by Grayson Kemper,
Startups are known for their hard-charging and high-stakes environment. They must grow, innovate, and produce to drive revenue and stay in business.
Still, startups must provide employee benefits to recruit and retain top talent. This article will explore several innovative ways startups can offer employees robust benefits while keeping their organization lean and effective.
Employee benefits help startups keep up with the competition
If you’re a small business owner, who thinks you don’t need to offer a benefits package to attract and retain the best and brightest–think again.
According to a Clutch survey, nearly half of small businesses offer benefits packages and most frequently provide health benefits, retirement benefits, family leave, and paid time off (PTO).
Those perks are important to job seekers —approximately one-third of potential applicants (32%) start their job search because they are seeking better pay and benefits.
Benefits beyond basic expectations
Labor laws require employers to provide certain benefits to full-time employees, for example, time off to vote.
Surprisingly, however, employers are not required to provide many benefits that employees expect from companies. These include:
- A retirement plan
- Health insurance (for companies under 50 employees)
- Life insurance
- Paid vacations, holidays, or sick leave
In reality, most companies will need to offer some or all of those benefits to stay competitive and attract quality employees.
Your startup should not skimp on basic benefits; in fact, you should go beyond the baseline provisions, and provide a real incentive for employees to remain at your company.
Despite this, deciding to offer an attractive benefits package is not an easy choice for a startup or small business. Some view the choice as binary: forgo profits and attract and retain talent or cut back on benefits and risk losing your best employees to companies that offer more.
To make matters worse, health care costs continue to rise. Most entrepreneurs don’t have the time or expertise to figure out how to balance benefit offerings with the financial health of their business.
Employers must understand what their current (and potential) employees will want and determine how much they are willing to chip in for the coverage.
According to the Bureau of Labor Statistics’ National Compensation Survey, 60% of firms with fewer than 100 workers offered health benefits. On average, those companies covered 80% of employee premiums for individual policies and 65% for family policies.
However, different plans can offer more affordable coverage for a startup.
Balancing the costs of employee benefits
Due to the high cost of health insurance plans, small businesses can offer high-deductible plans or plans with lower premiums but force employees to shoulder more of the treatment costs up-front before the insurance coverage starts paying.
A high-deductible plan is a calculated risk for employees: A relatively healthy person will pay less in premiums and save money, while someone who frequents the doctor will pay more out-of-pocket before the insurer starts paying.
A health savings account (HSA) is another popular option for employers. HSA plans allow employees to deposit pre-tax dollars to cover health care costs, and the employee both owns the funds and gets to rollover any unused funds from year to year.
Again, talking to your employees about what the best choice for them is will help an entrepreneur make the right choice about health insurance coverage.
Benefits are a worthwhile investment for employers
Offering a benefits package can be bothersome and expensive for a startup. But, while dollars and cents are a priority for an entrepreneur, it is important to appreciate that the business is only as good as its employees.
To that end, benefits are a critical tool for recruiting and retaining the best workers.