Offering employee benefits can help employers demonstrate their commitment to their workforce, attract new employees, retain top performers, and remain competitive in the marketplace. However, some small employers may perceive cost as a barrier to providing benefits.
Below are 10 employee benefit options that may be more affordable than you think:
#1: Paid sick leave.
According to the Bureau of Labor Statistics, the average cost in 2014 to small employers for offering paid sick leave was 16 cents per hour worked (or 0.7 percent of total compensation). The benefits of a paid sick leave program may outweigh this cost. With paid leave, sick employees are more likely to stay home, decreasing the spread of germs in the workplace. This could limit additional employee absences and help to minimize a dip in productivity. Note: Several states and local jurisdictions require employers to provide paid sick leave.
#2: Health insurance.
Health insurance can be a significant expense for employers, but you may find cost-effective options. For example, consumer-driven health plans (CDHPs), which are typically high-deductible health plans tied to a health savings account, are generally less expensive than traditional health plans. Additionally, small employers who meet certain eligibility criteria and who offer health coverage through the Small Business Health Options Program ("SHOP") Marketplace may qualify for a Health Care Tax Credit.
#3: Wellness programs.
If you pair your health coverage with a wellness program, you may realize significant savings. Employee wellness programs are designed to reduce absenteeism and healthcare costs by promoting physical activity, improving nutrition, and creating a healthier workplace. In addition, offering wellness programs may improve employee satisfaction and engagement, thereby reducing turnover.
#4: Flexible work arrangements.
Employees with the flexibility to reasonably meet the demands of their personal lives tend to be more satisfied with their jobs. They are also more likely to be productive and have higher attendance rates than those lacking a work-life balance. Flexible work arrangements may include telecommuting (work from home), compressed workweeks (such as four 10-hour work days per week), and flextime (early arrival or departure).
#5: Retirement programs.
Small employers who have concerns about the cost and complexity of administering a retirement plan may want to establish a Savings Incentive Match Plan for Employees (SIMPLE) IRA. In general, employers must have 100 or fewer employees and no other retirement plan to establish a SIMPLE IRA. Employers may also consider establishing a 401(k) plan which offers the advantage of permitting higher contributions and has no employer contribution requirement like a SIMPLE IRA plan. However, a 401(k) is generally more complex to administer than a SIMPLE IRA plan.
#6: Professional development.
Providing employees with development opportunities is a low-cost benefit and an effective retention tool. Consider mentoring, job shadowing, and inexpensive professional development classes to help retain top talent. Engage employees on a regular basis to determine their career development interests and offer options accordingly.
#7: Recognition.
Recognition is a simple, low-cost way for employers to motivate employees by showing appreciation for a job well done. Consider recognition through an "Employee of the Month" program, an announcement in company communications, or a note from a supervisor or head of the company.
#8: Commuter assistance.
The IRS allows employees to pay for certain commuting costs on a pre-tax basis (via payroll deductions), which may result in significant tax savings for employers and employees. The IRS also allows employers to subsidize certain commuting costs on a tax-free basis. These commuter benefits apply to qualified transportation benefits that meet certain requirements, including a ride in a commuter highway vehicle, a transit pass, or qualified parking.
#9: Employee assistance programs (EAPs).
EAPs are programs designed to help employees manage personal issues that may be affecting their work performance. EAPs typically cover financial counseling, stress management, substance abuse counseling, family therapy and crisis management. While fees may vary based on the type of program, EAPs generally cost about $15 to $25 per employee, per year.
#10: Employee discounts.
Discount programs are popular among employees and are relatively inexpensive. Consider offering employees a discount on your own goods or services, or negotiate discounts with local retailers, restaurants, or gyms for your employees. If you don’t have time to start your own employee discount program, you can contact vendors who will manage your company’s discount program for a fee.
Conclusion:
Employers should assess which benefits make the most sense for their business, considering the costs, the impact on retention, employee demographics, and company culture.