Which Employee Benefits Should a Small Business Offer?

Any small business owner knows that the level of employee salaries that they sustain is fundamentally important. However, the most successful small business owners know that the number and variety of employee benefits available can have a positive effect when it comes to motivating and retaining employees.

If you're a small business owner, reviewing and deciding on employee benefits can be daunting. How do you know what's worth your money? How much is too much to spend? Will good benefits make or break a new recruit's decision? In short, comprehensive employee benefits are crucial to your employees' satisfaction and therefore, their productivity and your business' success.

Health and dental benefits are one of the best ways to motivate and retain employees.

A recent survey of graduating students and alumni conducted by the National Association of Colleges and Employers found that health insurance was the most popular employee benefit that a small business could offer employees.

With rising medical costs, health and dental benefits have become even more important. Furthermore, by offering health and dental benefits to your employees, you are insuring the health of your employees, minimizing the number of days that an employee will be "out sick" due to an illness or complication.

Offering health and dental benefits are also a good way to attract potential employees. A comprehensive health plan is a major selling point for new recruits.

While hiring qualified, educated job applicants can help you build a strong team, you can also enrich your current employees' qualifications by providing them with further training and educational opportunities. Along with offering regular educational seminars at work, you can also offer to subsidize part or all of the cost of continued education, whether it be for a Bachelor's, Master's or Doctoral degree.

 

Offering your employees the chance to enhance their knowledge with further education will strengthen your current workforce by:

Because paying for part or all of your employees' educations is an investment, be sure that you set up some guidelines for providing education subsidies as an employee benefit.

For example, while some employers will only offer education subsidies for those who have been with the company for at least five years, others may require that you stay with the company for at least two years after you complete the subsidized education or degree program.

One of the best ways for a small business to retain trained employees with children is to offer good childcare provision. A nursery on the business premises is rarely the best option, but providing places at a local nursery at subsidized rates is likely to offer benefits that are received enthusiastically by any employee with young children.

With rising gasoline prices, many employees may like the idea of the company footing the bill. While a car is a big investment, having a company car allows you to control factors such as age, type, and reliability while your employee is driving on company business.

If a car requires too much money at the moment, think about reimbursing employees for on-the-job use of their cars or offering a paid allowance for car expenses. Be aware of federal tax laws, though, as certain things such as a paid allowance may be taxable.

The United States has a unique stance on paid vacations and holidays: Employers are not required to provide workers with any vacation. However, most companies voluntarily provide paid vacation, holidays and sick leave. Personal time away from work is a great way to motivate employees. It gives your employees time to rest and relax, often "recharging their batteries". The amount of time offered varies with the company, so check with other business in your area to determine a suitable amount of time.

Many businesses offer employee stock option plans as a way to compensate, retain, or attract employees. An employee stock option plan gives the employee the right to purchase the business' stocks at a fixed price within a certain period of time. Employees who have the right to purchase the stock at the fixed price hope to profit by exercising their options when the price for the stock is higher than the fixed price.

While very similar in name to employee stock options plans, employee stock ownership plans are very different.

An ESOP is a retirement plan in which the business sets up a trust fund into which shares of its own stock or cash to purchase shares of stock are placed. The shares are then placed into accounts of individual employees based on some sort of predetermined formula or method. The amount of stock in the employee's account continues to grow as he works for the company. The options can be sold after vesting in the program for a certain amount of time, or when the employee leaves the company. An employee stock ownership plan is a useful method of motivating employees because it literally lets them share in the success of the company.