This article, will help you to focus on the right small business employee benefits for your team. Employee benefits are forms of compensation you pay your staff on top of their salary to complete their salary package. For example, social security payments, healthcare benefits and the ability to work-from-home.
When reviewing your employee benefits package, it makes sense to review the payroll and employee benefits software you are using. We recommend Gusto because it’s used by over 40,000 small businesses who rate it very highly. Why not take a free 30-day trail and see for yourself.
Why Should You Pay Employee Benefits at All?
As an entrepreneur, you’ll want to know why you need to pay for perks and how you’re going to get a return on your investment.
The main reason to offer small business employee benefits is because you cannot compete on salary with larger companies, but you may be able to create a more attractive package. As a result, small business employee benefits enable you to:
- Retain your Staff for Longer – for example, being able to work from home could help to attract a better pool of talent (and also retain them for longer too). We’ll take a close look at the perks that are most highly valued by staff.
- Recruit Better Talent – for instance, better health insurance. If you want to hire the best, you have to match their benefit expectations. We’ll take a closer look at how you can do this further below.
- Comply with the Law – for instance, you must give your employees time off to complete jury service if they are called-up. We’ll run through the rest of your legal obligations further below.
Recruit Better Staff
If we look back 20 years, employee benefits were really the domain of larger businesses. But in today’s economy, putting in place a competitive benefits package is becoming essential if you want your small business to attract the right talent. In fact, Glassdoor’s Employment Confidence Survey confirms that nearly two out of every three job-seekers view benefits as a key consideration when choosing a new role.
So if you are serious about taking your small business to the next level, attracting the right talent has to be a key consideration. But what voluntary small business employee benefits should you consider investing in? A survey of 2,000 US job-seekers by Fractl provides good insight. You can use the key findings below to help you decide, which benefits to invest in.
Key Finding 1: Use Your Ability to Flex
Your small business must use its natural advantages to attract the best possible talent. One of your strongest advantages over larger employers, is your ability to flex. The best talent may choose you over larger companies paying higher salaries if you can enable your employees to create a better work-life balance. You can do this by providing more flexible hours, the ability to work from home and more vacation time. All of which, your staff will highly value.
Business owners that organise there company to make work-life balance a for their staff, report that their staff work less hours but that productivity increases. This benefit requires some organizational learning and maybe a shift in culture, but it’s worth investigating. Why? Because you can improve business productivity and you do not have to invest a cent.
Key Finding 2: Provide Good Quality Healthcare
At least one in two of your potential employees will decide whether to consider you or not based upon whether you have a good health, dental and vision insurance benefit in place. We recommend you provide health insurance if you are serious about hiring the best talent.
Health insurance not cheap at a cost of around $5k per employee for individual coverage. However, these days you will find that many employees would prefer a package with a slightly lower salary but including good quality healthcare in preference to a higher salary and no healthcare. The perceived value of this benefit increase as employees start a family and become more mature in years.
Key Finding 3: Men and Women Have Different Preferences
If you have an all women team, it makes sense to shift your focus towards things like local yoga classes, paid parental leave and free day-care services. Whereas a mainly male team would be likely to prefer free snacks, team bonding events and local gym membership. If you have a mixed team, it’s important that you get the balance right if you don’t want to be perceived and as a male or female work culture.
Retaining your Staff
It would be great to think that your staff will simply stay out of loyalty, but this is not how things work in 2018. Yes, you should work hard to create a work culture where every team member has a clear role, is managed well and feels highly valued for the contribution they make. You also need to insure your employee benefits are as good as your competitors or they will tempt your most experienced team members away.
Glassdoor’s Employment Confidence Survey also confirms that four out of every five jobseekers would prefer extra employee benefits over a pay rise. As we mentioned above, achieving a work-life balance has become the most important consideration for many employees.
Recommendation 1: Ask Your Team
So how do you decide which benefits to put in place for your team? The best way to get it right is to ask them. Put together a menu of the potential benefits you can afford to invest in and ask your team to rank them. Not only will this help you to clarify which they value most, you’ll also notice how much people appreciate being consulted.
Recommendation 2: Communicate the Cost
Share with each of your team the financial value of the benefits package that you have put in place for them. Because people have short memories, it makes sense to send each employee a summary of the benefits they received over the last year and what each one cost. This helps your team to understand the true value of what you have put in place for them.
Recommendation 3: Use Payroll Software
Administering payroll and benefits is admin intensive and important to get right. Getting is wrong could upset the IRS and put your business at risk. However, it’s also expensive to outsource. The best small business solution these days an online payroll system.
We recommend Gusto, which is a refreshingly easy payroll system to use. Gusto also makes it easy to manage benefits like healthcare. The platform provides tips and recommendations and has a team of fully-licenced brokers to help you choose the right package for your team.
How to Ensure You Comply with the Law
If you’re employing staff for the first time, you need to be aware of your legal obligations. Below is a brief summary of what you need to know. However, we also recommend that you take professional advice to ensure that you fully comply with all of your legal obligations.
Social Security and Medicare
You must pay federal payroll tax to fund Social Security and Medicare. This provides your employees with insurance to cover lost wages and medical bills if they are unable to work. Good payroll software like Gusto will ensure you make the right contribution.
If you employ 20 or more employees, you are required to pay COBRA benefits. In some states, this law applies to smaller businesses. The Consolidated Omnibus Budget Reconciliation Act enables your staff to continue receiving health benefits for up to 18 months if they lose their job.
Family and Medical Leave Act
The law requires that some types of business provide their employees with unpaid leave for family matters like caring for a new born baby. This does not apply to all business types, you should find out if this applies to your business. Once again, good payroll and benefits software will cover this off for you.
This is the lowest wage you can pay an employee in your business. This will depend on your state and the job being performed. The current minimum wage is $7.25 per hour. Although, some states have set a higher minimum wage so you should check to confirm what the minimum wage is in your State.
Some of your staff may be entitled to overtime pay. Whether they are or not is based on how much you pay them and the hours they work for you. Some states have their own overtime regulations, so you should check your state’s to see what applies.
US workers who find themselves out of work are eligible for unemployment benefits for up to six months, depending on the state they work in. To cover the cost , you contribute to state and federal unemployment taxes.
As we mentioned earlier, all employees are entitled to as much time off as they need to fulfil their obligations as a citizen to vote, complete jury duty service or serve the military during war-time.
The Juice Press
If you are serious about growing your business, you will need to compete to recruit and retain the best talent. In this article, we provided you with an introduction to how to choose your own small business employee benefits.
When you start growing your team, it also makes sense to put in place a great small business payroll system. We recommend Gusto, which is a breeze to use, affordable to small business and rated well by 40,000 small business customers.