The financial scars left by the past few year won’t disappear anytime soon and cash flow continues to be an issue. And that means businesses have to be even more strategic than usual about how they invest their now-limited resources.
In particular, businesses must be careful about how they craft compensation plans to lure back some of the talent they may have lost over the past year. But the good news is that there are some great perks and benefits businesses can use to build attractive compensation packages without spending a fortune. It’s even possible for many of them to be revenue-neutral or better.
Here’s an explanation of what conditions make an employee benefit revenue-neutral and a look at the five best options for businesses in a post-pandemic hiring environment.
What is a revenue-neutral benefit?
Put simply, a revenue-neutral benefit is anything you can offer to employees that also produces tangible offsetting gains for the business itself. In some cases, such benefits require little to no cash outlays, like employee-friendly workplace policy changes. In others, they require upfront investments that create enough additional value to the business that they offset their own direct costs.
By crafting employee benefits packages that include enough revenue-neutral benefits, small businesses can attract top-level talent while staying within their budgetary constraints. They can also use them to compete for workers with larger businesses by creating a desirable work environment and offering a better work/life balance for their employees.
Choosing the right revenue-neutral benefits
From an employee’s perspective, there’s no such thing as a bad benefit. At worst, an individual employee might be indifferent to a particular offering in their compensation package. For that reason, there aren’t many ways that a business can go wrong when choosing what benefits to offer. And that’s especially true when it comes to revenue-neutral choices.
But in the context of the post-pandemic environment, it pays for businesses to be a bit more selective. That’s because, over the past year, there have been some noticeable shifts in employee attitudes that now make certain benefits more attractive than others. To that end, here are the five best revenue-neutral benefits businesses should offer.
1. Flexible working arrangements
Even before the pandemic, the ability to work from home and the option to work a non-standard schedule were popular among employees who could do so. Nevertheless, many businesses remained hesitant to offer those options for fear of losing operational control of their staff.
But the grand forced work-from-home experiment that the pandemic made necessary put most of those fears to rest. And now, this is a benefit that businesses should see as a bedrock component of their future plans. The first reason is the fact that it’s what workers want. According to recent survey data, 92% of millennial workers identified flexibility as their top job-hunting consideration.
And the second reason is that offering remote and flex-work options often produces significant cost savings to businesses. In fact, the average real estate savings for each full-time remote worker stands at a staggering $10,000 per year. With savings like those, businesses could offer their workers a full suite of digital tools to help them stay productive while working from home and still come out ahead. And businesses that embrace flexible work options also benefit from access to a wider labor pool that could save them a great deal on employee salaries, as well.
2. Professional development opportunities
Another employee desire that became more apparent during the pandemic is for more opportunities for professional development. According to research by the Adecco group, 69% of workers now express a desire for digital upskilling to be a part of their post-pandemic work landscape. And that provides yet another easy revenue-neutral benefit that employers can offer.
Today, there are countless online training programs and certification courses that teach critical business skills. And by using them to provide a proper professional development program for employees, businesses can realize significant ROI. Where appropriate, businesses can even provide subsidies for employees to further their education on their own time. In an era where student debt is a significant concern for many workers, such programs are very popular.
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Repeated research has already demonstrated that professional development programs encourage employee engagement and lower turnover. And on top of that, they increase productivity and enhance the business’s core capabilities. Together, those outcomes make for an excellent employee benefit that’s revenue-neutral or better.
3. 401(k) plans and matching contributions
Many years ago, the average worker might have changed jobs only two or three times in their lifetimes. But part of that was because employers offered pension plans that promised to see workers through retirement in exchange for lengthy terms of service. But today, such plans are a relic of a bygone era. According to the Bureau of Labor Statistics, today’s retiring workers will have had an average of 12.3 jobs by age 52.
That reality makes saving for retirement a key concern of job-seekers and makes for another excellent opportunity for businesses. That’s because businesses can offer their workers 401(k) retirement plans that provide tax-advantaged savings for their retirement. And to turn it into an even more attractive benefit, businesses can opt to match employee contributions up to a certain amount each year.
But what makes this an even better idea for businesses is that they gain tax advantages from offering 401(k) plans, too. To start, they can claim a tax credit to cover much of the cost of setting up and administering the plans. And they can even write off every dollar they spend in matching contributions each year. Together, those tax savings can often make offering a retirement plan for employees into a revenue-neutral benefit that workers love.
4. Travel subsidies
In many parts of the country, the cost of commuting to and from work is a significant factor that workers consider when evaluating a job opportunity. And for a long time, that made travel subsidy benefits a popular perk that businesses offered to lure top talent. But in 2017, the Tax Cut and Jobs Act altered businesses’ ability to write off the costs of many types of travel subsidies – making them costlier and less prevalent.
But they remain very popular among employees who still have access to them. And businesses can still provide certain travel subsidies without incurring significant costs. For example, offering employees the option of a pretax salary deferral to defray their travel costs is still allowed, and costs the business nothing. Also, businesses can provide company car insurance for employee-owned vehicles used for work purposes. This will not only reduce their liability in the event of an accident during work hours but may also lower the employee’s overall insurance costs significantly.
But most importantly, the business would also save money on workers’ compensation coverage, which typically comes with higher rates for vehicle accident coverage compared to a vehicle-specific plan. And at a time when the burden of insurance coverage for small businesses is on the rise, every dollar saved is important. And if the savings comes from offering a popular employee benefit, so much the better.
5. Unlimited paid time off
Last but not least – and possibly the most popular benefit a business can offer – is a policy of unlimited paid time off for employees. On the surface, it’s a policy that would seem to be a risky proposition for any business. But you may be surprised to find out that it tends to be revenue-neutral for most businesses that provide it. And it also creates some significant benefits to overall productivity.
The reasons for that are manifold. The first is the fact that most employees won’t take long vacations even if they’re entitled to them. One study suggests that employees with unlimited paid time off took, on average, two days fewer off each year than those with a standard two-week vacation allocation. And that means more productive days for each employee.
But the benefits don’t end there. Employees consistently rank unlimited paid time off as a highly-prized benefit wherever it’s offered. That means happier and more loyal employees. And, it makes it easier to lure high-skill workers away from their current jobs because they won’t have to start the vacation time accrual from scratch again. And when an employee departs, the business never has to pay out unused vacation days, saving even more money.
Benefits that don’t bust budgets
Right now, few things are more important for businesses than to find paths to growth that they can afford to pursue. And there’s little doubt that investing in your workforce is always worthwhile. And by adding these five popular – and revenue-neutral – benefits to their compensation structure, businesses can improve their performance without breaking the bank.