The top employee perks and benefits that matter most

February 23, 2023 | 7 minute read

In a tight labor market, choosing the right employee perks can help your small business find and keep the best talent — and maintain a competitive edge. Even if you can’t afford to match the lavish packages of the big competitors in your industry, adding just a few extras that improve morale at work, like employee discounts, can go a long way to creating a sought-after workplace.

 

What are employee perks, and how do they differ from employee benefits?

Although the terms “perks” and “benefits” may seem similar, they aren’t the same thing. Benefits are non-cash compensation, like health insurance, that serve as a supplement to an employee’s salary. Benefits cover needs employees would most likely otherwise fund on their own.

 

On the other hand, perks, shorthand for perquisites, are more like extras — non-wage goodies that go beyond benefits. Sometimes called fringe benefits, perks provide an opportunity to differentiate your business from other companies and create an inviting corporate culture.

 

What are the benefits of small businesses offering employee perks?

Employee perks are helpful for attracting and retaining top talent. Offering the right perks also shows you’re committed to your employees’ welfare, while signaling important messages about your values. Plus, it makes for a more satisfied — and engaged — workforce, improving morale, loyalty, and productivity. Even better, there could be tax advantages that come with offering certain perks. Your accountant can advise you on your eligibility.

 

How to choose the right perks for your employees

Although many perks don’t require a big investment, they’re usually not free. So, first determine how much you can spend. Then, to ensure you’re offering perks your employees really want, ask them directly about their preferences for perks you can afford. If your company is small enough, you can do that by interviewing each individual. Another option is to distribute an anonymous survey listing the perks you are thinking about offering and asking for employee reactions to those items. Also, have team members rank the three to five perks they most prefer among any you currently offer; by doing so, you’ll more easily be able to pinpoint the most popular choices.

 

Once you’ve selected the options that seem to hit the mark, make sure to track participation and usage to see which ones are hits or duds. That way, you can continually refine your offerings to ensure they’re the ones your employees really want.

 

Employee perks small businesses should consider

While there are many popular perks you can offer employees, consider these options that can help your team feel happier, healthier and more engaged. The federal (and state/local) tax consequences of providing the below perks to employees may vary. Consult with your tax advisor for the specific tax consequences related to implementing certain perks.

 

1. Remote work

Since COVID-19 forced many companies to have their employees work virtually, a fully or partially remote environment has become the preferred choice for a growing number of employees, and sometimes not offering it is a dealbreaker. While not all work can be done remotely, much of it can, especially for knowledge workers — such as accountants, lawyers and programmers — whose main job is contributing their expertise to the company’s products and services. Some office-based businesses are giving team members four “work from anywhere” weeks per year or similar perks.

 

2. Flexible scheduling

Allowing work schedules that accommodate employees’ needs, regardless of whether they’re operating remotely, not only enables a better work/life balance, but also decreases worker stress. And they’re an increasingly popular perk.

 

3. Professional development

Most employees want to advance their careers, and one way to do that is through relevant professional development opportunities. Plus, when your staff receives additional training and education, they can bring more knowledge and skills to your business. Consider offering such perks as tuition reimbursement, access to educational webinars, and continuing education training. In certain cases, you may be able to deduct up to $5,250 per employee for tuition reimbursements and other qualified expenses made through qualified education assistance programs.

 

4. Meals and snacks

Providing anything from healthy treats in the break room to regular catered lunches helps boost morale. Even if you order something simple like pizza, sharing a meal is a great way to bring your team together.

 

5. Cell phone reimbursement

Some states, like California, require that employers reimburse employees for cell phones they use at work. Regardless of where you’re located, you can still offer this perk.

 

6. More paid time off

Offering more paid time off can go a long way with employees who are trying to achieve better work-life balance. This can range from giving them birthdays or “mental health days” off to actual sabbaticals, which are perks that are relatively simple to roll out.

 

More options to consider

Depending on the size, budget and goals of your business, you may also want to consider expanding your perks to include some other popular options:

 

Mentorship

Setting up an initiative to mentor newer team members can give your company an edge in attracting and retaining employees, particularly those who are in the early or middle phases of their careers. This doesn’t have to cost much: Simply pairing newer employees with a more senior person on your team to guide them can be valuable. Almost 30% of both Gen Z and Millennials say that learning and development opportunities are among the top reasons they chose to work for their current employers, according to 2022 research1 by Deloitte.

 

Wellness programs

These can include a wide range of offerings, from gym memberships and standing desks to mental health services. Even turning an unused room on your premises into a meditation room can send a message to employees that you care about their wellbeing.

 

Paid parental leave

The Family and Medical Leave Act (FMLA) requires that companies with 50 or more employees provide employees with unpaid parental leave. You can take that further by offering paid leave.

 

Childcare

Offer on-site daycare for employees’ children or work with other providers to make free or reduced-price services available. Some employers allow employees to set aside pre-tax wages to pay for childcare in dependent care assistance programs. Employees can set aside up to $5,000 per household (adjusted annually based on cost-of-living adjustments) in pre-tax wages for this purpose under federal tax law. Additionally, employers who offer child care for employees may be eligible for federal and state tax credits.

 

Charitable giving

Employees increasingly seek to work for companies that give back. With that in mind, you can match employee gifts to their favorite charities up to a specified amount. Or you can give team members paid time off to volunteer. One cause that matters to many younger employees is climate change. In its 2022 research, Deloitte found that 73% of both Gen Z and millennials believe the world is at a tipping point on this issue, but only 15% of Gen Z and 14% of millennials believe businesses are taking substantive actions.

 

Tech reimbursement

Some states — including California, Illinois, Iowa, Massachusetts, Minnesota, Montana, New Hampshire, New York, North Dakota, Pennsylvania and South Dakota — and the District of Columbia require employers to reimburse remote workers for home office expenses. Even if your state doesn’t, many team members will appreciate it if you reimburse employees for home office equipment or provide allowances for making such purchases. Some companies in technology-related fields offer free access to their own products. For instance, one company that offers a simple website-building technology gives all employees two free websites to pursue their creative passions.

 

The bottom line

By offering the right employee perks, your business can reap big rewards in the form of increased productivity, less absenteeism, and staff loyalty. That can give you a competitive advantage that will pay for itself many times over.

1 Parmelee, Michele. “Don’t want to lose your Gen Z and Millennial talent? Here’s what you can do.” Deloite.com. Available online at: https://www2.deloitte.com/us/en/insights/topics/talent/deloitte-millennial-survey.html. May 22, 2022

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