As a new business, you might struggle when it comes to assembling a competitive compensation package. Not only are you figuring out your internal processes, but cash flow can be unstable in the early days. It may be tempting to use these reasons to delay putting solid benefits in place for your employees.
Unfortunately, a lack of benefits presents two problems when it comes to attracting a strong team to support your enterprise. First, quality workers are likely to have multiple job offers. If they receive an offer elsewhere that provides comprehensive benefits, they will be unlikely to strongly consider yours.
Second, not having benefits in place can give the impression that your company’s future is tenuous. Many workers will hesitate to accept a position with a business that might close within a year or two.
Thankfully, there are simple and cost-effective ways to provide benefits to your employees no matter how recently you’ve begun operations.
1. A Retirement Plan
Some entrepreneurs might be under the impression retirement plans are too expensive or time-intensive. But with seemingly countless types of retirement plans available, you should be able to select one within your means.
For example, a SIMPLE 401(k) plan is a great way to dip your toes into providing retirement benefits at your company. These plans can operate one of two ways. You will either match up to 3% of employees’ deferred salary or provide a 2% match regardless of employee deferrals.
A big cost savings with this type of retirement plan is that there is no expensive annual cross-testing required. Not only that, but you don’t need to file a separate tax return for the plan. Depending on your accountant’s hourly rate, that alone can run hundreds or even thousands of dollars.
Even a modest retirement plan makes a statement. It tells employees that you intend to be in business for the long term and want to help them set up their financial futures.
When you’re just starting out, you may want to consider something like a SEP IRA. The flexibility offered by these types of accounts make them attractive to entrepreneurs just beginning a new company.
2. HSA Contributions
Offering group health insurance is an expensive undertaking, especially for small businesses. Employers often find that any plan without laughably high deductibles is far beyond their price range. In situations where your health insurance coverage is — shall we say — lacking, you might need to mitigate employee healthcare costs. Making contributions to employee health savings accounts is a fabulous and cost-effective way to address that need.
One benefit of offering HSA funding is that employees have more flexibility over their healthcare expenditures than with insurance alone. HSA funds can be used to pay for a multitude of items and services not typically covered by health insurance. These include mental health services, LASIK surgery, copays, drug rehab, and certain over-the-counter medications.
Employees who rarely incur medical expenses can also reap the benefits of HSA accounts. HSA funds can be invested in stocks or mutual funds and allowed to grow over time. Many people use their HSA as a secondary retirement account. It can either be left alone to grow until retirement or be used as an emergency fund in case of unexpected medical expenses.
If you do offer HSA contributions to your employees, make sure to explain to them how they can personally benefit. Providing perks that are unused or undervalued by your workers runs contrary to what you’re trying to accomplish. To acquire and retain quality talent, you need to demonstrate the value of your employee benefits.
3. Hybrid Work Options
For certain industries, remote and hybrid work options just aren’t a possibility. HVAC technicians, delivery drivers, and retail workers can’t work from home due to the nature of their responsibilities. However, if your business is in a field that could support remote or hybrid work options, offering them is a no-brainer.
If you want to create a work culture that is considered family-friendly, hybrid work arrangements are a great way to enable that. Any parent can tell you the ability to work from home to stay with a sick child is extremely valuable. Scrambling for childcare due to school closures or other unexpected circumstances can also be alleviated.
Outside of childcare considerations, hybrid work is great for instances of inclement weather. Employees don’t have to burn PTO or sick leave just to stay home and do nothing during an ice storm. With hybrid work options, they can continue to perform their essential job duties at home without battling dangerous travel conditions.
Hybrid work can be extremely adaptable to the needs of the employer as well. If you only want to allow remote work during weather emergencies and childcare crises, simply communicate what circumstances qualify. Alternatively, you might allow individuals to work from home for a certain number of days per week on a regular basis. You should draft and follow whatever policy would be most beneficial to your business and still provide value to your workers.
Real Benefits at a Price You Can Afford
With the job market the most competitive it’s been in decades, employers need to offer comprehensive value. Even for businesses just starting out, employees view benefits as a sign of stability, and they expect them to be competitive. If you are tempted to wait on offering benefits, be prepared to pay through the nose for salaries that compensate for their lack.
Before you begin the hiring process, you should evaluate your benefit options. You might find you can offer true value to your team at a fraction of the cost you expect.