Today’s job market is highly competitive, especially for employers. Small and new businesses have to find ways to compete with larger companies to hire top talent. Benefits for startups can be a key tool in attracting and retaining great employees that will help your business scale. By offering competitive compensation and benefits, startups can capture the talent they need to grow their business. It’s equally important to keep the talent you have once you’ve captured them. A well-designed benefits package can also help retain employees as the company grows. Unlike the big companies, most startups don’t have a dedicated HR department to help them design a stellar compensation package, but in this article, we will outline some steps your startup business can take to capture the best possible team members and increase employee retention.
Where do we begin with employee benefits as a startup?
There is no one-size-fits-all answer to this question, as the best employee benefits for a startup will vary depending on the company’s budget, size, and needs.
These days, employees care a lot about benefits that reach beyond their paycheck, such as flexible work schedules, stock options, company culture and remote work. Incentives that contribute to work-life balance will help your company meet the growing need for full-time employees to live fulfilling lives outside of work.
Basic offerings that all startups should consider include health insurance, retirement plans, life insurance and paid time off. As a new or small business owner, you may lack the cashflow for traditional healthcare benefit but even if you aren’t ready to offer an extensive insurance plan, there are some great options for offering insurance without breaking the bank.
By offering these and other benefits, startups can attract top talent, which is essential for any company’s success.
Learn More About Startup Benefits Packages
When you are recruiting for your startup, offering a strong benefit package can help you find the right talent and offset uncertainty during the hiring process. If you are wondering how to create a competitive benefits package, first look into what other companies provide to their employees. You’ll want to make sure you find the balance between health and wellness benefits, as well as work-life balance incentives. A typical startup benefits package will usually include health insurance, a 401K plan, a paid time off policy, an accidental death and dismemberment (AD&D) plan, and life insurance. Let’s quickly outline what employees can get with each of these benefits.
Health Insurance
Health care expenses can put a major financial strain on employees and health insurance will be one of the key benefits your future employees will look for. While offering health insurance can be a significant investment, especially when you organization is young, the payoff will be finding and retaining the right talent that can grow with you. There are a couple of ways to structure it depending on how much the business wants (or can afford) to cover.
If you want to offer a traditional health plan, you should find a trusted broker to work with. You will work with your broker to discuss your health plan options and take a census of your current team. Your broker will prepare pricing for a variety of health care plans with different coverage levels and different price points, providing the premium costs per employee so you can forecast what your expenses will be. Most organizations offer two to three different health plan options to their team, so the employee can choose the plan that best aligns with their current healthcare needs. The current rules state that an employer must cover at least 50% of the employee’s premium, but you can cover less (or nothing) of your employee’s dependent premium. The portion that your employee pays for their premium will be deducted from their normal paycheck.
If you aren’t quite ready to offer a traditional health plan, there are still ways to help your employees cover their healthcare expenses. One of the best ways to do this, while still retaining the tax benefits of a company-sponsored plan, is to offer reimbursements through a qualified ICHRA Health Plan. In this type of plan, the employee finds their own health care policy on the open market, and then the business determines a fixed budget to reimburse their employees for health insurance each month. This can be a great solution for startups looking to contribute a lower amount than what might be required under a traditional plan, but still offer their staff the value of a pre-tax health benefit.
Retirement Plan
Second in line to healthcare, a company-sponsored retirement plan is generally a high priority for employees when assessing a company’s benefit package. Especially if your new recruit is coming from a larger organization, which gave them the opportunity to save for retirement. One of the most common types of retirement plans to offer is a 401k.
If you want to save costs when you first start offering benefits, you can offer a 401K without a company match. This allows your employees to set aside pre-tax dollars with every paycheck, even if the company is not contributing to the investment. However, once you can afford it, offering a company match will increase the value of the benefit to your employee, and strengthen your overall benefit and compensation packages.
If you use a payroll company like Gusto, setting up a 401K is very simple. They have a variety of 401K partners they work with, and a 401K plan can be set up and running with payroll with just a few clicks of your mouse.
Paid Time Off
Paid time-off gives employees peace of mind that they can take leave for vacation, sickness, or maintaining a healthy work-life balance. It’s true that larger companies will have the funds to cover more paid-time-off days per employee; however, even a small business can start with a few days to strengthen its competitive edge. Some companies don’t implement a policy in fear of giving too much or too little time off. But studies have shown that having a set time off policy has a direct positive effect on employee satisfaction. It will also help with setting clear expectations as the employer.
Accidental Death and Dismemberment
Accidents happen and having different types of coverage can help your employees feel at ease. If an employee suffers accidental death, loses a limb or loses one of their senses (resulting in impairment) AD&D will act as a supplemental health insurance coverage. In the case of an accident, the insurance amount is paid in a lump sum to employees. This insurance is important for industries where employees are working with machinery, chemicals, volatile environments, or operating motor vehicles.
Life Insurance
Life insurance is often an overlooked benefit, but one of the easiest and most affordable benefits to provide. Life insurance is an easy way to offer your employees peace of mind and extra security for their loved ones in the case of a tragic event. The general rule is that you can offer up to $50,000 as a tax free benefit, if you meet certain requirements, such as offering the benefit to all full time employees.
Competitive Benefits to Consider for Startups to Attract Top Talent
If you want to differentiate your company from other opportunities potential employees might be considering, you can get creative about the additional offerings you choose to make available to employees. Aside from the basic benefits options we covered, there are additional benefits that will help you stand out in the eyes of prospective employees.
Offer Flexible Work Options
If you are a startup, allowing employees to work remotely can be beneficial to your financial health as a company and your employee satisfaction. Flexible work options let employees know that they have the freedom to enjoy hybrid work or work from home as they desire. In recent years work from home has become very common and a highly desired work benefit.
Stock Opportunities
Allowing employees to buy stock in your business is a great way to offer new compensation opportunities and encourage your team to grow with you. As the employer, you can structure the vesting periods so that the employee doesn’t get the full benefit up front, but earns it over time as their commitment to the organization is proved.
Employee Wellness Programs
Happy and healthy employees are more likely to stick around and be patient with the company’s growth. An employee wellness program can be unique depending on your business. For example, some startups might want to buy group fitness classes or gym memberships for their team members. Consider conducting a survey to ask your employees what type of wellness programs would interest them.
Training and Development
Startup employees are energized by the idea of growing with a company as they progress in their personal careers. Offering training and development is a great way to show employees that you care about their personal success. If you want to keep employees, create strategies that support agile growth throughout the years. Consider paying for online training for certain job positions, purchasing certification courses for employees, or attending small training conferences with the team.
Build a Benefits Package That Makes Sense For Your Employees and Unique Business
At the end of the day, there are plenty of ways to research commonly offered benefits packages for startups. We covered a lot of the basics today to give you ideas on how to build your own package to attract prospects. Even if you are just starting out, investing in benefits can offset the importance of salary alone. In the eyes of employees, they will appreciate that you are treating your startup as an established company that supports the employee experience. When you are interviewing employees, make sure to express what you will offer them upon starting and if you have any benefits that will be added on as time passes. This is another way to incentivize employees to stick around for years to come.
If you still aren’t sure where to start and need a little help, feel free to reach out to our team for more information on what other startups in your stage of development are doing. Our team would be happy to help you make sure you’re on target to attract the best employees and retain them for as long as possible.
