Health, wellness, PTO, education, medical leave, and other perks that can help you attract and retain top talent.
In today’s challenging jobs market, companies are looking for any advantage to attract new employees and retain current full-time workers. This is especially true for small businesses and startups that may not be able to pay the high salaries their larger competitors are able to use to attract top talent. That’s why more and more small business owners are expanding the number and types of benefits (or perks) they offer their employees.
The COVID-19 pandemic pushed the trend toward offering more benefits because workers turned to their employers for help with their physical and mental health, financial issues, and childcare needs. A recent study from the Society for Human Resource Management (SHRM), reports that 83 percent of employers offer mental health coverage, 79 percent provide an Employee Assistance Program and 58 percent have wellness benefits.
Did you know: Nearly two out of five workers feel burned out and one out of four say they are experiencing depression because of the coronavirus pandemic, according to the SHRM study? These people might find mental health coverage more valuable than a higher salary or hourly pay rate.
Depending on how the COVID-19 pandemic affected your community, finding the right combination of benefits to mitigate its impact could make your small business more attractive to full-time employees now and in the long run.
Tip: Adding fringe benefits to a job offer can be a great way to turn an undecided job candidate into a new hire.
Here are the most popular benefits as reported by the SHRM survey, along with some others offered by employers. They are ranked by the percentage of employers that currently offer them.
Paid vacation: 98 percent of employers offer it
Employers understand that their workers need to relax and recharge. Otherwise, they’ll burn out. That’s why almost all of them offer some type of paid vacation benefit. The cost of providing paid time off (PTO) pays off in increased employee productivity and retention.
According to the Centers for Disease Control (CDC), depression (often the result of stress in the workplace) can negatively affect a person’s ability to perform work tasks 20 percent of the time and hinders cognitive performance approximately 35 percent of the time. Add to this the cost of replacing workers who quit because they’re stressed out, it’s easy to see why small business owners should offer PTO. It’s also important to make certain that workers take advantage of their vacation time and use all their vacation days so they can rest up, even if it’s just during a staycation.
Retirement plans: 93 percent
As people live longer, they’ve become more concerned about being able to afford to live through an extended period of retirement. Market instability and changing financial needs and priorities have made it an even bigger worry. The pandemic only exacerbated this. According to the Pew Research Center, half of the people in the workforce say COVID-19 made it more challenging for them to reach their long-term financial goals. More than a third have had to withdraw money from their retirement accounts to pay their bills.
All this financial insecurity has made it necessary for most employers to offer a 401(k) or another type of retirement plan or savings account. There are many types of retirement plans that small businesses can offer to their employees. It’s worth meeting with your financial advisor or the retirement expert at your bank to figure out which option is best for your organization.
Mental health coverage: 83 percent
According to a recent report by Ginger, a mental healthcare platform, 96 percent of employers believe they’re doing enough to support employee mental health. However, only 69 percent of workers agree. The issue continued through the pandemic. Just over 90 percent of employers say they put more focus on mental health during the COVID-19 crisis. Again, just 57 percent of workers agree. The pandemic has placed more focus on mental health as more and more people have had to deal with stress, depression, anxiety, and burnout.
Mental health coverage could be one of the most valuable benefits you offer your employees today. Work with your insurance provider to find coverage that’s good for the people on your team and the bottom line of your business.
Employee assistance program (EAP): 79 percent
People today need mental health and work-life support more than at any time in modern history. The pandemic has made just getting through the day more challenging than ever.
It’s why EAPs have never been more relevant than they are today. Workers and their families appreciate being able to take advantage of in-person and virtual counseling. The 2020 Annual Report for the Workplace Outcome Suite looked at the effectiveness of EAP counseling. The study found people who took advantage of EAP programs were more present at work, engaged with their jobs, experienced less distress in the workplace, called in sick fewer times, and felt more satisfied with their lives.
Healthcare and flexible spending accounts (FSAs): 68 percent
Healthcare coverage has been a big deal for workers for decades. Health insurance has become even more important as changes have been made to the Affordable Care Act (Obamacare) and the need for access to quality healthcare increased dramatically during the pandemic.
Some good news about flexible spending accounts came out of the pandemic. They were formerly known as the use-it-or-lose-it account. The money in them had to be spent by the end of the year, often forcing people to use the cash for unnecessary treatments, exams, and services.
The Consolidated Appropriations Act was passed by Congress and signed by the president back in December. The legislation was developed to provide Americans with financial relief from the pandemic. One of the provisions in it allows an additional year for people to spend the money on FSAs.
Wellness programs — 58 percent
Concerns about employee wellness have increased throughout the pandemic. Stress, depression, and anxiety have had a big impact on workers. It’s encouraged employers, even many small businesses, to offer wellness programs like exercising, meditation, yoga, nutrition advice, and financial counseling. They have been a relatively low-cost way to manage stress and develop healthy habits during the pandemic. Wellness programs are also a proven way to reduce employee sick leave.
Tuition assistance programs (TAPs): 56 percent
The cost of higher education has made it more challenging than ever for people to take advantage of it. Politicians have been calling for tuition and student loan relief for decades, however, nothing has come of it.
When it comes to deciding whether to go to school or join the workforce, many people choose to go to work rather than taking on more debt while earning less money as a student.
That’s why more and more employers are offering tuition assistance programs to attract top-tier talent. They typically pay a percentage of tuition upon the successful completion of coursework. Tuition assistance programs are popular with technology and other cutting-edge companies that seek to attract knowledge-hungry workers who want to stay up-to-date on the latest industry knowledge and trends.
An investment in a TAP could pay off for your business for many years to come. Of course, some workers could leave your firm after you pay their tuition bills. However, most will become incredibly loyal because you helped them out.
Health savings account (HSA): 56 percent
An HSA is unique because it allows employees to save for both healthcare expenses and retirement, two important concerns for most people. Unlike the FSA, employees can control the contributions into an HSA. Money can also be rolled over to another HSA account when an employee changes jobs. The Consolidated Appropriations Act passed late last year allows FSA balances to carry over into 2021 and they can be deposited into a qualifying HSA. It’s one of the reasons more businesses are offering HSAs to employees.
Long term care insurance: 32 percent
As people live longer, caregiving is becoming a big issue for many families. The work and family lives of caregivers often suffer because of their added responsibilities. Many people who become caregivers promise to avoid making their children and family members caregivers in the future. It’s one of the reasons that long-term care insurance has quickly become a popular employee benefit that many people take advantage of. It helps pay a variety of expenses if the covered person ever experiences a serious long-term illness.
Fitness support: 30 percent
Exercise is known to promote health and improve employee performance on the job. It could also help lower health insurance costs and reduce the number of worker sick days.
Most small businesses can’t afford to open their own company fitness center, but they can negotiate a reduced rate for gym memberships at a nearby health club or subsidize a membership. Most find that the relatively small investment pays off in big ways in increased employee productivity.
Paid parental leave: 27 percent
Almost nothing is as life-changing and stressful as becoming a parent. More and more employers are acknowledging this by offering paid parental leave to new moms and dads. It’s hard for them to stay focused at work when they’re exhausted because of a crying baby, constant diaper changes, and late-night feedings. It builds a great deal of goodwill and loyalty when businesses give parents time to adjust to new circumstances.
Did you know: Paid time off for parental leave is covered by the Family and Medical Leave Act (FMLA) and overseen by the United States Department of Labor (DOL).
The FMLA allows eligible employees of covered employers to take unpaid, job-protected leave for a new parent and other reasons. It requires the continuation of group health insurance coverage that is identical to what it would be if the employee had not taken leave. In addition to twelve weeks of leave for the birth of a child, the act provides for time off and continued healthcare coverage for an adoption or new foster care situation, care for an immediate family member who has a serious health condition, major employee illness, and more.
The FMLA is complex, and it’s smart for employers to become familiar with its provisions.
Paid time off for volunteering: 26 percent
Do you run a progressive business that’s committed to its community? Then put your money where your mouth is and offer PTO for volunteering, which is often referred to as volunteer time off (VTO).
VTO is popular with millennials, which is currently the largest demographic segment of the workforce. Millennials are vocal about what they want from their employers and often base their job decisions on benefits package offerings. If you want to attract them to your business, think about whether it makes sense for you to offer VTO.
If you use t-shirts, buttons, and banners to make it clear your employees are helping out the people in their community, you can consider VTO a brand marketing, rather than a human resource, expense. It’s a good way to demonstrate — not just talk about — company values.
In-vitro fertilization (IVF) coverage: 19 percent
Infertility treatments: 18 percent
Becoming a parent isn’t easy for many people. Accessing fertility support can be emotionally and financially draining. Employers are helping to reduce the burden by offering benefits that make it easier for employees to become parents. This is a popular offering for employers who want to attract younger workers. It can make employees who take advantage of it feel less stressed and more financially secure. This could result in greater loyalty and productivity at work.
Payroll advances: 15 percent
The pandemic has increased the number of people experiencing everyday financial issues, including late rent and mortgage payments and overdue bills. Needless to say, this leads to stress that impacts job performance. It’s the reason more and more businesses offer payroll advances as a form of relief. Don’t think of this as a loan. You’re simply paying people what they’ve already earned more quickly by accelerating your normal pay period. It could help reduce employee distractions and increase productivity during these challenging times.
Pet insurance: 15 percent
Veterinary medicine is becoming increasingly sophisticated — and costly. Caring for a sick pet can be very expensive and cause serious stress to a pet parent. Pet insurance is an emerging workplace perk, and it costs very little to offer. Depending on your employee base, it could be something you may want to consider in the future.
Student loan assistance: Eight percent
The stress that comes from student loan debt can negatively impact employee performance. The national student debt balance has increased to more than $1.6 trillion and 53 percent of people with high student loan debt have experienced depression because of it. That’s according to a survey by Student Loan Planner, an online information resource. One in 15 borrowers who participated in the survey say they have considered suicide because of their student debt burden.
While few employers currently offer student loan assistance, it is an important and valuable benefit to people in professions like law and medicine who typically accrue high student loan debt.
Tip: Some employee benefits may be covered by federal laws and state laws and are subject to U.S. government taxes and state taxes. It’s a good idea to check the legal and tax implications with your lawyer and tax expert before offering them.
Workers’ compensation, Social Security, life insurance, profit-sharing, vision insurance, childcare, and transportation benefits.
Seven benefits or perks not covered in the Society for Human Resource Management study, but offered by many employers, include:
- Workers’ compensation: Unlike most of the other benefits on this list, employers are required to provide workers’ compensation insurance, which is often referred to as workers’ comp. It’s a government-based insurance program that covers a range of expenses if an employee is injured while on the job.
- Social Security: Similar to workers’ comp, Social Security is a government-mandated program. The U.S. government requires employers to collect Social Security withholdings (payroll taxes), up to a certain level, from their employees. Social Security provides limited income to United States citizens (including those in territories like Puerto Rico) who are retired. Workers who have paid into the Social Security system for at least ten years become eligible for program benefits at age 62. However, they will receive a higher monthly benefit if they wait longer. Medicare, the program that provides healthcare insurance to retirees is part of the Social Security program.
- Life insurance: A life insurance policy will pay designated survivors a certain percentage of — or the number of years worth of — salary if workers pass away while employed by a company. It’s a relatively inexpensive benefit that can help protect the families of employees against a loss of salary at a vulnerable time. The one issue with employer life insurance is that it usually cannot be transferred when a worker leaves the company.
- Profit-sharing. Are you looking for ways to motivate the people on your team? Offering a profit-sharing plan could be a great way to do it. You pay employees more when your business does better. This encourages them to work harder, better and smarter. It could also help attract job seekers who want to feel that their work matters and makes a difference to the success of the company they work for.
- Vision insurance. This type of insurance is relatively inexpensive and covers things like eye examinations, glasses, and contact lenses. Families that need a great deal of eye care support appreciate this benefit.
- Childcare. Caring for young children can be expensive. That’s why many businesses offer some form of subsidized childcare help. Larger companies sometimes open their own daycare centers. Small businesses can work out a deal with a reputable childcare provider to get access to care at a reduced cost. It can help workers rest assured knowing their kids are being looked after by trusted professionals. This can help them stay focused on their work.
- Transportation. Getting to work in some cities is expensive. It’s why many employers leverage local transportation agency programs to offer employees low-cost transit passes. It helps reduce some of the stress of getting to work in big, expensive cities.
This list of benefits is big and too extensive and expensive for most small businesses to offer each and every one of them. Select a few of the benefits that will appeal to the kind of people you want to employ. It will make them more likely they’ll be attracted to your business and feel loyal to it once they come to work for you.
Learn about another form of employee benefit, credit card rewards, on the Biz2Credit blog.