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Employee Benefits for Small Businesses

Mar 2, 2023
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As a small business owner, you likely face two main issues when it comes to quality employees: hiring the right people and keeping them satisfied within their jobs. There are many steps you can take to try to increase job satisfaction – such as offering the best employee benefits.

Today we will cover why benefits should be a top priority when trying to get or retain top employees, and we’ll go over five employee benefits your small business should offer in 2023.

The Importance of Employee Benefits for Small Business Owners

The average worker will consider several factors when determining whether or not to take a job, and they will continue to weigh these factors after they’ve accepted and started the job. It is not enough to get the right people to work for your small business – you must also look for ways to keep them happy.

The Role of Employee Benefits in Attracting the Right Job Candidates

The fact that today’s workers want a comprehensive benefits package is not news – this has been true for decades. However, today’s workforce has different needs than workers in the past. Thankfully, employee benefit options reflect that.

No longer is a single healthcare program going to work for all – or even most. Today’s benefits packages need to be geared toward diversity, equity, and inclusion for companies that want to draw top talent. The five small business employee benefits listed below reflect today’s reality.

The Importance of Employee Benefits in Retaining Your Best Workers

If you already have top talent working for you, you will not be surprised to learn that, according to one estimate, the costs associated with replacing them could be as much as four times their annual salary. What is involved in these costs? Many things, including the following:

  • Direct costs. Advertising for the position, and the labor hours required to interview, screen, and hire are all direct costs of replacing a worker.
  • Onboarding. Training takes time and costs money.
  • Loss in productivity. One study from Harvard Business Review found that it takes up to eight months for a new employee to reach the productivity level of the person they are replacing.
  • Lost engagement. When there is high turnover, other employees notice – and their productivity and loyalty can be impacted.
  • Error rates. New employees are more prone to make mistakes. Depending on your industry, these mistakes could be costly.

These are only some reasons it pays to keep employees rather than replace them. Just as those looking for jobs report that benefits are important, keeping your employees requires great benefits, the right mindset, and a whole lot more. That’s where the five benefits below can come into play.

1. Supplemental Health Insurance

Health insurance is the number one employee benefit employees are looking for. Nearly half of all small businesses with three to nine employees offer health insurance, while 65% of companies with 10-24 employees offer coverage. This is wise because 78% of employees said they were likely to stay with their employer specifically because of their health insurance coverage.

We recommend taking it one step further and adding supplemental health insurance products as employee benefits for small business owners who really want to stand out. Considering that upwards of one in every three employees could not come up with $3,000 if they had a medical emergency, this supplemental insurance can provide real benefits and peace of mind to employees.

2. Mental Health Coverage

The Affordable Care Act greatly expanded mental health coverage by requiring that nearly all individual and small business health insurance plans cover services for mental health and substance use disorders. As a result, if you want to stand out and provide optimal employee benefits, just offering coverage for these services is not enough.

We recommend investing in mental health programs that can offer additional assistance to your employees and ensuring a specific mental health policy is in place.

*Disclaimer: AWA offers supplemental, non-ACA compliant benefit plans.

Mental Health Assistance Programs

There are a wealth of mental health assistance programs out there, and the right option (or combination of options) for your small business will depend greatly on where you are located, what the specific needs of your industry are, and what your employees would find most useful.

The U.S. Department of Health & Human Services offers their employees a suite of services under their Employee Assistance Program (EAP) that can be used as a guideline in determining the best services to include for your company.

Having a Clear Mental Health Work Policy in Place

For example, if your employee has a mental health challenge, do they know where to go and whom to talk to? Can they request paid or unpaid leave? Are there company resources that could help them get through their challenge?

Regardless of how your company decides to respond to each of those questions, one thing is essential: making sure your employees know how you’ve answered them. 97% of GenZ workers and 85% of millennial workers believe it is important for their employer to have a clear mental health work policy in place.

3. Flexible Wellness Programs

Wellness programs are great options to invest in for two reasons. First, employees love them. Second, if you choose the right programs, your return on investment could be more than twofold.

Employees Love Wellness Programs

Wellness programs have the power to draw in top talent and keep them working for your company. One study by Forbes found that nearly 70% of employees who have a wellness program like their job more because of it – and most of those employees say that the wellness program would make them more likely to recommend the company to others seeking jobs.

Wellness Programs Can Have an Excellent Return on Your Investment

It’s unwise to dismiss employee wellness programs as “just another fad.” Johnson & Johnson, one of the first major companies to test out these programs, saw a $2.71 return on every dollar they spent on wellness programs.

Studies of their program have found that it helped to:

  • Lower health care costs
  • Reduce absenteeism
  • Improve worker productivity
  • Reduce the costs of disability and workers’ compensation
  • Reduce injuries
  • Improve employee morale
  • Improve employee loyalty

The goal is to find wellness programs that are flexible, well-thought-out, and benefit both the health of the employee and the small business’s bottom line.

For example, at AWA, we offer MyeWellness, an online health and fitness program designed to help members reach their health and wellness goals. They can do this with a wealth of convenient services, including:

  • Web-based workouts
  • Daily nutrition tips
  • Health tracking
  • Incentive programs
  • Health articles
  • Videos

4. Child Care Assistance

If your goal is to try to compete with larger companies, then child care assistance is an excellent employee benefit to offer. Of larger companies surveyed in one study, 23% said they either currently offer or will offer backup child care assistance by the end of 2023.

From the employee standpoint, consider the results of a survey of 1,000 workers with a child under the age of 15:

  • 73% were considering a major change at work
  • 44% were looking to revise their schedule
  • 21% were looking for a new job
  • 15% were considering leaving the workforce altogether

Two-fifths of all families in the United States have a child under the age of 18, and most of those families have at least one working parent. It just makes sense that child care assistance would greatly benefit these families and could help you get great employees and keep them. There are several different options if you want to provide this benefit to your employees.

Providing child care subsidies

Small business owners can design these programs however they’d like, with common options including employer-provided spending accounts that employees can use for child care costs, or bonuses designed specifically to help with child care costs.

Providing at-work child care

If you employ a number of people who seek out child care services, it might make the most sense to offer free or subsidized on-site child care services. While the cost can be significant, it can also be hugely attractive to potential employees.

Businesses stand to benefit when childcare is provided to their employers

As is true of other employee benefits for the recommendations we’ve offered for employee benefits for small business owners, subsidizing child care benefits the employer, too. When a working parent knows they can afford daycare or other child care, they worry less during work hours – which means better productivity.

Covering a portion of childcare for employees, or providing on-site daycare, also helps incentivize them to remain within your company.

Make sure child care offerings are fair

As you set up a child care subsidy for your company, remember that employees who do not have young children might feel it’s an unfair practice to offer such a big financial perk to some but not all of your employees.

That’s why we suggest reviewing how your benefits are allotted and offering additional benefits to those who do not take advantage of child care benefits. This could include things like:

  • Elder care subsidies
  • Covering deductibles for health insurance
  • Additional 401(k) offerings
  • Money deposited into a health savings account
  • Life insurance coverage
  • Tuition reimbursement

Create an overall plan that makes the most sense for your employees and their specific needs.

5. Flexible Working Environments

Not all benefits you could provide for your employees require a financial investment. One of the most sought-after benefits by today’s employees could actually save you money: flexible working arrangements. Financial experts widely agree that flexible working arrangements are a top factor when today’s workers consider job offers.

The most popular example is allowing employees the option to work from home all or some of the time. However, there are other flexible work options that could help you stand out from the pack.

A Task-Based Working Environment

The “traditional” working environment of 9 – 5, Monday through Friday, is no longer necessary in many industries. It used to be that these were the hours banks were open, and much of the world revolved around those hours. Now, banks are open virtually 24 hours a day, and workers can get things done on a very different schedule.

If your industry allows it, consider assigning a specific amount of work per week or month to your employees and giving them the option of getting it done when and how it works for them. They might choose to work three days a week for ten hours a day or five hours a day every week. They might work first thing in the morning and be done by 1 PM, or they might start their day around noon and not call it quits until 8 or 9 PM.

The key is that as long as they’re getting the work you need done, they can work whenever they’d like.

Job Sharing

If you’re having trouble finding someone to fill a full-time job, consider finding two people to fill a part-time job. This is what’s known as job sharing. In it, your employees will each complete the number of hours (or tasks) they agree to each week. Together they will get the job done as part-time employees.

You might set this arrangement up so that they work together, or, in a job requiring 40 hours of coverage per week, you might choose to have them work opposing schedules. The more control you give them over how their schedule works, the better this arrangement will likely work for everyone.

What Employee Benefits Will You Add in 2023?

These are our top ideas for employee benefits to add in 2023. Which ones will you implement for your small business? Whether you can make big changes or you’re starting out small, taking care of employees today is the best way to create a future workforce that will work for you.

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