Key Tenets to Guide Your Company’s Benefits Strategy (Part 3 of 3)

In this three-part series, Renegade Partners’ Chief People Officer, Susan Alban, explores how startups in the Supercritical Stage should approach their benefits strategy—from nailing the core offerings to communicating the long-term vision. Her first two articles can be viewed here and here.

Now that you understand the core and expansion benefits you should consider, I want to share some guiding principles—or key tenets—to help you craft your overall benefits strategy. While every company’s approach will look different, following a set of best practices helps ensure that your benefits package is inclusive, impactful, and cost-efficient.?

The 5 key tenets to guide your benefits strategy

1. Get the core right

A rule of thumb: you can always add to your benefits package over time, but it’s challenging to take anything away. Taking things away can lead employees to feel loss aversion and resentment that something that was once theirs is no longer. That’s why it’s critical to start with a focused foundation. If you missed Part 1 of this series, where I discussed the four core benefits that every startup needs, I encourage you to go back and review that first. As a quick refresher, the must-have offerings include:??

• Health insurance
• Vacation and paid time off
• Retirement account
• Parental leave

2. Try not to spend $1 to get $0.50 worth of services

When making benefits decisions, always consider what percentage of your spend will reach your employees as valuable services. The two primary sources of value loss to the employer are:

• Taxes: If a benefit is taxable to your employee, that means they’ll need to pay cash taxes on the value of the benefit. In other words, they won’t receive the full value of your spend. The most widespread example of this is a gym benefit. If you provide $100 per month towards gym or fitness expenses, that money will be added to the employee’s taxable income. As such, after taxes, the employee will effectively net approximately ~$60-$70 per month, instead of the full $100.
• Service provider margins: Benefits providers have to make money too (and I’m not objecting to that by any means!). But sometimes, their pricing structure is such that small companies, in particular, end up paying a lot upfront and in fixed costs. And your employees end up receiving less value in benefits relative to what you’re spending in total.?

One suggestion to avoid this is to estimate the split in value between what you’re providing to your employees and the margin that the provider is taking. Unfortunately, there aren’t good rules of thumb on how much is too much margin that I’m aware of, but it may be worth closer inspection if your employees aren’t getting at least 70% of your spend.?

3. Consider inclusivity when adding new offerings

When evaluating new benefits, consider inclusivity from multiple lenses. While it’s impossible and impractical for all benefits to be perfectly inclusive to all employees, it’s still important to keep inclusion top of mind as you plan, design, and implement your holistic offering. Here are a few factors to consider when selecting your benefits:

• Location: Is this a benefit one that all employees can access regardless of where they’re based??
• Office vs. remote: Is this benefit one that is skewed towards in-office employees or remote workers??
• Demographics: Is this benefit accessible by all employees, regardless of their age, gender and gender expression, sexual orientation, marital status, disability status, or any other facet of their identity?

Again, the idea is not that every benefit will be perfectly inclusive–for example, a student loan repayment benefit is only accessible to those employees with loans; a fertility benefit is only appealing to those employees who are considering children now or in the future; and so forth –, but rather that you’ve considered this as you’ve created your strategy.?

4.?Build and communicate the long-term vision

When you introduce a new benefit, it’s important to plan for both the present and where you want to be with them in the next two to three years. This will help you create a clear roadmap for the company and also a vision you can articulate clearly to employees and candidates.

Communicating that future vision to employees is critical. Why? It helps people manage their expectations and understand that their benefits will continue to evolve as the company does. If they’ve previously asked for specific benefits or hear about friends at other companies getting specific benefits, and your company isn’t yet ready to offer it, a roadmap helps them understand the broader context.

For example, at Renegade—given our small size and minimal redundancy—we currently offer 13 weeks of fully paid parental leave. However, in the next two to three years, our plan is to increase this amount to 16 to 20 weeks, which is a goal we’ve explicitly shared with our team.?

Here’s another example: let’s say your company is launching a 401(k) this year with no matching. However, you plan to introduce this feature after the next round of financing or when the company hits a specific revenue goal. Sharing this plan with your employees demonstrates that you’re thinking of ways to continue investing in them, gives them something to look forward to, and entrusts them with enlightening context.?

5. Connect to your overall business strategy

As you evolve your benefits offerings, it’s inevitable that you’ll have to make some hard decisions. If you’re feeling stuck, always go back to your overall business strategy and mission, and reflect on these questions:

• Why does your business exist?
• How does that reason-for-being extend to your employees and why you exist as an employer??
• Who do you need to attract and retain to achieve your mission and goals, and what do those employees value?

To answer the last question, review your top-level goals and consider the talent you need to achieve them. Consider surveying your employees. Engage in conversations with the people who you believe are integral to the success of your company. This will reveal a lot about the needs of your current and future workforce, and help you make more informed benefits decisions.?

Hopefully, this series has given you the knowledge you need to start crafting a powerful benefits package—one that helps you attract and retain talent, reflects your priorities as a company, and positively impacts the lives of your employees. If you haven’t already, don’t forget to check out Part 1 and Part 2 as well. If you have any questions or want to share how your company is putting together a benefits strategy based on the above, please share below!