10+ Affordable Employee Benefits That Improve Retention and Productivity

In fact, according to a recent survey, 51% of the respondents identified cost as a key factor in their benefits strategy.

The solution? Finding ways to deliver premium employee benefits without increasing cost.

In this guide, you’ll learn how to build an affordable employee benefits strategy, including suitable perks to offer your members.

What Are Employee Benefits and Why Do They Matter

Employee benefits are non-wage compensation that you can offer your members in addition to their base salaries. Usually, employee benefits are highly desirable and help keep your team motivated and engaged.

Common reasons every company should provide employee benefits include:

• To make your organization attractive to top talent and increase your competitiveness in the job market.

• To foster a genuine sense of job satisfaction within your team and increase your retention rates.

• To provide experiential perks, such as remote work options, that support your employees’ work-life balance.

• To reduce your employees’ financial stress (retirement-related) so they can focus on work.

Mandatory vs. Optional Benefits

Employee benefits often fall under two categories: mandatory or optional. Mandatory benefits are legally required and enforced by the federal or state governments, while optional benefits are at the company’s discretion.

The table below provides a quick overview of each benefits category:

The best employee benefits strategy should incorporate mandatory and optional benefits to optimize costs and deliver premium perks for effective engagement.

How Much Do Employee Benefits Cost?

Cost is among the most essential factors when implementing an employee benefits strategy, and influences the initiatives’ sustainability and eventual ROI. 

The cost of an affordable employee benefits program depends on the following factors:

• The employee benefits’ key components, such as health insurance, retirement planning, and corporate wellness programs.

• The benefits’ duration, with longer programs often costing more if billed monthly.

• The extent to which the benefits are personalized to employees’ individual needs.

• Company size, with larger companies often incurring lower costs per employee due to economies of scale.

• Programs that require ongoing support or employee benefits administration software often cost more than initiatives that don’t.

Now that we’ve outlined the factors that influence affordable employee benefits, let's illustrate a simple employee benefits program cost breakdown in the table below:

Sources:

Bureau of Labor Statistics

Based on the table above, it’s apparent that experiential initiatives are arguably the most affordable employee benefits and can help you reduce total costs.

Why Companies Are Shifting Toward Affordable Employee Benefits

Companies are gradually moving towards affordable employee benefits they can sustain long-term, rather than capital-intensive perks that fail within months or years. 

Here are the main reasons companies no longer want to break their bank for employee benefits:

• Containing Rising Costs: The cost of providing mandatory benefits, such as health insurance, is rising each year, forcing companies to find ways to manage the financial burden without compromising quality. Consequently, organizations are moving toward preventive care programs, such as health and wellness initiatives, to keep their members fit, thereby reducing medical-related expenses.

• Evolving Employee Expectations: Companies are under increased pressure to match their employees’ changing needs, forcing them to introduce new perks on short notice. This requires finding affordable perks that you can launch quickly without hurting your cash flow.

• Focus on ROI: Companies are now expected to justify their spending on employee benefits, prompting the need to prioritize low-cost, high-impact perks with quick ROI.

12 Cost-Effective Employee Benefits by Category

Using the tabulated figures above, the cost of providing employee benefits to a small company of 5 employees is $105,180 annually. This is well above what most companies can afford, given that 78.3% of US businesses generate less than $500,000 in annual sales.

The solution?

Shifting to affordable employee benefits, some of which we’ll cover below:

Corporate Wellness Benefits

These are experiential employee benefits that cater to your members’ holistic well-being:

Looking to implement such wellness benefits in your organization?

SoHookd offers the only wellness-based incentives marketplace that enables companies to customize bundles that align with their wellness cultures. We have procurement-friendly programs and don’t tie you down with contracts or PEPM fees. 

Download our free ebook and discover ways to provide psychology-backed incentives to drive real engagement for your team.

Work-Life Balance Benefits

These employee benefits help members manage stress, anxiety, and burnout. They help employees unwind after long shifts or challenging projects. 

They include:

4. Paid Time Off: Implement PTOs that allow employees to take breaks from work to go on vacations or spend time with family. This helps members recharge so they can return to work reenergized and focused.
5. Asynchronous Work: Allows employees to clock in during their most productive hours rather than the standard 9–5 schedule.
6. Compressed Workweeks: Shortened weeks, such as working 9 days every fortnight, give employees an extra workday, helping them rest or pursue personal projects and hobbies, thereby enhancing their overall job satisfaction.

Remote Work Benefits

If you manage a remote team, consider offering affordable employee benefits that help team members settle into their roles quickly. 

Examples include:

7. Home Office Upgrades: Provide a one-off allowance to help employees set up or improve their home office, such as by buying office chairs with lumbar support or ergonomic keyboards and monitors. This helps reduce common injuries associated with remote work, especially back and neck strain.
8. Connectivity Support: Cover your employees’ remote work needs, including high-speed internet and project management tools such as Slack and Microsoft Teams.
9. Remote Buddy Programs: Launch programs like watercooler hours to help remote teams interact informally, reducing feelings of isolation and social anxiety among members.

Financial Benefits

According to a recent survey, 86% of employees feel stressed about their finances. With this in mind, you could offer financial benefits to motivate your employees and boost retention. 

Start with the following benefits:

10. Insurance Covers: Provide health, dental, vision, life, and disability insurance to reduce the out-of-pocket costs employees incur when sick or in the event of workplace accidents.
11. Pension Contributions: Match your employees’ retirement contributions up to a specified amount to encourage a savings culture.
12. Performance-based Bonuses: Introduce monetary incentives and rewards to recognize employees who have excelled at their work. This helps create healthy competition among members, boosting the team’s overall productivity and performance.

How to Build an Affordable Employee Benefits Strategy

Designing an affordable employee benefits strategy requires finding the balance between the quality of offerings and the cost of implementing and sustaining the programs.  

Let’s see how to plan and launch an employee benefits strategy that boosts your members’ motivation and job satisfaction:

• Define Employee Benefits Goals:  Outline what you want to achieve with your employee benefits strategy, such as to boost engagement, reduce turnover, or enhance your company’s net promoter score.
• Create a Budget: Determine how much you are willing to spend on the employee benefits strategy, as this provides guardrails for the HR team and ensures they don’t introduce unsustainable initiatives.
• Assess Employees’ Benefits Needs: Conduct employee surveys and focus groups to determine which benefits members want based on their demographics. For example, Gen Zs might want flexible work schedules, while millennials might prioritize health insurance benefits.
• Create the Benefits Package: Design a benefits strategy that incorporates all core benefits components, including health insurance, retirement planning, and corporate health and wellness programs.
• Communicate the Benefits: Highlight the newly introduced employee benefits strategy, including the perks members will gain when they participate. Additionally, engage top-level management as role models for the employee benefits package to encourage more employees to enroll in the programs.
• Launch the Benefits and Track Performance: Implement the benefits strategy, including conducting training sessions for members on eligibility and how to access benefits. Additionally, track essential performance metrics such as sign-ups, participation rates, and costs to evaluate the performance and effectiveness of employee benefits.

How to Select the Best Benefits Package for Your Company

If you already have an employee benefits strategy, you might only be looking to add more perks to better meet your team’s benefits needs or to support your company's goals, such as increasing your company’s competitiveness. 

Here’s how to improve your employee benefits without increasing cost:

• Employee Needs Assessment: Ask your employees which benefits and perks are missing in the current package, and which you should introduce to enhance their holistic well-being. For example, some members may suggest adding subsidized gym memberships to health benefits.

• Partner with a Benefits Broker: Bring in a benefits broker to help you align your employee benefits strategy with your members’ benefits needs. A benefits broker will also help you bargain for competitive prices that help keep the overall benefits costs low.

• Competitor Analysis: Conduct benefits benchmarking to identify and address gaps in your packages to help you keep an edge over your competitors. 

• Set a Budget: Determine how much you are willing to spend on employee benefits without hurting your cash flow. Usually, we encourage organizations to prioritize low-cost, high-impact employee benefits, especially experiential programs like employee wellness incentive programs.

• Find Vendors: Engage your benefits broker to shortlist vendors offering affordable employee benefits. Consider booking live demos to gain hands-on experience with the programs and see if they are a good fit for your team. 

• Select the Benefits: Use the live demos to identify the most essential benefits to implement based on impact and relevance to your team. You can then add more perks incrementally based on the effectiveness of the benefits strategy.

At SoHookd, we also offer the Build Your Own Program (BYOP), partnering with employers to design wellness benefits tailored to each employee’s individual needs. The wellness benefits include wellness rewards, wellness challenges, and wellness webinars to support employees’ holistic well-being.

Schedule a one-on-one call today to learn about our wellness product packages.

Common Mistakes to Avoid When Offering Low-Cost Benefits

As you look to make your employee benefits more affordable, you risk offering perks that don’t align with your team’s needs, reducing enrollment and participation rates. 

Watch out for these common pitfalls that could undermine the program’s success:

• Generic Employee Benefits: Just because you are offering low-cost benefits doesn’t mean you should follow a one-size-fits-all approach, as this might hinder employee participation. Instead, personalize the benefits to various employee groups based on demographics.

• Not Looping In a Benefits Broker Early: Involving a benefits broker too late into the benefits design process or not involving one at all causes you to miss out on key advantages like negotiating better rates to keep your costs manageable. Bring in a benefits broker during the planning phase to leverage their industry knowledge to provide the best benefits at your budget level.

• Lack of Incentives: Not offering thoughtful rewards discourages employees from enrolling in and participating in benefits programs. Provide personalized benefits that support your team’s wellness goals and help them overcome psychological barriers to participation, such as procrastination.

• Lack of Executive Buy-In: Low-cost employee benefits often fail because HR teams see no need to engage top-level executives, since the programs aren’t capital-intensive. However, it is essential to involve top leadership so they can act as role models for the rest of the team.

• Overlooking Employee Engagement: Failing to communicate the benefits to your employees clearly leads to low participation rates and ROI, as members don’t know the programs are available or how to access them. Instead, schedule training sessions before and after launching the initiatives to explain eligibility and the program’s benefits.

• Misalignment with Company Goals:  A mismatch between employee benefits and organizational goals often leads to internal conflict, with the latter being discarded. Ensure employee benefits support the larger organisational goals, such as boosting performance or increasing retention rates.
  

Frequently Asked Questions (FAQs)

Let's tackle some commonly asked questions about affordable employee benefits:

Are Affordable Employee Benefits Tax-Deductible for Employers?

Yes and no. Most mandatory employee benefits, like health insurance and retirement contributions (401(k) plans), are tax-deductible for employers. 

However, experiential employee benefits, such as paid gym subscriptions and healthy office snacks, are not exempt from tax.

Are Affordable Employee Benefits Suitable for Contractual Workers?

Yes. Affordable employee benefits are suitable for contractual workers to boost their motivation and job satisfaction during their time at your organization. 

Suitable employee benefits include flexible work schedules, professional development opportunities, and wellness benefits.

What is the Ideal Mix of Monetary and Non-Monetary Benefits?

The best mix of monetary and non-monetary benefits varies among companies. 

As such, organizations should conduct employee need assessments to identify what benefits their members want and find helpful.

Conclusion

Here’s the thing: affordable doesn’t mean cheap. The employee benefits packages you choose should be reasonably priced, ensuring you get maximum value for your money.

Most of the time, the best way to make your employee benefits strategy cost-effective is to introduce experiential benefits that improve members’ holistic well-being. 

At SoHookd, we have nearly a decade of experience helping companies introduce wellness into their employee benefits programs to address low employee engagement and retention. We offer pre-built wellness programs that you can quickly customize to employees’ needs and launch within 2 weeks. Additionally, our partnership is procurement-friendly, given that we don’t tie you down with contracts or PEPM fees.

Schedule a personalized call to discover how our wellness product packages can help you deliver affordable yet premium experiential employee benefits for your team.