Benefits are a great incentive to both recruit and retain good employees. However, competition and rising costs have made it difficult for many small businesses to offer much beyond paid vacation time, which is required by law (i.e. Social Security contributions, unemployment and disability insurance, and time off as specified by the Family and Medical Leave Act).
So, it’s hardly surprising that the 2014 Aflac Workforces Report for Small Businesses found only 12 percent of small business employees considered themselves “extremely satisfied” with their benefits. Even more worrisome for employers, 57 percent of respondents would likely go to another job with better benefits, even if it meant receiving a slightly smaller paycheck.
The range of options available to small business owners is actually quite extensive. The challenge is achieving an ideal balance between what your employees want, what you can afford, and what will make sense as your business grows.
A good place to start is to find out what firms similar to yours are offering. Mary Pat Messina, a Senior Human Relations Generalist with Paychex HR Solutions, suggests consulting with your local Chamber of Commerce, HR professional association, and insurance and tax professionals.
“It may also be helpful to talk with the employees and determine what they would most like to have,” Messina says. “There may be an affordable way to get them what they want.”
For example, employers can open an IRA or 401K plan without a company contribution, or set up a high-deductible health plan with a portion of the deductible funded through a Health Reimbursement Account. Other benefits such as a Flexible Spending Account for Dependent Care expenses require no employer funding other than administrative costs to manage the plan.
“Business owners should also have a conversation with their CPA on whether the size of their business and their payroll entitles them to the Small Business Tax Credit under the Affordable Care Act for their health insurance coverage,” Messina adds.
Whatever combination you choose, it’s a good idea to share your investment in both mandatory and voluntary benefits with your employees. “Benefits typically add 35 percent to an employee’s base pay,” Messina says. “Seeing these figures in black and while teaches employees the real value of these benefits.”
There are many other perks a small business owner can offer. Time, a scarce commodity for everyone these days, can be offered through flexible working hours or allowing employees to work from home on certain days. Catered lunches, gift cards, parking privileges, and even customized business cards can be used to reward employees on specific projects, or as a periodic appreciation gesture.
Other unconventional benefits include: working with other local businesses to provide employee discounts on their products or services, company memberships at local fitness centers, sponsoring family-oriented events, and funding or helping offset continuing education expenses.
This Ask SCORE column is provided by the SCORE Central Oregon Chapter.
SCORE is a nonprofit association with 11,000 volunteers, business experts in 320 offices in communities across the country. SCORE is a resource partner with the U.S. Small Business Administration. To request a free small business mentoring session go to www.scorecentraloregon.org.
