No matter who you are, money talks. But it’s not just the salary figure that employees look at when evaluating job opportunities. Financial perks and benefits, or a lack thereof, often come into play.
Benefits Benefit Everyone
A few years ago, when unemployment numbers were high and the job market was slow moving, benefits packages took a hit. Employers didn’t have much practical motivation for luring and enticing candidates with attractive perks. After all, a job offer alone was enough to get people excited. But today, with business thriving, benefits packages are once again valuable in enticing candidates to accept job offers. And beyond that, they keep employees engaged and allow organizations to motivate and retain top talent for much longer periods of time.
According to a recent survey from Glassdoor, 60 percent of candidates report that perks and benefits are a major factor in their decision to take a job offer. Even more noteworthy is the fact that 80 percent of employees would rather get additional benefits than a pay raise.
Small businesses and companies with tight budgets often feel like they don’t have much to offer in terms of benefits. After all, not everyone can afford to follow Silicon Valley trends like putting massage chairs in reception areas and replacing elevators with slides. But you might be surprised to learn that these aren’t the perks employees even want.
Employees want perks that are practical and rewarding. As the Glassdoor survey shows, this includes things like flextime and unlimited vacation. But it also includes practical financial perks.
Offering a solid employee benefits package can bring numerous advantages to businesses. Here’s a bulleted list highlighting these benefits:
- Attracting and Retaining Talent:
- Provides a competitive edge in the job market.
- Appeals to top candidates who seek comprehensive benefits.
- Encourages employee loyalty and reduces turnover rates.
- Boosting Employee Satisfaction and Morale:
- Enhances job satisfaction through additional non-wage compensations.
- Improves morale by showing employees they are valued.
- Leads to a more engaged and committed workforce.
- Enhancing Productivity:
- Reduces absenteeism by supporting employees’ health and wellbeing.
- Increases focus and efficiency at work.
- Creates a positive work environment that stimulates productivity.
- Improving Company Reputation:
- Enhances the company’s image as an employer of choice.
- Attracts more clients and partners who value socially responsible businesses.
- Strengthens the company’s position in the industry.
- Financial Incentives for the Business:
- Offers tax advantages in some cases for providing certain benefits.
- Reduces costs associated with high employee turnover.
- Can be more cost-effective than offering higher salaries.
- Supporting Employee Health and Wellness:
- Provides healthcare benefits, leading to healthier employees.
- Offers mental health support, crucial for employee wellbeing.
- Encourages a work-life balance through flexible schedules or remote work options.
- Fostering Diversity and Inclusion:
- Tailored benefits can address the diverse needs of the workforce.
- Shows commitment to inclusivity and equality.
- Helps in building a diverse and robust employee base.
- Legal Compliance and Risk Management:
- Ensures compliance with laws and regulations related to employee benefits.
- Reduces legal risks associated with non-compliance.
- Protects the company and employees through insurance and other benefits.
These benefits collectively contribute to a strong, sustainable, and positive company culture, ultimately driving business success.
Methodology for Selecting Financial Perks and Benefits for Employees
When we, as a small business or entrepreneurial venture, evaluate the various financial perks and benefits to offer our team, it’s vital to consider a range of factors. These factors ensure that the benefits align with both our employees’ needs and our business objectives. Here’s a breakdown of the criteria we considered when crafting the following list:
- Relevance to Employee Needs
- Scale of Importance: 10/10
- The benefits should address the real needs and preferences of our employees. This could include health insurance, retirement plans, or flexible spending accounts.
- Cost-Effectiveness for the Business
- Scale of Importance: 9/10
- While offering competitive benefits, it’s essential to consider the financial feasibility for the business. The perks should not strain our financial resources.
- Competitive Edge in the Job Market
- Scale of Importance: 8/10
- The perks offered should help position our company as a desirable place to work, helping to attract and retain top talent.
- Ease of Implementation and Management
- Scale of Importance: 7/10
- The benefits should be straightforward to implement and manage, without requiring excessive administrative overhead.
- Scalability and Flexibility
- Scale of Importance: 6/10
- As our business grows, the benefits should be adaptable and scalable to accommodate changing needs and employee numbers.
- Legal Compliance and Tax Benefits
- Scale of Importance: 8/10
- Ensuring that the benefits comply with legal requirements and offer potential tax advantages is crucial.
- Employee Engagement and Morale
- Scale of Importance: 7/10
- The perks should contribute positively to employee morale and engagement, fostering a productive and happy workplace.
- Long-Term Value to Employees
- Scale of Importance: 9/10
- Benefits should offer long-term value, like retirement savings plans, which help in building employee loyalty and commitment.
- Customizability to Individual Needs
- Scale of Importance: 6/10
- Offering customizable benefits, where employees can choose what fits their unique situation, can be highly appealing.
- Alignment with Company Culture and Values
- Scale of Importance: 7/10
- The benefits should reflect and reinforce a company’s culture and values, strengthening our brand from the inside out.
Best Financial Perks and Benefits for Employees
You don’t have to give out pay raises to financially lure and retain top talent. There are plenty of other cost-effective, tax-friendly perks that are mutually beneficial. Let’s highlight a few options that you may consider.
1. Offer HAS Contributions
Did you know that you can set up Health Savings Accounts (HSAs) for your employees? If you’re unfamiliar with HSAs, they’re essentially savings accounts that are funded using pre-tax income and used to pay for qualifying medical expenses.
“In addition to the tax-exempt funds, a HSA can also be maintained for years,” Boost Health Insurance points out. “That means that if you don’t withdraw those funds, your HSA can continue to grow, year over year. That tax-free money can also accrue interest, or even be used to invest in mutual funds.”
As an employer, you can help employees set up HSAs and even make regular contributions to them. You’ll have to study the annual limits to understand how much you can contribute, but these calculations can be handled pretty effortlessly.
It’s also important to note that HSAs are set up in the name of the employee, which means you don’t control how the funds are spent. And if an employee leaves, the account goes with them. Just something to keep in mind.
2. Offer 401(k) Match Programs
For employees in their 30s, 40s, and 50s, retirement benefits are very attractive. And while you can automatically enroll employees into a 401(k) program, take things a step further by offering to match their contributions.
A dollar-for-dollar match up to a certain percentage point – usually 6 to 9 percent of their salary – is a huge perk. Now, instead of contributing $6,000 a year to a 401(k), the employee knows she’s getting a $12,000 contribution. That little boost can enhance a retirement portfolio by hundreds of thousands of dollars down the road.
Educate your employees on the power of compounding interest and use a competitive matching program to entice and retain them.
3. Pay Off Student Loan Debt
Helping employees save for retirement is great, but not every employee is as focused on this long-term goal as they should be. Instead, helping them accomplish short-term goals may be more enticing.
“If you’re triaging immediate needs, newly-graduated students aren’t focused on saving for some nebulous retirement event at 62; they are focusing on paying off their student loans,” says Jenny Chou, chief strategy officer at student lender Darien Rowayton Bank.
One option is to match payments like in a 401(k) program. For example, you can offer to match the first 5 percent of annual student loan payments an employee makes beyond the minimum. Another choice is to help them refinance. With the proper guidance, you could help your employees save thousands of dollars per year — something they’ll be eternally grateful for. Better yet, some companies promise to pay off a certain dollar amount for every year the employee is with the company.
4. Offer Credit Assistance
Americans aren’t very good at handling credit. This has become quite evident over the past couple of decades. If your employees are indicative of the average, then you probably have a number of individuals on your payroll who have poor credit. One perk that may be enticing is free credit assistance and monitoring.
From your perspective, credit monitoring services are defined by the IRS as a form of identify theft protection, which makes them non-taxable. This makes it a savvy choice on both ends.
5. Provide Personalized Financial Guidance
The fact that Americans have such poor credit scores speaks to the financial illiteracy of today’s consumers. Most people haven’t received much financial guidance from parents and peers and, therefore, don’t know what it looks like to be smart with their money.
While it’s technically only your job to pay employees, many would appreciate you taking the time to help them get on the right path. Optional financial guidance is a really good perk to offer. You may even want to hire a financial guidance counselor for your team.
Some of the different topics to help your employees with include: personal budgeting, savings techniques, investing strategies, retirement planning, debt repayment, and home buying.
6. Give Childcare Discounts
Childcare is one of the biggest issues new parents face after the birth of a child. In many cases, the cost of childcare is such a large percentage of a person’s income that they decide to quit the job and stay at home. Others are forced to look for better paying jobs. You might not be able to provide onsite childcare, but you can help out in other ways.
Facebook, for example, offers four months of paid leave to new parents, as well as $4,000 in cash to help offset expenses. Other companies give monthly childcare stipends, or work out deals with local daycare facilities for discounted rates. Could you do something similar?
| Financial Perk/Benefit | Description | Advantages for Employees | Considerations for Employers |
|---|---|---|---|
| HSA Contributions | Health Savings Accounts (HSAs) are pre-tax savings accounts for medical expenses. Employers can contribute to these accounts. Funds can grow and accrue interest or be invested. | – Tax-exempt savings for medical expenses – Accounts grow over time – Funds can accrue interest or be invested |
– Must understand annual limits for contributions – Employees control the funds and accounts follow them if they leave |
| 401(k) Match Programs | Employers match employee contributions to their 401(k) retirement plans, usually up to 6-9% of their salary. | – Enhanced retirement savings – Employer matching effectively doubles contributions up to a limit – Benefits from compounding interest |
– Cost consideration for the employer in terms of matching funds – Can significantly improve employee retention and satisfaction |
| Student Loan Debt Payment | Employers assist in paying off employee student loans, either by matching payments or helping with refinancing. In some cases, employers pay off a set amount per year of employment. | – Reduces personal financial stress – Accelerates debt repayment – Can result in substantial financial savings |
– Can be costly depending on the level of assistance provided – Attractive to younger employees or recent graduates |
| Credit Assistance | Offering services like free credit assistance and monitoring, recognized by the IRS as non-taxable. | – Helps improve personal credit scores – Access to identity theft protection and monitoring services – Non-taxable benefit |
– Relatively low cost as a non-taxable benefit – Can improve employees’ financial management skills |
| Personalized Financial Guidance | Providing optional financial guidance on topics like budgeting, savings, investing, and debt repayment. Employers may hire financial counselors for their team. | – Access to professional financial advice – Improves financial literacy and management – Can lead to better financial decisions and savings |
– Costs associated with hiring financial counselors – Demonstrates employer’s commitment to employee well-being |
| Childcare Discounts | Offering benefits like paid leave for new parents, cash bonuses, childcare stipends, or discounted rates at local daycare facilities. | – Eases financial burden of childcare – Allows for better work-life balance – Attractive for employees with young families |
– Can be a significant financial commitment – Indirect way to support employees and boost morale |
Let the Benefits Do the Talking
According to a MetLife study on the topic of employee benefits, there’s a direct correlation between benefits and company loyalty. Specifically, the data shows that 71 percent of employees who are satisfied with their benefits are “very loyal” to their employers.
While you have the ability to offer whatever benefits you want — and customizable packages on an employee-by-employee basis is often a smart idea — financial perks like the ones outlined in this article provide a solid foundation.
This article, “Financial Perks and Benefits for Employees: Top 6 Options for Small Businesses” was first published on Small Business Trends