Hiring has been one of the biggest challenges for our small business clients. It is hard enough to find the right people for the right seats, and once they do, they need to make sure those seats are comfortable enough for the employees to stay! To stay competitive in this hiring environment, benefits are essential to attracting and keeping top talent. Many small business owners will say “I can’t afford benefits; I am a small business” without really investigating what their employees might want and what the benefits will cost.
What are Benefits? Benefits include anything that is offered or provided to employees by the employer that provides additional economic security for the employee. Benefits help attract and retain employees as well as increase overall job satisfaction. When considering whether or not to offer benefits, remember that it is incredibly expensive to have employee turnover in your business. For an entry level job, the cost of turnover can be anywhere between 30-50% of the cost of the employee. You could be losing money by not providing benefits! What kind of benefits are there?
- Insurance – Health, dental, vision, life, and disability. Watch our video about What Options to Consider When Offering Health Insurance as a Small Business
- Other Health Benefits – access to mental health services, gym memberships, healthy lifestyle benefits, and other things that promote overall health
- Retirement – 401k, simple IRA
- Ownership – stock options, ESOP
- Additional pay – bonus structure, referral bonuses, profit sharing, etc.
- Misc – onsite snacks/drinks, meals at work, events, discounts on memberships, on site use of facilities, childcare stipend, gifts, pet friendly workplace, no dress code, flexible hours, student loan assistance
There are a WIDE variety of benefits that employers can offer. The trick for small business is to identify what really matters to your employees.
How do you find out what your employees want? You can ask them yourself through conversations, or you can provide an employee benefits survey and ask your employees what matters most to them! This works well when you have an established team and are wondering what else you can do to serve them better.
When you are thinking about your benefits package, it is important to consider both the cost to the employer and the benefit to the employee. If it is something that can make their work life that much better, it could be worth it for you as the employer.
You don’t need to offer everything all at once. You could consider adding benefits one at a time, and some of them might not even cost the company anything. Some employers will begin the process of adding benefits by setting up employee paid plans (like retirement accounts or group insurance plans) while not contributing from the company side. Some employers will start out by covering 100% of the benefits costs. This depends on the financial ability and the values of the company.
Remember, as an employer, you do not have to do any of this. There are no requirements for small employers to provide benefits to anyone, even if you are hiring full time. However, we recommend thinking about this and planning for it when you begin hiring a team.
Note: We recommend consulting with an HR specialist familiar with your local and state guidelines for compliance on leave policies. You should make sure you are compliant with your labor laws regarding pay rates and legal time-off requirements. Some jurisdictions might have requirements for paid sick leave or other required leave policies.
Additional Resources If you need help planning for things when it comes to hiring and employee benefits, check out these resources:
Employee Benefits Overview for Small Businesses in 2022
Affording Benefits – What to Consider When Adding Benefits Costs
The Hidden Costs of Hiring (Contractors and Employees)
If you want help growing your business in a financially sustainable way and would like to learn more about our fractional CFO services, you can learn more HERE.
Disclaimer: This blog and the linked videos are intended for educational purposes and should not be taken as legal or tax advice. You should consult with your financial professionals about your unique financial situation before acting on anything discussed in these videos. Clara CFO Group, LLC is providing educational content to help small business owners become more aware of certain issues and topics, but we cannot give blanket advice to a broad audience.