As you grow your business, it’s hard enough to know when it’s the right time to bring on that next employee or how to compensate them. When you add benefits to the equation, these employment questions are among the most complicated issues business owners have to address. Benefits can be expensive. It’s easy to feel like it’s a tradeoff between supporting your employees and keeping the lights on, or even providing for your own family. I personally have wrestled with these questions over the years and watched our clients wrestle with them as well. Here are some ideas on how to think about providing benefits to your employees.
Types of employee benefits
First, let’s define the territory. There are many types of employee benefits you can offer and all of them have a cost, some greater than others. The benefits employees most value across every type of company include:
- Medical, dental and vision insurance
- Disability and life insurance
- Flexible spending plans (that permit employees to use pre-tax dollars to pay for things like unreimbursed medical expenses and dependent care)
- Retirement plans and employer matching
- Bonuses for performance, company profitability (including profit-sharing plans) and work anniversaries
- Stock options
- Flexible hours including work-at-home options
- Paid vacation, sick, bereavement and personal leave
- Paid parental leave (for fathers as well as mothers)
- Student loan forgiveness and tuition assistance
- Additional skills training
- Free gym memberships
- Free daycare services
- Free snacks, coffee, tea and other beverages in the office
Obviously, few companies offer all of these benefits. What you choose to include in your package will depend on what you can afford, as well as the personal preferences and needs of your team.
Why employee benefits make sense
The sad reality is that many employees are disengaged at work. Statistics vary, but most estimates I’ve seen show that somewhere between 50-85% of employees don’t like their job or the company they work for. While inadequate pay and advancement opportunities certainly contribute to those feelings, the root cause goes much deeper. In our experience working with businesses for decades, the primary reason employees are disengaged is because they don’t feel seen, heard, appreciated or valued by the people they work for. Someone who feels invisible at work is not going to give you their best, or even close to their best. Employee benefits—from the more expensive options like health insurance, to the least expensive, like a generous supply of your employees’ favorite snacks and drinks in the office—can go a long way in communicating to your employees: “You matter to us.” If you invest in your employees, they’ll invest in your company.
Examine your beliefs about your employees
It’s impossible to thoughtfully consider creating or expanding your employee benefits without examining your beliefs and attitudes about your employees. Are you a business owner who believes that you can’t find good people these days, or that no one can do things as well as you can? Or, are you someone who knows that, with a supportive culture and the right hiring, training and operational systems, you can attract and retain employees who not only love working for you, but who produce exceptional results and are dedicated to doing things your way?
Your beliefs and attitudes about your employees tend to become a self-fulfilling prophecy. If you understand the entrepreneurial imperative to build a company infrastructure in which people can flourish, you’re likely to view employee benefits as just one essential aspect of that infrastructure.
Choose employee benefits that reflect your values
At EMyth, we seek out the best talent we can find and reward our employees with the best benefits package we can offer. In addition to a range of benefits that starts with what I’d consider the basics—health insurance, a retirement plan with employer matching and paid time off (PTO)—we’ve been known to ensure uninterrupted paychecks to employees recovering from a heart attack or going through cancer treatment. We’ve paid for an employee’s fertility treatments that insurance wouldn’t cover through a combination of a bonus and a loan. These decisions reflect our values. Among our nine core values are these three:
- Gift love and compassion even when it’s hard
- Do the right thing because it’s the right thing
- Make magic in the details
Everyone at EMyth does their best to embody our values. We care about doing the right things even when they’re hard. We care about the details. We hire people who care. Our employee benefits are just one of the ways that we care about each other.
Customize benefits to your employees' needs
The benefits that make the most sense for your company are those that are most valued by your employees most often based on their stage of life. Parental leave won’t mean anything to a population that’s not yet or no longer having kids, and tuition assistance won’t matter to employees who’ve completed their education. I remember a period when most of EMyth’s employees were relatively young and single. At that time, we were able to increase the percentage of our employees’ health insurance premiums we covered by decreasing the percentage of dependents’ premiums the company paid for. So, take a thoughtful look at what benefits will really light your employees up, and remain flexible based on the changing needs of your team.
Let go of unproductive benefits
Employee benefit programs are like any system in your business: They’re designed to produce a specific outcome. As part of a company culture that values and appreciates people and their contributions, a benefits program is intended to encourage engaged, committed employees. Like other systems, you may discover that some benefits are not received the way you expected. Some years ago, we initiated an unlimited vacation policy: Employees were free to take the time they needed, subject to the approval of their manager. We hoped that this practice would give our employees more freedom to balance their professional accountabilities and personal needs. While it may seem counterintuitive, we found that it ultimately disincentivized many employees from taking vacations, something everyone needs to perform at their best. It didn’t work for the company or our employees—they felt more conflicted about taking time off, and actually preferred the clear expectations of a set number of days for vacation and personal leave. Needless to say, we abandoned our unlimited vacation policy and replaced it with an EMyth version of a more traditional approach to PTO.
Paying for your employee benefits
While there may be compelling reasons to provide generous benefits to your employees, your company’s business model may limit your ability to offer your employees all the benefits you’d like to. Very simply, your business model is your plan for generating profits; it primarily takes into consideration the product or service you sell, your marketing strategy, your systems strategy and your expense structure. In my experience, the business model of most companies develops by default rather than with intention. The result is that there’s never enough profit or resources to do the right thing for your employees or your customers—or yourself, for that matter. One silver lining that’s emerged from the pandemic is that it’s forced many business owners to rethink how they do business, and to search for system solutions to problems that were previously left unaddressed. The ideal profitability plan for your business—one that allows you to invest in your people in the ways that matter most to you—is waiting for you to find it.