You’re creating a benefits plan for your small business. It must resonate with top talent, provide well-rounded options, and signal to current and future employees that you care about their well-being. The catch? It also needs to be sustainable and within budget.
Building benefits packages can be complex, so it’s essential to follow straightforward, actionable steps to determine which benefits matter most and how to offer them effectively.
The advice below focuses on how to build a benefits plan to enhance employee satisfaction and drive retention, all without compromising your company’s financial well-being.
Understanding Small Business Employee Benefits
Did you know that nearly half of your team might be eyeing the exit if they’re unhappy with company benefits? This fact may sound surprising, but it’s one to recognize as you build out benefits for your small business.
That’s because, as a small business owner, your team is one of your most valuable assets. You don’t want your top talent (and their experience, knowledge, and skills) to walk out the door, especially over something in your control. Therefore, your benefits plan and other policies should acknowledge your employees’ needs, well-being, and financial future.
Note: While a study by SHRM found that health care was the most important benefit to employees, it’s important to examine retirement, leave, additional disability coverage options, and mental health as well. In fact, business spending for mental health coverage has risen 53% since March 2020, which signals that more and more companies are recognizing the importance of mental wellness in the workplace.
The Role of Health Insurance in Benefit Packages
Most people immediately jump to group health insurance when they think of benefits, and for good reason. Health insurance provides a safety net for employees by covering qualified medical expenses and promoting regular healthcare access (BTW: have you scheduled your yearly physical yet?).
Selecting an appropriate health insurance plan for a small business entails weighing factors such as whether to offer a single plan or various health insurance plans for employees. Options include:
- Preferred Provider Organization (PPO) plans
- Health Maintenance Organization (HMO) plans
- Health Savings Account (HSA)-qualified plans
- Flexible Spending Account (FSA)-qualified plans
- Indemnity (AKA fee-for-service) plans
Retirement Savings Plans: A Key Employee Perk
Want to really step up your small business benefits package? Include a retirement savings plan. By doing so, your benefit offerings will help support employees’ present well-being and allow them to establish financial security for the future.
Options for retirement savings plans among small businesses can include:
- SIMPLE IRA
- SEP IRA
- Traditional or Roth IRA
- Solo 401(k)
However, when selecting benefits for your small business, matching or contributing to retirement plans may not be in your current budget. If that’s the case, build out your other offerings, but put retirement benefits on your roadmap.
Besides caring about your people’s financial well-being, including retirement benefits can:
- Give you the competitive edge. Only 22% of small and medium-sized businesses offer retirement benefits. Adding this option to your small business benefits package will make you stand out to candidates.
- Help attract top talent. If you want to tip the scale in your favor and secure top candidates, a retirement plan will help. A study by Businesswire found that 62% of candidates consider the availability of a retirement plan when deciding whether to accept a job.
- Increase retention rates. Regarding retention rates, many HR leaders focus on findings from the employee lifecycle. But financial planning has emerged as another contender to consider – 76% of employees are likely to be attracted to another company that cares more about their financial well-being.
Additional Coverage: Disability and Life Insurance
Beyond health insurance and retirement plans, employees appreciate additional coverage options like disability and life insurance as part of their benefits package. Disability insurance, for instance, provides a safety net for employees with work incapacity, enabling them to meet financial responsibilities and provide for their families.
The associated costs for disability insurance for small businesses typically range from 1% to 3% of their income. This investment is invaluable in ensuring employees’ financial security and peace of mind, making it a key component of a competitive benefits package.