How to Create an Effective Employee Benefits Package for Your Small to Medium Sized Business

Managing employee benefits is the most important task your H.R. team will undertake. Selecting what benefits to offer is a decision that will impact every corner of your business because it is how you maintain your workforce. Building an effective employee benefits package will not only attract top-tier, dedicated talent, it will encourage them to stay. 

What should you include in your benefits package?

Each business is unique. Your industry, your company culture and your company’s goals will all play a part in determining the right benefits package for your employees. Nowadays, there’s a wide array of employee benefits that are appropriate for small and medium sized companies all the way from paycheck advancement services to local discount programs for employees to stretch their hard-earned dollar. 

With the sheer diversity of the modern workforce, no two benefits packages are going to look exactly the same, but you can expect most to include some form of the following: 

Health insurance

According to the Society for Human Resource Management, health insurance consistently ranks as the top priority of employees and nearly every company offers at least one plan. 

Health insurance costs can be high and employers with greater than 100 insured employees have a “risk pool” for potential cost savings by self-insuring. 

A retirement savings plan

Traditional 401(k)’s still dominate the market. The 2019 Investment and Retirement Survey from SHRM estimates that over 90 percent of employers surveyed offer a 401(k). 

Life and/or disability insurance

Disability insurance gives employees peace of mind that their finances will be taken care of if they become injured. Pricing is relatively standard and third party rating services such as A.M. Best, Moody’s, Fitches, and Standard & Poor’s (S+P) are the primary rating companies.

Paid leave

Paid sick leave and vacation time help employees maintain a healthy work-life balance. No third party service or agency needed.

Extra benefits

Additional perks like commuter benefits or remote work options may be a good fit for your company and in some states may even be a legal requirement. 


There is no one-size-fits-all benefits package. While you’ll notice most companies offer similar plans, the differences are in the details. Offering flexibility to your employees and focusing on benefits that better serve their specific needs will help you find and retain major talent.  

Gauging the efficacy of your benefits program

A successful benefits package will have high participation rates and relatively few gaps in coverage. If your company already offers a benefits package, you’ll first want to determine how well your current system is working. Consider running a basic S.W.O.T. analysis of your benefits package. 


What are the advantages of your current benefits program? How has it been successful? Look for ways to build off of what is already working well. 


Identify areas for improvement. How can you better engage with employees?


Look for opportunities to streamline services, cut costs and better accommodate your current workforce. Are there extra fees that you can eliminate? Is any of your coverage redundant?


What is the cost of doing nothing? Are employees depleting 401(k) savings because of unnecessary fees? Is there a way you can help employees cut health insurance costs to free up some of their income? 

Employee needs vs. employer objectives

Crafting an adequate benefits package is a balancing act between ensuring your company needs are met and taking care of your employees. Too much of one at the expense of the other will prove costly and ineffective.

Listen to what your employees are saying

Your employees will tell you what they want, both directly and indirectly. Conducting an audit of your benefits program will reveal how many employees are taking advantage of each benefit offered. Benefits that see unusually low usage rates can often be eliminated, or they may need to be more effectively communicated to employees.  Low participation is usually a tell tale sign that the program needs adjusting.

Cost savings

One area where both parties line up is in the need to deliver a comprehensive benefits package at an affordable cost. As a small business, you may not have the same cash to throw around as larger companies, so it is important to keep costs and fees low. High expense to you will only be passed on to your employees, decreasing participation rates and making your benefits offerings less effective overall. 

For example, a self-funded health insurance program allows for greater flexibility and lower fees. Stop-loss insurance is available to protect smaller employers from having to pay out large insurance claims. 

401(k)’s are another area where you may be getting hit with unnecessary charges. All 401(k)’s are not created equal and some can have up to 17 layers of fees. Find a consultant that specializes in employee service so that employees will participate. If the plan has less than 50% participation, consider it broken and take action to fix it.

Communicating with employees

Your workers need to know what their options are. Insurance coverage and retirement programs can be confusing, and new employees going through orientation are already being asked to learn a lot. Any changes to benefits offerings should be clearly communicated to current employees to avoid confusion. 

Offer continuing education opportunities for your benefits program. The more employees learn about what you can offer them, the more engaged they’ll be. Surveys conducted by the National Association of Plan Advisors have found that a lack of tools for employee education is one of the top three factors in employers looking to switch plan advisors. 

Benefits education goes beyond just showing your employees the ropes of their new retirement account. Netwellth provides confidential financial coaching and customized reporting for employees that extends well past their 401(k)’s and health insurance. In 2019, only 55 percent of employees rank their financial wellness as “good”, a 6 percent decline in just one year. A Netwellth WellthCoach can help employees take advantage of their provided work benefits and address their overall financial wellbeing.

Schedule periodic evaluations

Your benefits package will certainly need updating as the times press on. Changing employee demographics, fluctuations in the economy or tax laws and the state of your business can all alter what makes “the perfect” benefits package. 

Schedule an automatic reassessment of your benefits offerings to recur as needed. Routine employee questionnaires as well as full needs surveys can all help you keep your benefits offerings up to date. The more in-depth you can be with these evaluations, the better. If you partner with a company like Netwellth, continuing assessment tools will be available to you at no additional cost. 

Set goals and keep measurements

Don’t enter into benefits evaluations blind. Set clear goals and means by which to measure them. Track your overall levels of employee participation and be willing to adjust your benefits package as different needs arise. 


The takeaway here is that simply offering a benefits package isn’t enough. To be effective, a benefits plan needs to be low cost and high reward to both you and your employees. Pay too much and your employees get stuck with the bill. Offer too little and you’ll see painfully low participation rates.  

Your benefits package is a fluid part of your business. It needs to grow and change as your company does. Even a perfect benefits package needs to be audited now and then.

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