Employee Benefits for Small Employers - Human Resources Hero

Employee Benefits for Small Employers

Employee Benefits for Small Employers | Human Resources Hero

Studies show that businesses spend 38% of employee salary on hiring and training new employees. While the cost may be lower for small business owners, employee turnover is still a burden. So how do you keep employees? Well, you can start by offering them fair wages. You can up the ante with employee benefits.

Wait a minute, you say. Your margins are already thin enough. How can you make a profit and offer employee benefits? Read on to learn about the benefits business owners can provide to keep employees happy.

What We Talk About When We Talk About Benefits

Running a business isn’t for the faint of heart. Especially a small business like a restaurant or tavern. Your profit margins are already small, and you face fierce competition.

When we talk about employee benefits, we often talk about two things: Healthcare and retirement.


As a business owner, you know that America operates an employer-based healthcare system. 55.4% of working Americans receive group health insurance through an employer.

What about the rest? These workers purchase their insurance through a private insurer on state-run ACA marketplaces or they go without.

  • Employers with less than 50 full-time employees don’t have to provide coverage
  • Small employers who offer health coverage to full-time employees are eligible for a 50% tax credit to cover costs


Large companies once offered comprehensive pension packages for their employees.

The American workforce is far less static due to deindustrialization. These days, the average American worker holds 12 jobs in their lifetime. Comprehensive pension packages no longer make sense.

401(k) plans with an employer matching option are now more common. These plans allow for worker flexibility and are more cost-effective employer investments. 


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Employee Benefits Ideas for a Small Business

Small businesses are at a disadvantage when it comes to offering traditional benefits. Health insurance and retirement packages aren’t cheap. Even if you wanted to, offering them doesn’t make financial sense.

At this disadvantage, how do you retain your employees?

You have to change the way you think. Offering employee benefits is about saving money long-term. A happy employee is a productive, long-term employee.

Flexible Paid Time-Off

Workers appreciate PTO, and you need to offer it. A small business owner may be tempted to squeeze as much labor as possible from their employees. This management philosophy will lead to burnout.

Paid sick leave, vacation days, and family leave are all important offerings. Your employees need to feel as though they can take a day off for illness or crisis.

They also need time away from work to recharge.

  • Flexible PTO allows workers to use their PTO as they see fit
  • You don’t have to offer sick leave and vacation
  • It may be possible to set the rules for how PTO is earned rather than granted as a term of employment.
  • You are also able to set rules for the use of earned PTO
  • Younger employees love to save it for longer vacations

The best part about flexible PTO? You can make it work for your business. Cities and counties are now passing paid sick leave legislation. You can adjust your PTO policy based on what’s required by the government.


Holidays are a concern for the hospitality business. More people than ever opt to dine out on holidays. According to a 2017 survey, 1 in 10 Americans planned on dining out for Thanksgiving that year.

Getting a piece of this business is tempting, but consider the negative consequences.

  • Holidays take your employees away from their family
  • Many in the hospitality industry consider holidays the most challenging days to work
  • Employees in hospitality industries forced to work holidays feel underappreciated
  • Holiday openings cause rifts between ownership and employees
  • Holidays cause discord among your staff if some must work while others have off

The simple truth about holidays and the hospitality industry is this: If you can’t withstand two to three days a year of no revenue, you need to rethink your business plan.

Offering a few holidays off is an easy way to make your employees feel appreciated.

Fringe Benefits

These are secondary benefits but will go a long way in helping you retain your employees. They’re an easy, cost-effective way you can show your appreciation.

  • Gym Memberships: Many gyms give a discounted group rate for employers offer memberships
  • Transportation Benefits: Public transportation discounts and parking lessen the employee commuting burden
  • Employee Discounts: Your employees feel appreciated and will spend their money with you
  • Worker Appreciation Events: Labor Day picnics and holiday parties show appreciation and value
  • Achievement Awards: Lift morale and reward your good employees who work hard

Student Loan Incentives

Student loan incentives are the future of employee compensation given the current crisis. Your young employees leaving college are saddled with a massive amount of debt.

Helping them pay this debt down is a clever way to retain employees and attract talented workers.

It won’t cost you much. An extra $100 per month helps your employees avoid interest accrual and pay their debts faster.

Join A PEO

A Professional Employer Organization, or PEO, is a service that allows small business to get access to benefits that typically only large a business can get. PEO’s utilize a technique called co-employment.

Co-employment allows a PEO to combine many separate businesses into one large group and negotiate rates directly with the insurance carriers. The result is often much lower benefit-cost and access to benefit plans that small business can’t usually get

Employee Benefits Make Your Business More Profitable

Too many businesses, big and small, find themselves trapped by short-term thinking. Not offering employee benefits will save money and increase your profit margins right now. You will pay in the long run.

Employee benefits keep your employees happy. The happier they are, the less likely they’ll look for other jobs. The less employee turnover you have, the more money you save.

If you need help developing an employee benefits package for your small business, or if you’d like to look at joining a PEO, our HR partners are here to help.

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