7 steps to design a benefit plan that you and your employees will love

Every business has different worries, from inflation to customer growth to succession. But nearly all businesses share two top concerns: retaining both existing employees and key employees. That’s according to April 2024 Principal^® research of small and midsize businesses.

While you may fret about employees leaving, your workforce may think about why they want to stay, and it turns out benefits (or lack thereof) make a big impact. Three out of four employees want their employers to add benefits within the year, according to the Principal survey. If those workers go looking for a job, they may find competitors that offer the benefits they feel are lacking.

One thing that can help you gain an edge in recruitment and retention: Create (and share) with employees your plans for extending or enhancing benefits. Here’s how to use your benefit plan to help keep up with employee needs and business growth goals—and stay one step ahead of your competitors.

Step 1: Establish a benefits philosophy.

A benefits philosophy typically has three prongs:

1. How do your benefits protect your employees?
2. How do your benefits protect your business?
3. How do your benefits protect yourself and your family?

The three prongs are interdependent and affect one another. For example, benefits you use as an edge to attract the best talent (protect your employees) also serve to encourage growth (protect your business).

Step 3: Listen to and learn from employees.

Listening can be both formal and informal; the smaller your business, the more you can rely on everyday conversations. Even so, more structured opportunities—during annual reviews, for example—can help you glean employee sentiment and expectations around benefits. You might also see trends in exit interviews: Are people leaving because of a benefit you don’t offer? If you need the honesty of anonymous feedback, survey tools including SurveyMonkey, Google Forms, and Typeform can help.

PlanOmatic, a rental real estate design company in Denver, surveys employees once a month, with a benefits and retirement survey every six months. “People's lives change a lot. There's a lot of flexibility that goes into benefits, a lot of flexibility that goes into retirement plans,” says Kennedy Watson in human resources. “We listen and incorporate that feedback into our conversations internally.”

Step 4: Calculate the true benefit costs.

It’s easy to overestimate the cost of adding benefits. Nate Schelhaas, senior vice president with Principal, has found that many employee benefit costs are less expensive than decision-makers realize. “Because they use health insurance as a point of reference, they assume everything else is expensive, too, and assume they can’t do anything,” he says.

But there are often ways to add benefits, monitor costs, and meet employee needs. For example, most traditional benefit costs such as healthcare tend to be largely covered by employers. Now let’s say there’s a potential benefit your employees want, but it’s outside your benefits budget. Maybe all your employees really need is easier access to buy that benefit as part of your workplace benefit plan. The cost to you may be all, some, or none.

Step 5: Balance cost with long-term benefits for employees, the business, and you.

For your long-term goals, some hardworking benefits offer a more concrete way to plan for next steps. Take key employee benefits: Nearly every employer ranks worries about retaining key employees as a top concern, according to Principal research. To create a robust key employee benefits retention plan, you have to balance the investment in benefits such as non-qualified deferred compensation or bonuses with what it would cost you—today and in the future—should you lose the talents of that person.

Step 6: Prioritize extended or enhanced benefits.

Your master benefit plan can outline the future in broad strokes—what you’d like to add or boost based on timing, budgets, wants, and needs. Complement that with details about what’s next—something you’re going to add this year, for example—to level-set expectations. And think about what you need to grow your business—perhaps a focus on key employee benefits first.

Step 7: Continuously adapt your benefits.

Year over year, your business, workforce, and customers change—and you change with them. Today’s multi-generational workforce has diverse needs and wants—and if you’re able to accommodate some of those asks, you may be able to improve your employee retention. And a team of experts including a tax advisor and financial professional can help you understand how employee benefit goals can balance with your business’s challenges and opportunities.