Major decisions you make as a small business owner could lead to financial successes or tragic, dream-killing mistakes. Every move you make needs to be calculated and checked against potential risks. Even scarier is the fact that you can’t see every hurdle in your way. Some things are unpredictable.
By VERONICA BAXTER
Two of the more daunting decisions facing small businesses early on is when and how to offer employee benefits beyond what’s federally mandated as your business grows? As an employer, you have a responsibility to the people you hire. The smaller the company, the more personal this responsibility feels.
I know from personal experience that the business relationship between some small business owners and their employees feels more like a family tie, friendship, or like being on a sports team. The dynamic is way more nuanced and is practically incomparable to the relationship between, say, Jeff Bezos and one of his tens-of-thousands of factory employees.
So, I’m sure you feel every ounce of that weight when considering when to take that next step and get coverage. You want to make sure that you do it right in a way that satisfies your employees’ needs but also keeps the company profitable and their jobs secure. So…
When should you expand to benefits beyond what is federally required?
The answer is as soon as it is financially feasible for you to do so. The good news is that there are ways to get your employees the benefits they need in cost-efficient ways.
You Don’t Need to Put Every Benefit in Place All at Once
Some outsourced HR companies pull together comprehensive benefits packages for their clients that contain all the bells and whistles, but these are usually way too expensive for small businesses to reasonably afford. You may want to take a staggered approach to get your employees the benefits that will keep them satisfied and onboard.
Be Transparent and Ask Your Employees What They Want
Talk with them about what benefits they want you to prioritize. Affordable health insurance is going to be at the top of that list. Other top contenders will be flexible spending accounts, PTO, a retirement savings plan, student loan aid, etc. Transparency and openness are key – communicate that you want to prioritize the benefits they want.
By staggering the approach, you can devise a benefit plan that scales alongside your businesses’ growth. Having your employees involved in the process gives them a stake in your business’s success beyond their paycheck.
Offer Creative Benefits or Perks Unique to Your Business or Your Employees Needs
Ask your employees what kinds of perks they’d like to have. If you cannot afford to offer them life insurance yet, they might be interested in a gym membership or discount. Are you located in a city? How about providing free parking? Or reimbursing for transportation?
Invest in Your Employees Futures
Another enticing perk is investing in your employees’ futures. Paying for conferences, classes, and certifications will show that you care about their futures and that you want to help them climb the ladder, so to speak, and realize their potential.
Offer Equity in Your Business
Early on, if you do not have the means to offer the benefits you’d like to, consider providing equity in the company itself. This is useful for start-ups because it gives the employees a personal stake in their health and longevity. Offering equity fosters a team spirit and can help motivate your team to excel.
Offer Life Insurance
Different life insurance options are very enticing to both employers and employees, depending upon your business operations’ amount of risk. The most common life insurance policy used by businesses is group-term life insurance. This is a general policy that should come after more essential and immediate needs – like health insurance. However, there are other types of life insurance policies you can offer your employees that might be more appropriate to offer right away, depending on the nature of your business.
Accidental death and dismemberment insurance, “AD&D” for short, might be essential to offer if your business has specific risks associated with it. Contractors who operate dangerous machinery, security guards who risk their lives, and scientists or other technicians who deal with hazardous materials all might find an AD&D policy enticing.
Business travel accident insurance is another specific type of policy. It is a good idea if your employees often travel for business meetings or travel for extended periods is part of the job description.
Make Sure Your Employees Are Thorough and Accurate When Filling Out Applications
Having your life insurance claim denied is an awful ordeal, especially when the reason is a misunderstanding of a question on the application. If you pay for your employees’ life insurance, make sure the process is done right, so they don’t have to fear life insurance not paying out because of some clerical error.
Getting your Employees Benefits Early is Ultimately a Good Business Decision
There are financially intelligent ways to get your employees the benefits they want. You may not be able to get them everything they want right away, but together you can create a path forward that prioritizes their needs. Medical insurance is usually the most popular benefit, so this will probably be your priority. Remember to communicate with your employees to find out what matters most to them. To summarize, getting your employees benefits is not a zero-sum game.
- Veronica Baxter is a writer, blogger, and legal assistant operating out of the greater Philadelphia area.