Designing Your Small Business Benefits Package

Dec 31, 2020 4 min read

When you run a small business, you face many challenges in growing your company. One of them is recruiting and retaining the best talent for your needs. 

When your primary goals are managing costs and increasing revenue, how do you sufficiently entice new recruits and reward current staff members for continually putting their best efforts forward? One way is ensuring you provide a competitive, cost-effective small business benefits package that includes both traditional and not-so-traditional perks.

Traditional Employment Benefits

In order to remain competitive, nearly all employers should offer some form of health insurance and retirement savings plan. Yet according to the U.S. Department of Labor, only 54% of small employers (private companies with fewer than 100 employees) offer health coverage and just 49% offer a retirement plan. These are must-have employment benefits for small businesses.

Health Insurance

Small businesses have options for health insurance plan types, each with different access and cost considerations. According to the Kaiser Family Foundation, the average premium for family healthcare coverage has increased 20% in the past five years. Affordable plans will certainly sway potential employees.

Traditional Health Insurance Plans

Traditional plans are typically more expensive but tend to provide more access to providers. These plans generally have higher monthly premium but lower deductibles.

Health Maintenance Organizations (HMOs)

HMOs generally carry lower costs for both premiums and deductibles but have fewer options for care providers. These also tend to require referrals from your primary care provider before seeing a specialist.

High-Deductible Health Plan (HDHP)

In an HDHP, employees carry a higher burden for up-front costs, but the health savings account (HSA) allows them to set aside money on a tax-advantaged basis to help defray these costs.

Retirement Plans

In today's economic and political environment, most people view retirement planning as a high financial priority. That's why it's important to include a retirement savings option in your benefit package. There are several options available to small employers, including traditional 401(k) plans, SIMPLE savings plans and SEP-IRAs. A financial professional can help you choose the plan that's right for your company's needs.

Family Leave 

Organizations with 50 or more employees are required to provide up to 12 work weeks of unpaid leave, thanks to the Family and Medical Leave Act (FMLA). In 2021, 23% of private industry workers had access to paid family leave benefits. Advertising generous family leave plans can help you attract top talent and set you apart from other potential companies.

Paid Time Off

Employees expect adequate paid time off (PTO) allowances — and the ability to take days off without guilt — to help them achieve a healthy work-life balance. While there is no federally mandated PTO requirement, your state may have one. It will also address whether this benefit must be paid out upon employment termination. 

Other Options

Other traditional benefits include the following group insurance policies:

Life Insurance

These policies generally provide employees' survivors a death benefit in a set amount or an amount based on salary (e.g., two times salary).

Disability Insurance

These plans provide employees with an income stream should they become disabled. Benefit amounts are typically a percentage of salary.

Vision and Dental Coverage

These plans tend to be highly valued by employees. The costs associated with dental and vision treatments, which are generally not covered by health insurance, can be quite high.

Not-So-Traditional Benefits for Small Business Employees

In addition to traditional benefits, there are several not-so-traditional perks you can offer to help set your organization apart in the competition for talent.

Wellness Programs

Healthier employees are generally happier employees. Wellness programs help improve overall employee engagement and encourage individuals to take responsibility for their own well-being. According to the Kaiser Family Foundation, 54% of small employers offer at least one of the following three types of wellness programs: smoking cessation, weight management and behavioral or lifestyle coaching. A fitness discount used for gym memberships, yoga studios or even new running gear is a great way to encourage and reward healthy behavior. 

Flexible Work Arrangements

The COVID-19 pandemic highlighted employees’ ability and desire for more workplace flexibility. A company that values work-life balance is nearly as highly valued as one that offers the best insurance or retirement plan. More than half (58%) of Americans can work from home at least one day a week, McKinsey & Company reports, and 87% of people who can work remotely do.


However, telecommuting isn’t the only flexible work arrangement you can offer your employees. Some examples of flexible work programs include:

  • Flex Schedules: Establish work hours that are outside the norm, such as 7 a.m. to 4 p.m. instead of 8 a.m. to 5 p.m.
  • Condensed Work Weeks: Employees work four 10-hour days instead of five 8-hour days.
  • Job Sharing: Allow two or more employees to "share" the same job, essentially doing the work of one full-time employee (e.g., Jan works Monday through Wednesday noon, while Sam works Wednesday afternoon through Friday).
  • Going Part-Time: Employees can have the option to cut back their hours as needed.

Tuition Reimbursement

Reimbursing tuition and professional development is a surefire way to invest in your employees. If your administrative assistant would like to help running social media accounts or updating your website, encourage them to pursue marketing courses at the local community college or university. Employers offering educational assistance programs can deduct up to $5,250 per participating employee. 

Social Activities

Hosting out-of-office activities can help workers relax and get to know one another. Ask your employees what they’d like to do, so your big ideas don’t turn into “forced fun.” These events can be quick lunches out or an afternoon at a baseball game. Depending on your business size, you might want to have a small committee organize these events so they feel more like camaraderie.

Concierge Services and Discounts

You may be able to negotiate with other local companies for employee discounts and services. Laundry service, dry cleaning pickup/drop-off and meal providers that can deliver hot, family-sized take-home dinners may help employees save both time and worry — and stay focused on the job.

Childcare Support

Working parents faced a particularly difficult challenge during the COVID-19 pandemic, which only highlighted the benefit of workplaces offering caregiver support. While on-site childcare isn’t a practical option for most small businesses, childcare allowances and flexibility can go a long way to support your employees and their families. 

Financial Planning and Education

For many people, money worries can be distracting and time-consuming. Consider inviting a local financial advisor into your office to provide counseling sessions for your employees. While you don't necessarily have to pay for any services provided, simply offering the opportunity to get such help during work hours will be appreciated by your workforce.

Involve Your Employees

The best benefits are those that meet the needs of your employees. Before making any assumptions, solicit ideas from your employees and then conduct a survey to see what benefits they value the most. Consider putting together teams of associates to help with the idea generation and execution. By involving your employees in the decisions that matter most to them, you demonstrate that you value their time, efforts, opinions and hard work.

When you’re ready to make plans, talk to a Farm Bureau financial advisor about the best fit for your business.