At Gladly Network, we know that choosing the right employee benefits for your small business can be challenging.
Employee benefits for small businesses are crucial for attracting top talent and keeping your team happy and productive. However, with so many options available, it’s easy to feel overwhelmed.
In this post, we’ll guide you through the process of selecting the best benefits package for your company and employees.
Why Employee Benefits Matter for Small Businesses
The Talent Magnet Effect
Employee benefits transform small businesses into talent magnets. They’re not just perks; they’re powerful tools that can revolutionize your company’s success. A robust benefits package sets you apart from competitors. Companies rated highly on benefits and compensation saw 56% lower attrition than those rated lower. This means you don’t just attract great employees; you keep them too.
Productivity and Happiness Boost
Benefits directly impact employee productivity and happiness. The American Institute of CPAs found that 80% of workers prefer a job with benefits over one with a higher salary but no benefits. When your team feels valued and supported, they’re more likely to excel in their roles and contribute to your business’s growth.
Many small businesses are also embracing tools like Motivosity, a platform that empowers peer-to-peer recognition and real-time feedback. By enabling employees to celebrate each other’s contributions, these kinds of tools can boost morale and create a more connected workplace, leading to higher engagement and stronger team dynamics. When your team feels valued and supported, they’re more likely to excel in their roles and contribute to your business’s growth.
Legal Compliance
Offering certain benefits isn’t just good practice; it’s often a legal requirement. Depending on your company’s size and location, you may need to provide specific benefits. For example, small employers with fewer than 50 full-time and full-time equivalent employees are not subject to the Employer Shared Responsibility Payment under the Affordable Care Act. Compliance avoids costly penalties and legal issues (which can be a significant drain on resources).
Long-term Investment
Benefits aren’t mere expenses; they’re investments in your company’s future. They help create a positive work environment, reduce turnover costs, and ultimately contribute to your bottom line. As you build your benefits package, consider what will truly make a difference for your team and align with your business goals.
Competitive Edge
A strong benefits package can truly make your small business shine! It sends a powerful message to potential employees: you genuinely care about their well-being, not just their paycheck. This is crucial when you’re competing for top talent, especially against larger companies that often have the upper hand in resources. Investing in your team’s happiness can set you apart and attract the best candidates!
Now that we understand why benefits matter, let’s explore the types of benefits you should consider for your small business.
What Benefits Should Small Businesses Offer?
Health Insurance: The Foundation of Employee Well-being
Health insurance remains the cornerstone of any competitive benefits package. About 49 percent of those at small firms worked at establishments offering health insurance. When you select a health plan, consider options like High Deductible Health Plans (HDHPs) paired with Health Savings Accounts (HSAs). These options can be more cost-effective for both employers and employees, provide tax advantages, and encourage proactive health management.
Retirement Plans: Securing Your Team’s Future
A retirement plan demonstrates your commitment to your employees’ long-term financial well-being. Small businesses can start with a SIMPLE IRA, which is easier to administer than a 401(k) and has lower startup and operating costs. As your business grows, you can transition to a 401(k) plan with more features and higher contribution limits.
Time Off: Balancing Work and Life
Paid time off (PTO) is essential for maintaining employee well-being and productivity. To combat unused vacation days, you can implement a flexible PTO policy that encourages employees to take time off when needed. Some small businesses even experiment with unlimited PTO policies, which can boost morale and trust when implemented correctly.
Flexible Work Arrangements: The New Normal
The pandemic has accelerated the trend towards flexible work arrangements. When you offer flexible work options, you can significantly expand your talent pool and improve employee satisfaction without necessarily increasing costs.
Professional Development: Investing in Your Team’s Growth
Professional development benefits both your employees and your business. To help retain top talent and reduce employee turnover while boosting engagement, organizations can implement career advancement programs. You can offer tuition reimbursement, access to online learning platforms, or sponsor attendance at industry conferences.
Mental wellness is another increasingly important area of focus. Platforms such as Impact Suite offer small businesses access to therapy, mindfulness tools, and emotional wellness resources in a scalable, affordable way. Integrating mental health support into your benefits package shows your employees that you care not just about performance, but about their overall well-being. It’s a powerful signal that can drive loyalty and reduce burnout in fast-paced environments.
Now that we’ve covered the essential benefits small businesses should consider, let’s explore the factors you need to weigh when selecting the right mix for your company.
How to Select the Right Benefits Mix
Understand Your Budget and ROI
Your budget forms the foundation for any benefits decision. Focus on both upfront costs and return on investment (ROI) for each benefit. A study revealed that ROI estimates vary from $6.00 in healthcare savings for every dollar invested in a single employer cardiac intervention to $2.71 for Johnson & Johnson’s comprehensive programs.
Determine the amount you can allocate to benefits as a percentage of your total compensation budget. The Bureau of Labor Statistics reports that benefits costs averaged $12.02 per hour worked, while wages and salaries accounted for 70.5 percent of employer costs. Use this as a benchmark, but adjust based on your industry and financial situation.
Know Your Workforce
Tailor your benefits to the needs and preferences of your specific workforce. Consider factors like age, family status, and career stage. For a younger workforce, student loan repayment assistance might hold high value. A 2021 survey by the Employee Benefit Research Institute found that 48% of millennials would switch jobs for better benefits.
Don’t assume what your employees want. Ask them directly through surveys or focus groups. This approach ensures you offer benefits they’ll use and demonstrates that you value their input.
Stay Competitive in Your Industry
Research standard benefits in your industry and region to remain competitive in the job market. Websites like Glassdoor or industry-specific salary surveys can provide insights into what other companies offer.
However, avoid simply copying your competitors. Look for opportunities to differentiate your benefits package. If most companies in your industry offer standard health insurance, you might stand out by adding a wellness program or mental health support.
Consider Administrative Complexity
Evaluate the administrative burden of each benefit you consider. Some benefits (like health insurance) require significant ongoing management, while others (like flexible work arrangements) may require less administrative oversight.
Try to balance the value of the benefit with the resources required to manage it. You might consider partnering with a benefits administration company (such as Gladly Network) to help streamline the process and reduce the burden on your internal team.
Align with Company Culture and Values
Your benefits package should reflect and reinforce your company’s culture and values. If your company values work-life balance, for example, generous PTO policies or flexible work arrangements might be a priority.
This alignment helps attract employees who share your company’s values and contributes to a more cohesive workplace culture. It also sends a clear message about what your company stands for, both to current employees and potential hires.
Final Thoughts
Choosing the right employee benefits for your small business isn’t just a business decision—it’s a human one. It’s about the people who show up every day, who put their energy and care into helping your company grow. Benefits are one of the clearest ways to say: We see you. We value you.
And yes, it can feel overwhelming. Between health plans, retirement options, mental health support, and everything in between, it’s hard to know where to start. But you’re not in this alone.
That’s where the #getgladly movement shines. It’s a celebration of everyday generosity—recognizing people who go out of their way to support others, often without expecting anything in return. It reminds us that kindness and recognition aren’t just feel-good ideas—they’re the foundation of strong, connected teams.
And that’s the real heart of a great benefits package. It’s not just about coverage or time off—it’s about building a workplace where people feel valued, supported, and proud to belong. When you lead with empathy and invest in your team’s well-being, you create more than a productive company. You create a culture that people want to grow with.
