As your startup grows and expands, so too should your approach to employee benefits. After all, your employees are the backbone of your success, so meeting – and even exceeding – their needs and wants should be one of your priorities as you’re taking your business to the next level.
A good benefits program becomes even more important as you’re trying to attract more top-talent for your growing business.
But, of course, this all costs money, which can negatively affect a growing startup. So how much cash is reasonable to set aside for employee benefits and perks so you can actually benefit from the investment?
In other words, exactly what kind of benefits will attract, motivate, and retain the best candidates for your startup while not endangering your finances?
How Scaling Impacts Your Business and Employees
Scaling your startup involves much more than simply increasing your revenue and hiring more people – in reality, it also changes the dynamics within your organization.
For example, the employees who joined your startup very early on may now have different expectations as the company grows. This is perfectly understandable; after all, they risked by joining a budding little startup and may now, when the company is growing, expect more for their hard work.
At the same time, your team, which once might have felt like a close-knit community, perhaps even a small family, may now evolve into a larger, more complex, and more structured group.
Furthermore, as this team of employees expands, so does the demand for competitive benefits: both your old employees and new (if you’re trying to attract top performers) will expect this. Usually, employees will start expecting more comprehensive health coverage, retirement plans, and some perks that are relevant to your industry.
Keeping Up with the Rising Costs
So, what do you do when your employees start expecting more comprehensive benefits and perks?
Find a way to meet those expectations in order to ensure they remain satisfied with their job and loyal to your startup. Easier said than done, yes, but… Things are rarely black or white. In other words, it’s not like you have just two choices: provide all the benefits or none at all.
To manage your rising costs effectively and make sure you actually experience the biggest return on investment (ROI) here, why not focus on what matters most to your employees?
If you’re not sure how to find this out, it’s simple – either conduct surveys (which you can do anonymously, depending on what your team is most comfortable with) or have informal discussions with each employee to better understand their priorities.
Sometimes, targeted benefits, such as flexible work arrangements or professional development opportunities can be valued more than costly health plans, particularly in the tech sector.
Here’s how you can keep up with the rising costs of employee benefits:
- Prioritize Essential Benefits: To make sure you’re not overpaying for things that ultimately won’t make much of a difference, consider offering core benefits that provide the most value to your employees. This could be health insurance, paid time off, or retirement plans – whatever your employees need the most. The goal is to concentrate on quality over quantity.
- Offer Customizable Benefit Structures: You can also offer customizable or flexible benefit packages that allow employees to choose benefits based on their individual needs. For example, you can offer two benefits per employee and let them choose those that they need the most. This does two things – enhances perceived value without increasing your costs (significantly).
- Use Gross-Up Calculations: When offering fringe benefits like bonuses or relocation assistance, use a gross-up calculation to offset associated taxes. This way, your employees receive the intended benefit but there are no unexpected tax burdens. Bonuses are highly recommended when you’re hiring new talent.
As startups continue to scale, understanding the evolving landscape of hiring trends becomes crucial for adapting recruitment strategies and ensuring a competitive edge in attracting and retaining top talent. Emphasizing flexible work arrangements or professional development opportunities might align well with these trends, reflecting what today’s job seekers value most in an employer.
Benefits and Programs with the best ROI
To get the most bang for your buck, make sure you regularly assess the effectiveness of your benefits program by analyzing utilization rates and gathering feedback from your team to find areas for improvement.
Sometimes, optimizing existing benefits can be more impactful than introducing new ones, but this depends on your sector, employees, and the benefits on offer.
When you’re introducing new packages, focus on those that will attract, motivate, and retain top talent, a.k.a. benefits that offer the best ROI.
From our experience, these are:
- Health Insurance: Comprehensive health insurance coverage can greatly enhance employee satisfaction and can be a deciding factor for new candidates, especially those with families.
- Retirement Plans: Retirement savings plans, such as a 401(k) with employer matching contributions are a must for attracting and keeping experienced candidates, but they also encourage employee loyalty as they help them build towards their future.
- Flexible Work Arrangements: Remote work or flexible work hours have become expected, especially in the tech sector. Providing this flexibility shows you trust your employees to manage their own schedules, which can also lead to improved work-life balance and job satisfaction.
- Professional Development: Finally, investing in employee growth can also improve job satisfaction, as well as retention. High performers especially value opportunities to enhance their skills, so consider offering professional development programs, training workshops or tuition reimbursement.