Offer the benefits your employees really want (that you can also afford) with these 5 tips

A robust benefits package is no longer optional for businesses hoping to retain valued employees. But the concern over costs are real, with three-fourths of small businesses saying they can’t offer the benefits that a large business can.¹

The reality: You can lean into balancing what your people want and what your budget can afford.

The payoff isn’t just retention but making your team feel heard and valued. “It’s really thinking of benefits differently,” says Nate Schelhaas, senior vice president of Benefits & Protection at Principal^®.

Your path to success is to listen, set a budget, and flex your mindset. These five tips can help.

1. Ask employees what they’re missing.

You may think your employees are satisfied with the benefits you offer, but it’s worth investigating if that’s still true. While 78% of employers are interested in offering at least one additional benefit within the next year, that want increases to 84% for employees.¹

The best way to figure it out: Just ask. For example, your employees may view their wages or salaries as competitive but find themselves attracted to benefits at another job.

“Employees may want to keep working for you, especially those with tenure,” Schelhaas says. “Ask them what they like about work, and demonstrate you care about what they need by asking which benefits they value.”

2. Know how benefits motivate your employees.

Additional benefits don’t have to be expensive to be meaningful. An employee, for example, could receive the benefit of a flexible schedule that adds up to the cost of one month of childcare.

“Something like that means a lot yet doesn’t cost the organization much,” Schelhaas says. “It’s a tangible way to demonstrate that you’re empathizing with your employees.”

This thinking is contrary to the past approach of one-size-fits-all employee benefits.

“The question in this very competitive retention landscape is, ‘What are you doing to make a difference?’” Schelhaas says. “Find the benefit that’s most valued and go from there.”

3. Don’t overestimate the cost of benefits.

Schelhaas has found that many employee benefit costs are less expensive than businesses decision makers realize. And some benefits are simply more affordable than others.

“If you use health insurance as a point of reference, you may assume everything else is expensive, too,” he says.

Another tactic to tamp down costs is to flex benefit features. For example, with dental insurance from Principal, there are various levels of coverage—from preventative care only to coverage for basic and major services.

In a competitive hiring market, it’s also helpful to consider the potential costs of losing—and replacing—employees. If you factor in the hard costs of replacing an employee (an estimated $4,700)³ and the soft costs (such as lost skills and institutional knowledge), the numbers may tell you benefits are well worth the investment.

And if you do need to recruit new talent, benefits will help anyway, with 73% of employees agreeing that hiring would be easier if employers offered a competitive benefits package.⁴

4. Add access through voluntary benefits.

Voluntary benefits are gaining popularity among small and midsize business owners.⁵

And for good reason: These benefits allow you to split the cost with your employees or make the benefit available for them to purchase at the level of coverage that best suits their needs.

So let’s say there’s a potential benefit your employees want, but it’s outside your budget. Making that benefit voluntary can provide them with convenient and affordable access to it while minimizing impact on your bottom line.

For BLK & Bold, a Principal client based in Des Moines, Iowa, offering voluntary benefits is a way to show employees how much they care as they continue to grow their business.

“While we want to give the world to our employees,” says Rod Johnson, cofounder and chief values officer of BLK & Bold, “we still are an emerging brand, and we at least wanted to give access to our employees to have the option to choose voluntary benefits.”

5. Keep your benefits plan flexible.

The benefits you offer needn’t be static; they may change based on evolving employee values or your bottom line.

“Think about how to personalize added benefits and meet employees where they are,” Schelhaas says. “It helps them understand that you’re contributing based on their needs, and that means a lot.”