For a growing or small business, finding and retaining quality employees goes beyond compensation.
What gets top talent in the door and keeps them there are often the benefits and perks your company provides. These offerings are things employees may not be able to access on their own, and they provide additional value by helping to strengthen your company culture and show employees they’re appreciated.
When you’re looking into offering employee benefits and perks, there are a lot of considerations to weigh. Discover the difference between benefits and perks, and how to determine what to offer to your team on a budget.
Benefits and Perks: What’s the Difference?
Benefits are non-wage compensation that supplement salary. Health insurance, pre-tax transit assistance, stock options, and 401(k)s are just a few examples. Benefits are generally more reliable than perks, and cover more basic needs.
Perks, on the other hand, are those nice-to-have additions to a benefits package. They typically consist of things that can help the employee perform a job better, like a company car (which the employee also uses as a personal vehicle), discount travel fares, or exclusive access to premium hotel suites. But they can also just be fun extras. In recent years, many companies have begun to offer a more creative breed of perks, like Summer Fridays, discounted or free gym memberships, standing desks, and off-site team building activities.
Many great work perks, like having coffee and snacks available to employees, make the office environment more inviting. However, perks do little to compensate an employee, which is why benefits are more substantive.
In short, perks are things people want, while benefits are things people need.
What to Offer Your Team
For many small and growing businesses, it’s simply not feasible to offer all the benefits and perks you’d like to from the get-go. Budget is one factor, as are time, resources, and culture fit.
Another crucial consideration of course is what you’re required by law to offer. Look into any laws that apply to your company and make sure you’re compliant. Checking with an attorney who specializes in this area is always a best practice.
Beyond that, how do you determine what benefits and perks to offer? Here are some questions to get you started.
Put your accounting on autopilot
Schedule a free consultation today.
What can you afford?
When it comes to employee benefits and perks, there are certainly costs involved for the employer. The more your team gets, the more you pay. But it can be helpful to think of these costs as an investment. By investing in great benefits for your team, you’re better able to attract and retain top talent for your company.
That said, it’s helpful to start with the basics. People generally won’t be swayed by the snacks in the office if they don’t have health insurance.
Health insurance can be one of the bigger costs that a growing or small business needs to budget for. Bear in mind that benefits can be offered at nearly any budget, depending on what you want to offer. For small businesses that are struggling to find access to affordable benefits, services like a Professional Employer Organization (PEO) can help.
It’s recommended that you aim to cover the needs first, then add in the wants as your budget allows. Lean on whatever free or nearly free perks you can to help boost morale, like flexible hours, the option to work from home, or no-meeting Fridays, just to name a few.
What do your employees want?
A Justworks survey found that health benefits are usually the most expected and desired type of benefit employees cited when accepting a job offer. 88% of respondents said the quality and options of health benefits were important to them, but only 41% of employers surveyed offered health insurance as part of their benefits package.
Find out what your own team values. A simple survey is a great way to collect feedback and get a clearer picture of what benefits and perks will be a good fit for your current team.
It’s also worthwhile to consider your future team. What type of employees do you hope to attract and hire down the line? What kinds of benefits and perks are important to them? If possible, factor this into your decision making.
What kind of an employer do you want to be?
Sometimes, it pays to get a little philosophical. The benefits and perks that you offer say a lot about the type of employer you are and the type of company you’re building. Where do you see your company in five years? What kind of business do you envision it will be?
If you’re unsure, it can be helpful to set a benchmark. Take a look at what kinds of employee benefits packages other similarly sized businesses in your industry are offering. Are they offering access to health insurance? Are they turning to perks instead? This can show you what prospective employees are looking for and expecting, and allow you to determine what you might offer to gain a competitive advantage.
Ultimately, creating the right package of benefits and perks to fit your team, your culture, and your budget is a work in progress. Your team may grow over time, your budget can change, and you’ll need to adapt. Remain flexible and open to feedback from your employees, and you’ll be on the right track.
This blog post was written by our partner, Justworks. Justworks helps entrepreneurs and businesses grow with confidence by giving them access to big-company benefits, automated payroll, HR tools, and compliance support — all in one place. Learn more at Justworks.com.