A startup faces the same challenges as established firms but with shallower pockets. Whether your goal is to attract top talent in your field or retain the top employees on your team, you will need to develop a competitive total compensation package that includes comprehensive health and fringe benefits.
Here’s a brief overview of factors you may consider as a guide to employee benefits packages for your startup.
Learn how to offer the best benefits package to your employees!
What Benefits Do You Have to Offer?
The law requires that employers offer the following employee benefits:
- Workers’ Compensation which replaces wages if an employee is injured while performing their job;
- Sick leave (varies by state);
- Matching employee Social Security and Medicare Taxes;
- Unemployment insurance in the event employees are involuntarily terminated or face layoff;
- In certain states, disability insurance for employees who miss work due to illness or injury through non-work related causes;
- The Family Medical Leave Act (FMLA) requires employers with at least 50 employees to provide up to 12 weeks leave per year; and
- The Affordable Care Act requires employers with more than 50 full-time employees to offer acceptable health benefits or face stiff penalties.
Keep in mind that required benefits may vary from state to state.
Which benefits are voluntary?
Fringe benefits invite voluntary participation. Some employers may offer more upscale benefits to leadership employees in order to stay competitive in the job market. Others offer more common benefits to their core employees. A few examples of commonly offered benefits are:
- Free coffee, tea, water, soda, snacks in the break room
- Flexible work arrangements
- Tuition reimbursement
- Fitness Center access/discounts
- Employee meals/cafeteria plans
- Dependent care assistance
- Employee Recognition Programs
- Stock options
- Employee discounts
- Personal use of company cars.
Analyze your workforce to determine the appropriate mix of fringe benefits that appeal to your employee base. An employee survey may serve as your guide to employee benefits for your startup and may provide an added incentive for employee participation in the final package.
What benefits do your employees want?
One of the most important things to understand before you select a group of benefits is what your employees want in a benefit plan. Sixty-nine percent of employers have trouble filling empty employment openings due to the ongoing talent shortage. It stands to reason that you must understand what motivates your current employees to stay and attracts new top talent to apply for your openings.
In general, the most wanted benefits are:
- Health
- Dental
- Vision
- Vacation, Paid time off
- Bonuses
- Paid sick days
- 401(k), pensions
- Flex work schedule
- Office perks in the form of free food, snacks, casual days
What benefits can you afford?
As important as it is to know what benefits appeal to top candidates and to current employees on your team, it’s also important to keep your budget in mind. You want to get the most out of the dollars you spend on benefits, just as you do with respect to other expense-related items. Think of the return on your investment in offering good benefits compared to the costs of losing out in the top talent candidate race. The same cost comparison is appropriate when it comes to the costs in hiring and onboarding new employees because your current staff jumps to your competitor where the benefits are better.
What happens as you grow?
As a startup business, you have to wonder what happens when the company starts to grow. Your size of employee team will most likely grow, too, and so will the competitive compensation package that you offer. As a small company, it’s difficult to obtain insurance benefits at a competitive price. You just don’t have the negotiating power that big firms enjoy. The administrative tasks increase, too, taking more time away from growing your business.
A Professional Employer Organization (PEO) takes the following duties off your plate:
- Payroll payments to employees, managing payroll deductions to 401(k) plans and income tax withholding;
- Tax filings;
- Unemployment, Workers’ Compensation, and disability claims administration;
- State and federal regulatory compliance;
- Recordkeeping such as employee disciplinary actions; and
- Designing performance evaluation forms/procedures.
Best of all, the PEO helps design the most competitive benefits package possible for your business. A PEO that works with multiple employers and multiple insurance companies provides the prime opportunity to negotiate significantly lower premiums with superior coverage. The advantages of benefits competitive with much larger companies are:
- Improved employee satisfaction;
- Higher employee retention rates;
- Reduced unemployment rates and lower workers’ compensation insurance rates; and
- Attraction of top candidates to smaller firms.
The prospect for a company’s increased profitability is 16% higher after hiring a PEO. In addition, companies working with a PEO enjoy the potential for:
- 10-14% lower employee turnover;
- 40% reduction in health insurance premiums annually;
- 50% less chance of going out of business.
Take the Next Step
You should conduct diligent research on the PEOs in your area. When ready, select a PEO that has the ability to offer core HR and payroll administrative services. You want a PEO that has a stable financial history, that maintains an experienced and stable staff of HR professionals and exhibits an exemplary performance history on behalf of its clients.
The National Association of Professional Employee Organizations (NAPEO) says that companies that use a PEO experience 7-9% more growth than companies that do not choose to work with a PEO. We invite you to review the types of services we provide, so you can see for yourself how working with our PEO to outsource your benefits and administrative tasks will help you grow your business.
