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As a small business, you may operate with a smaller budget and fewer resources. But how you care for your employees is just as important to the overall success of your business as it is to a large enterprise.
According to a 2022 survey by the Employee Benefit Research Institute, 66% of employees feel their employers have a responsibility to ensure they are financially secure and well. Offering a comprehensive employee benefits package can alleviate many of the concerns your employees may have and add a critical sense of security to their lives. Benefits also show how much you value your employees and their well-being. Additionally, it can help turn your business into a more desirable and competitive place to work.
Below, you’ll find many of the most important reasons to offer benefits, along with a summary of the benefits every business is legally obligated to provide. We’ll also talk about how an HR partner can help you come up with a benefits plan that’s right for your business and employees, and ensure you meet your legal obligations.
Your employees lead complex lives. They have multiple responsibilities — at work and at home, to other people, and to themselves. Your workers navigate change and uncertainty just like the rest of society. When your employees have what they need to function on the job and at home — no matter what life throws at them — they become healthier, happier, and more productive.
But providing employee benefits isn’t just about helping your workforce. It also helps you as a business leader.
The type of employee benefits you offer can help make your business more attractive to job candidates. If you’re trying to build a new team from the ground up, or add to your existing team, a good mix of relevant benefits and value-added perks — such as flexible work hours, remote work options, student loan or tuition assistance, and/or a fitness and wellness allowance — helps bring quality workers in your door so you can meet your business goals. With a talented team on hand, you can raise the stature of your business in your field or industry, which further attracts top talent and keeps the cycle going.
As a small business, employee benefits set you apart from the crowd. You may already be competing with larger companies for top talent. What can you offer that they can’t? Consider what employees want most of all and do what you can to provide it. Your business may not have the resources or income to match a larger company, but you can demonstrate that you value and care for your employees, their mental health, and their well-being. Many people are eager to sign up for that environment.
Having access to good benefits makes your employees feel valued and more satisfied at work. Satisfied employees are more loyal to your business and less likely to leave. And when you have a whole team of satisfied, loyal employees functioning well, your business achieves a level of stability and low turnover that’s key to efficiency and growth. New and experienced employees aren’t suddenly quitting and causing disruptions to workplace dynamics and productivity. Instead, employees want to stick around for each other and teams can collaborate effectively.
Few people leave jobs simply because they’re bored. Quitting a job and starting over somewhere new is an uprooting and sometimes frightening feeling. Most people want to feel settled. Offering a comprehensive package of health benefits, retirement benefits, or even employee assistance programs goes a long way to making that happen. If employees feel that they have most (or all) they need in their current job, there’s much less motivation to look elsewhere.
When your employees aren’t constantly worried about what’s happening outside work — whether they can afford a medical procedure or if they’re saving enough to buy a house — they have more focus and dedication to give to the job. A good benefits package frees employees to become more personally invested in their day-to-day responsibilities and the overall success of the business.
Some types of fringe benefits can even have a direct impact on how well employees perform, such as providing an office supply stipend, subsidized meals, or childcare assistance specifically for remote workers. Invested, productive employees are also likely to see opportunities for improvements and innovations that can take your business to the next level.
In essence, happy, healthy employees do better work. A combination of fair pay, good benefits, and a solid work-life balance will substantially improve productivity. While some businesses may balk at providing those things, it pays off. Your business enjoys higher productivity, better quality work, higher-tier talent, and employee longevity. Give your employees the tools they need to do their job and live well and many will rise to the challenge.
The needs of employees might appear vastly different today than just a few years ago. Coming out of the pandemic, traditional benefits like health insurance and 401k plans are still tremendously valuable, but the last couple of years have uncovered new demands and priorities that are increasingly important to working people.
For example, if your employees are struggling with work-life balance and asking for more flexibility, coming up with benefits that address this need shows that you’re willing to adapt your business to the current reality. Recognizing, instead of ignoring, the challenges that exist today and responding to them can help reduce the stress and burnout that eventually lead to poor employee morale and high turnover.
A growing number of employees appreciate voluntary benefits, too, which help them in other areas of their lives. Dental and vision insurance is an excellent example of this, but there are other types of voluntary benefits, too. Jobs that make every aspect of their lives easier are attractive. Offering things like pet insurance, discounted wellness memberships, and deals on other types of insurance (like car or travel) help them cover all their needs.
Before you consider perks like pet insurance or financial planning assistance, remember that there are basic employee benefits that your business is legally obligated to provide its employees. Make sure you factor those into your discussions first so that you’re meeting compliance requirements.
Here’s a quick review of required employees benefits at the federal level:
And if your business has 50 or more full-time employees, you must also provide:
Here in Colorado, you are obligated to provide paid sick leave to all employees regardless of the size of your business, as well as a special provision of two weeks of paid sick leave if there is a public health emergency that involves the closure of schools, workplaces, and childcare facilities, such as what occurred during the COVID-19 pandemic.
Laws and regulations that impact benefits obligations can change often at the federal, state, or local level, so it’s critical to stay on top of what’s happening and implement new or changing laws correctly and by the stated deadlines. For instance, certain states, like California and New York, have certain mandates around disability insurance. Federal requirements are not the only requirements you must be aware of.
Part of any discussion about employee benefits for small businesses has to include a financial component. Depending on your resource and budget constraints, it may not be financially feasible for your business to offer every trendy or desirable benefit. And some perks — such as flexible work hours and remote work options — may not be conducive at all to your particular business. Delineating between the must-haves and the nice-to-haves is important so you can settle on a cost-effective, competitive benefits package that makes sense for your business, while still offering value and relevance to your workforce.
Working with a local HR partner like Obsidian HR, you get expertise in benefits administration and employment laws. For example, we can strategize with you and help put together a comprehensive benefits package. We also help you understand, set up, and administer mandatory state and federal employee benefits.
Our experts keep you informed about new and changing regulations that could impact the benefits you offer. With our support, you’ll ensure you’re covering all your bases when it comes to taking care of your employees.
Ready to learn more about how Obsidian HR can help you? Reach out to us, or download our comprehensive benefits guide above.