When employers talk about their "compensation packages," they don't mean just salary. Typically, this package includes an employee's pay, plus a number of other perks like health insurance, retirement plans and paid time off.
But a truly impactful employee benefits program goes well beyond medical coverage, said Alex Shubat, CEO at work-life balance platform Espresa. It's a tool you can use to engage and retain your workforce.
"I believe that benefits are all about employee recruitment and retention, which comes from people feeling valued," Shubat told Business News Daily. "They want to know that their employers care about their well-being and respect their time."
Most employers seem to agree with this perspective: In research by Thomsons Online Benefits, nearly 90 percent of employers said their top benefits objectives are attracting talent and improving engagement. However, many of the employers (70 percent) said they struggled to deliver and communicate their benefits packages effectively.
"Global employers spend a significant amount on benefits, on average 31 percent of employee salary, but there's a real risk that they won't see the full return on this investment," Chris Bruce, co-founder and managing director of Thomsons Online Benefits, said in a statement. "HR professionals understand the link between benefits engagement and broader workplace engagement, but they're stumbling at the first hurdle: engaging employees in their reward schemes."
If you're looking to build a comprehensive, cost-effective and engaging benefits program for your small business, here's what you need to know. [See Related Story: Quitting Your Day Job? The Basics on Benefits Coverage for Entrepreneurs]
Not sure what to include in your benefits package? Here are some key perks that many businesses offer, according to Money-Zine:
- Health insurance, including medical, dental and vision
- A retirement savings plan such as a 401(k)
- Additional insurance, like life and disability
- Paid time off for vacation, sick days and personal days
- A pre-tax commuter benefits program if your company is in a major city. For example, New York City requires all employers with 20 or more full-time, nonunion employees to offer this type of program.
- Flexible and/or remote work options to help employees save on commuting costs and achieve better work-life balance
Of course, these are just the basics. To stand out and make your company more attractive to employees, you'll need to go above and beyond, within your small business budget.
"All companies wish they could spend more on benefits, but it is a balancing act," said Jeff Yaniga, chief revenue officer of Maestro Health benefits enterprise company. "It's been hard for smaller employers to offer choice. Voluntary benefits continue to improve and evolve.
Employers must budget benefits with the same rigor by which they budget payroll, innovation, and building great products and services."
Benefits don't have to eat up your whole budget, though. Small perks like free food or discounted services can go a long way in keeping employees happy.
"Something as simple as free drinks in the kitchen may only cost a few hundred dollars a year, but it's amazing how much the 'little things' affect morale and performance," Shubat said. "A soda machine ... free massages or onsite dry cleaning ... aren't going to break the bank, and the value they generate in terms of retention is unbelievable."
Other low-cost perks include employee-recognition programs (with small rewards or prizes), points-based programs that let employees earn discounts or cash, gift cards, and drawings/raffles.
Making your program work
Offer choices. Yaniga said voluntary benefits are a great, low-cost way to add value to your total compensation package. This is especially true for health insurance, a notoriously high-cost item.
"Voluntary benefits ... [can help] employees get the most value out of their high-deductible health plans," he said. "For example, employers can offer low-cost loans for employees to leverage in times of crisis. Empowering employers with the best benefits options will put them on a path toward higher retention rates, greater employee engagement and a more thriving workplace."
Other popular voluntary benefits include wellness plans, telemedicine, pet insurance and financial advisory tools, said Yaniga.
Use technology to your advantage. The Thomsons report states that online portals that give employees access to their benefits anywhere, anytime are becoming a critical tool in engaging employees and realizing global benefits strategies.
"Most traditional benefits, like medical and retirement plans, can be viewed and managed through online portals," said Shubat, whose company helps small employers digitize their benefits management. "The next wave is making all benefits and services available through digital platforms. Most companies don't have those tools in place right now, but it's becoming more and more common every day."
Additionally, Thomsons found that employers that use data analytics have 14 percent higher employee-engagement scores than those that do not. However, nearly half of all HR and reward professionals surveyed said they don't yet use analytics at all, and are therefore unlikely to be fully realizing their objectives and ROI.
Ask employees what they want. Thomsons reported that only about half of U.S. employees feel their benefits are "very relevant" to their personal situations, and approximately the same percentage of employers take the opportunity to engage with their workforces about benefits during key life stages. That's why Yaniga emphasized the importance of knowing your employees and finding out what benefits they really want.
"The more we understand about the benefit priorities of our employees, the more we can meet them at their priorities," Yaniga said. "Best-in-class companies build a great culture by applying all they know about their employees' priorities to their benefit structures."