Employee Benefits: Everything You Need To know To Stay Competitive
Scrimping on employee benefits isn’t the way save a few bucks.
Employee benefits are more than just the standard healthcare/retirement package. They are the carrot in front of the horse, both enticing and keeping great employees on your team. They can make you stand out in a crowded and competitive industry.
In other words, employee benefits are part of how your business stays competitive.
The Law: Required Employee Benefits
There are some employee benefits that are not an option. If you have employees, you must provide the following benefits as required by law:
- Social Security taxes: You must pay the same rate of taxes as your employees.
- Unemployment insurance: Some businesses will be required to register with the state workforce agency where your business is located, and to pay unemployment insurance.
- Worker’s compensation: You must have worker’s compensation insurance, whether you choose a commercial carrier, pay for it yourself, or through your state’s program.
- Disability insurance: Not all states require disability insurance, but you should check to be sure if you are required to help pay for a percentage of wages for sickness or injury off the job.
- Leave benefits: Employers must honor the Family and Medical Leave Act, though they may offer additional leave above and beyond that such as for jury duty, military service, and other types of leave.
Best approach? Consult an expert to make sure that you are meeting your legal requirements. According to Entrepreneur.com, one of the most common mistakes that businesses make in this area is not giving benefits to all of their employees. Employers often fail to include part-timers when they should, or exclude custodial or clerical staff that they don’t consider a “major” part of their team.
You can’t be competitive if you aren’t even meeting the law. So get this part right first.
Your Choice: Optional Employee Benefits
As long as you meet the law’s requirements, you are under no obligation to provide any additional employee benefits. But, as I pointed out, you definitely will want to offer employee benefits above and beyond the bare minimum if you want to compete both in finding and keeping great employees.
Some of the optional benefits might include:
- Retirement plans (including matching contributions)
- Vision and dental insurance
- Life insurance
- Paid vacation, holidays, or sick leave (the more generous the better).
- Health insurance (depending upon how the Affordable Care Act affects your business, it may not be optional).
- Regular pay raises, or performance or project bonuses (particularly important to provide incentives for employees who won’t have an opportunity for promotion).
These optional items may vary according to the laws of your state or country, but they are considered standard in some industries.
Trends: Unusual Employee Benefit Trends
Employee benefits have changed significantly in the startup age. If there was ever a competitive industry, it’s in the development and technology fields. Potential workers are no longer just weighing the salary, but they’re considering the benefits with about as much equal weight.
- Food and drink: On site meals, beer on tap — you name it. Providing serious food and snacks is a great perk, particularly for an office setting where your team puts in long hours and the workplace is their second home.
- Health opportunities: Paying for gym fees isn’t all that unusual, but having a climbing wall or exercise class right there at work is a whole new level of dedication to healthy employees. Some employers start small, paying for wearable fitness bands (like the FitBit) and reward employees for being active.
- Entertainment: Game rooms, video games, music rooms — anything that encourages your team to take a break during the middle of the day and kick back for a bit.
- Continued education: Helping your employees continue their education or further their skills tells them you think highly of them. Whether it’s paying for college classes, conferences, group retreats, paid travel experiences, offering sabbaticals, or providing a yearly book allowance, a well-educated employee is a confident one, and a huge asset to you.
- Freebies:Who doesn’t like freebies? Employers give away everything from free products, subscription services, and daycare services.
But, according to Kate Harrison, contributor to Forbes, the most common employee benefit amidst all of these unusual trends is not so unusual at all: more time off.
Others have implemented a four-day workweek, either all year around, or seasonal (e.g. during the summer). According to Inc.com, a sense of renewal and improved creativity often happens when you allow employees more time off.
The takeaway from this is that you don’t have to break the bank and build a full workout gym or install a bar in your office. Give your employees a chance to enjoy their life by giving them back their life.
Build A Competitive Edge With Employee Benefits
Some companies who use a broker or outside provider to help them with benefits go as far as using benchmarks to know if the employee benefits they offer are competitive or within industry standards.
How do you know which employee benefits you should have?
1. Follow the law.
Make sure you are following the letter of the law and providing the benefits that the law requires. You’ll probably even want to provide some of the more typical benefits even if the law doesn’t require it.
These are the benefits that employees expect. Not having them would make your business look poorly in comparison.
2. Consider your industry.
Look at your industry and see what others are offering, and then determine what you could add that would make sense in your industry while setting you apart.
First, find out what kinds of benefits your competitors are offering. Are you on par with what they provide? You should at least be offering that “bare minimum” in your industry.
Then, consider what your industry requires. Is your’s an industry that is quickly changing? You will want employees that are current in education and experience, and so offering educational benefits would make sense.
3. Consider your team.
Once you have benefits that fulfill the law and compete at an industry level, you can narrow down benefits further and think of your specific team.
Think about the team you have and the team you want. No two teams are alike, and they may have different preferences for what kinds of benefits and perks they’d like.
What will help make your workplace culture healthy and attractive to the kind of workers you want? If you’re trying to attract young families, you’ll might consider paying for daycare. If your workers are mostly young and single, daycare might not be a big selling point.
Additionally, men and women don’t always prefer the same kinds of benefits. A Monster.com survey indicated that women placed more importance on vacation time, while men placed higher value on performance-based bonuses.
Where your employees are at in their career (starting out, nearing the end), their gender, relationship status, income and debt levels — these can all affect what kinds of benefits they prefer.
The easiest way to know what you should offer your employees is to ask your qualified employees what they’d like. What would it take to keep them on your team, loyal and diehard employees, no matter what other salary offer came their way? What would make their life easier?
Remember, any business can offer a salary. It’s the unique and tailored benefits package that makes you stand out and helps you hire the best people.
4. Consider the cost.
It won’t help you much if you offer benefits that you can’t afford. While the first two (law and industry standards) don’t offer much leeway, the third does. If you can’t afford that full-featured gym that your employees want built into the office, promising it won’t do much good.
There are extra benefits that can come without much cost to your business. The four-day work week with longer days, allowing telecommuting or flexible hours — these will not impact your bottom line all that much and in the long run, may increase employee satisfaction. Really interpret what your employees tell you they want. Are they really asking for you to pay for a trip to the Caribbean, or are they indicating they want more freedom and personal life time back?
Substitute a gym membership for a built-in gym. Cater a meal into the office periodically instead of building a cafeteria. Give your employees their time back to use as they see fit instead of paying for a one-year sabbatical.
Not everyone has millions in their budget for amazing perks. Find benefits that fit your budget and still address the core concerns of your team.
Why Bother With Employee Benefits?
All of this sounds like a heckuva lot of work and extra expense for something that seems rather peripheral to your business, possibly, but there’s a real reason for it.
1. Employees expect it.
A survey of workers revealed what they consider to be important when it comes to employee benefits. The most important benefit was healthcare, at 32%. This was followed by vacation time, at 25%. Pay raises, performance bonuses, and a retirement plan followed closely behind.
Additionally, the normalization of benefits — including the “exotic” and trendy versions — means that new generations of workers are being taught to expect it and weigh those benefits as almost equally as they would the salary you offer. If you’ve been involved in the hiring of Millennial workers, you’ve no doubt been on the receiving end of questions about the benefits you offer.
2. Employees will stay.
A 2015 Aflac survey of employees discovered that a good benefit package will help find and keep great employees:
- 38% of small-business employees said improving the benefits package would keep them in their job
- 87% said a well-communicated benefits package would keep them in their job
- 57% said they would take a job with less pay if the benefits were better
Great benefits will keep an employee from leaving even if a better salary offer comes along. Salaries come and go, but fantastic benefits are hard to let go of.
The salary you offer is no longer enough. Employees want benefits. They consider that as part of the salary calculation when deciding on where to work and whether to stay. You’ve put time and money into your employees. Losing them to a competitor because someone else offered better benefits is a loss of money and talent that you cannot afford over time.