 401(k), SIMPLE IRA, and more. Most retirement plans also allow for some tax advantages. Employers can choose how the contributions are made: by the employer, by the employee, or by matched contributions. The last option is very common, where an employer matches a percentage of the paycheck that the employee chooses to put into a retirement plan.
Student loan repayment benefit
Student loan debt is a topic of concern for many employees. While student loan repayment has been on pause due to the pandemic, it is scheduled to resume 60 days after June 30, 2023.
That’s why this type of benefit is again beginning to gain popularity. It can help employees lift the financial burden and see their loan debt shrink.
Financial advisory benefits
This type of benefit indirectly helps with money matters by reviewing employees’ current financial situation and advising them on the best course of action. Many people worry about financial security but with the right help, employees can learn how to manage their finances better. This spans budgeting skills, cash flow management, investments, retirement plans, and even tax advice.
People come to work not only to earn but also to learn, and small businesses usually give employees ample opportunities to upgrade their skill set.
Having a benefit set up for continuous learning and development like language courses or skills training is a great way to support your employees’ need to educate themselves and grow within the company. It can be seamlessly built into your employees’ career plans and paths, while you can accommodate their newly acquired skills in their position to enhance your business.
If you’re looking for more inspiration about best employee benefits in 2023, read this informative Gusto guide.
Creating a culture of engagement at work with small business employee benefits
While a long list of benefits is surely very desirable by the employees, small businesses often have financial constraints. However, it is a personal approach to employee benefits that makes a real difference for prospective employees.
If your team highly values innovation, for example, in addition to the mandatory benefits, you can offer perks like innovation courses for employees, conference attendance, flexible work time, remote work, or even creating a day for working in a different department.
Creating a coherent package of benefits that centers around your business values can give your employees a roadmap and mission that can enhance their engagement, retention, and loyalty.
How Gusto helps small businesses manage their employee benefits
At Gusto, we understand that managing employee benefits can be a complex and time-consuming task for small businesses. That’s why we’re here to help. With our comprehensive payroll and HR software, we offer a seamless solution to simplify and streamline the management of employee benefits. From health insurance and retirement plans to paid time off and flexible spending accounts, Gusto ensures that your employees receive the benefits they deserve while taking the burden off your shoulders.
We believe that every small business deserves access to high-quality employee benefits solutions, regardless of their size or resources. Gusto provides you with the tools and expertise to compete in the talent market by offering competitive benefits packages. Our dedicated support team is always available to assist you with any questions or concerns you may have along the way.
Employee benefits for small businesses: Closing thoughts
Employee benefits are a great way to attract and retain top talent, especially for small businesses. To enhance productivity, engagement, and job satisfaction, small businesses can offer their employees a personalized approach to benefits. This journey starts with helping employees achieve the best conditions for success.
By attracting like-minded people and offering coherent benefits, employers can create a thriving environment of passionate and engaged individuals who contribute and grow with the company – a perfect win-win situation.
Get started today and leverage Gusto + Synder integration for a perfect combo of payroll and bookkeeping.