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Happy employees are an essential driver of a successful business. But what drives their success and happiness?
Our 2020 State of Small Business Survey found that a little over half of employers offer their workers health insurance. A similar number provide vacation time or paid time off as well. Our stats also show that 72% of employers feel like the benefits they offer meet the needs of their employees at least somewhat well.
But do the employees of small businesses think their needs are being met? In a different survey, conducted by the Society of Human Resource Management (SHRM), 92% of employees said the benefits they receive are vital to the overall satisfaction they feel at work. To make sure you keep your team satisfied, here’s a closer look at our research, as well as some key third-party statistics about which benefits an employer should offer.
The top benefits for employees
In order, these are the benefits that are most important to the employees who took our survey:
- Health insurance
- Paid time off
- Retirement benefits
- Vision insurance
- Dental insurance
- Parental leave
- Life insurance
- HSA and FSA accounts
If a business owner wants to offer excellent benefits, here’s a little more insight what the three most popular employee benefits are likely to mean to your team:
1. Health insurance
After their salary, health insurance is likely the most essential aspect of employees’ compensation. It’s one of the most common benefits, according to our survey data, and employees rate it number one on their wishlist. Business owners can also enjoy this benefit for themselves and their families.
In our survey, 58% of small business employees said their employer offers a health plan. Many employers also include vision and dental insurance alongside health coverage. As you think about offering employees health insurance, keep in mind SHRM’s finding that 56% of employees said the quality of their health plan is a big part of what binds them to their current employer. It may be worth spending a little more to offer employees a better standard of care or offset more of their premiums.
2. Paid leave
Paid leave ranks high among most employees’ priorities. The SHRM study found that 92% of employees say their paid time off policy (PTO) has a large effect on their overall job satisfaction. In addition to being the second most popular benefit, it’s also the second most common, with 57% of employees receiving PTO, vacation pay, or sick days as part of their package.
Employers that offer generous time off policies telegraph their support of employees as whole people away from the office — not just as workers.
3. Retirement savings plans
Employees appreciate help when it comes to saving for their retirement, and 41% of small businesses step up by offering a retirement plan. The most common option is a traditional 401(k) or similar defined contribution retirement plan. In addition to sponsoring a plan, many employers also choose to match employees’ contributions, but it isn’t generally required. And keep in mind that business owners can usually save more for their own retirements when they set up a plan for employees.
Employee perks to consider
In our survey, we also saw that flexibility, fun, and coworkers were among the top things employees like about their job. While these aren’t technically benefits, there are many free and low cost steps an employer can take to provide additional perks.
Remote work options
Once the COVID pandemic is over, 65% of small business owners say they plan to offer at least some employees a remote-work option indefinitely. That’s a good thing: Employees who work from home were 20% more likely to say their employer is supporting them “very well,” and are more likely to recommend their employer to others. If you don’t already offer a work-from-home (WFH) option for your employees, we created this guide to set up a WFH policy for your small business.
The popularity of secondary wellness benefits is growing quickly. In the SHRM survey, almost half of the organizations that added new benefits included wellness benefits as part of their package.
These perks can take the form of organized wellness resources or programs, a casual company-wide fitness challenge, CPR training, standing desks, or other preventive health programs. They can create good bonding opportunities — and sometimes even lower the cost of your company’s health insurance plan.
If you want to go the unhealthy route, remember that a tasty lunch or doughnuts in the morning can also boost morale and provide a moment of delight.
Why benefits are important
The bottom line is that benefits play a big role in attracting and keeping a good staff. SHRM’s survey reveals that the top reasons employers decide to increase benefits are to retain employees (72%), attract new talent (58%), and respond to employee needs (54%).
The ability to attract top talent is often a key reason business owners put together a high-quality benefits package. It shows applicants that the company is investing in its employees and is interested in supporting them beyond the four walls of the office. It can also give you a competitive advantage against employers that don’t choose to offer benefits.
Benefits have a clear effect on retention — 29% of employees in the SHRM survey reported that their overall benefits package had been a significant factor in deciding to look elsewhere for work. Meanwhile, 32% of employees who were satisfied with their workplaces said that the quality of the benefits package was a major reason. Great benefits translate into good morale and job satisfaction among employees.
Taking care of your people
Keeping your employees healthy is an excellent reason to have a robust benefits package. When workers are sick and miss work, the lost productivity translates into real dollar losses for your business. The indirect cost of all that missed work adds up to approximately $1,685 per employee every year, according to the SHRM survey.
Increased revenue and sales
Conversely, when employees are at work, feeling good, and on task, they are able to make your company run better. When employees are happy or satisfied at work, their productivity increases by 31% and sales jump by 37%, according to Harvard Business Review. The relationship is referred to as the Happiness Dividend.
So, how do you choose employee benefits?
In addition to the options listed here, many employers offer their workers life insurance, professional development opportunities, tuition reimbursement, family leave, paid gym memberships, and commuter benefits (among many others).
With employee benefits making up a hefty 32% of total compensation costs, employers should consider their options carefully. Our data about which benefits are most important to employees is a good place to start. As you consider your options, keep in mind that health insurance is far and away the benefit employees want most. But after that you may want to get more insight by asking your team directly which benefits they would prefer — or how they might view tradeoffs between investing more in one benefit over another.
Choosing among all the options can feel a little head-spinning, but you don’t have to go it alone. Partner with a benefits broker or a top-notch payroll service provider to help you manage these essential HR functions.