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18 affordable benefits to offer instead of a raise

Written by: Chase Charaba
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Published on November 30, 2022.

One of the most important aspects of running a business is attracting and retaining employees. Without skilled workers, your organization can’t grow in a competitive market. To attract qualified job candidates, employers must improve employee engagement and enhance the employee experience.

When combined with your existing employee perks, free and low-cost employee benefits can help incentivize employees to stay with your organization—and help you stay within budget at the same time.

This article will explore how affordable benefits impact recruitment and retention. We’ll also provide 18 affordable benefits ideas you can offer to your employees no matter your budget.

Want an easy way to offer benefits your employees value? Learn more about providing employee stipends with our free guide

What are free employee benefits and perks?

Free employee benefits are perks that don’t cost you or your employees anything financially, at least directly. These perks are often simple to provide and help bolster an existing compensation package.

This differs from low-cost benefits, which are generally inexpensive to provide to your workforce compared to traditional benefits.

Why are affordable benefits good for retention?

Providing a variety of free and low-cost perks is a great way to attract and retain employees. Offering additional benefits can improve employee job satisfaction, increase productivity, boost morale, and give you a competitive advantage.

Increase employee satisfaction and morale

Employee benefits are one of the best ways to retain employees. This is because employees value benefits, activities, and other perks. When your employees see your organization as a fun place to work and feel taken care of, they’ll be more likely to stay and see you as an employer of choice.

According to a Pew Research Center survey1, 43% of workers who quit their jobs in 2021 said poor or no benefits played a role in their departure.

Without a variety of benefits, employees will seek other opportunities where their needs will be satisfied.

As a small or medium-sized business, you may be unable to expand your benefits package due to budget constraints. Offering free or low-cost benefits can help compensate for these missing perks, contributing to improved satisfaction.

Increase productivity

When employees feel taken care of and appreciated, they’re more likely to work harder and stay motivated. Satisfied employees are also more likely to contribute ideas. This helps your organization grow and reach its goals.

Benefits create a competitive advantage

Offering a robust benefits package gives your organization a competitive advantage. When you offer the perks your employees want, you’ll have a better chance of attracting top talent, even in a tight labor market.

According to our 2022 Employee Benefits Survey Report, 82% of employees said the benefits package an employer offers is an important factor in whether or not they accept a job with that organization.

By offering additional low-cost perks, your job postings will stand out.

Free and low-cost employee benefits ideas

Now let’s look at some of the top free and affordable perks you can offer your employees.

1. Employee discounts

If your organization sells consumer goods or services, consider giving your employees a special discount or free items. By providing your employees with discounts for your organization, you can help them save money, which is seen as a huge perk. It may also help you attract new employees who love your products.

2. Event tickets

While event tickets can get expensive depending on the occasion, providing free tickets to employees is a great way to recognize their contributions and create excitement and engagement.

You can have a drawing for free tickets where employees earn entries to the contest. This can be a fun way to ensure your goals are being met or to recognize employees who go above and beyond.

3. Potlucks and team lunches

One of the best ways to enhance your workplace culture is by allowing employees to socialize about something other than work. Team lunches and office potlucks are excellent ways to accomplish this sense of belonging. You can schedule a particular day to have potlucks, like once each month on a Friday, and have specific themes, like breakfast.

You can also take your team out for lunch or dinner on occasion. This gives everyone something to look forward to and have fun connecting. When employees enjoy where they work and who they work with, they’re more likely to stay with your organization.

4. Bring your pet to work

To make the workplace more fun, many organizations allow employees to bring their pets to work on certain days or year-round. If you plan on offering this perk, be sure to ask your employees how they feel, as some may have allergies.

5. Summer Fridays

Many organizations offer summer Fridays to their employees. This allows them to leave work early to get out and enjoy the warm weather before the weekend. Some organizations take this further by giving workers Fridays off in the summer.

6. Remote work

Many organizations have kept the remote work model they adopted during the COVID-19 pandemic. This is because employees value a work-life balance and flexibility more than ever.

Allowing your staff to work remotely full-time or on a hybrid model will keep them happy. Working from home eliminates commute times, giving workers more time in their day. It also helps them save money on gas, vehicle maintenance, and transit passes.

7. Casual dress code

Allowing your staff to wear casual clothes is another great perk for attracting job applicants. Not everyone wants to dress up or buy new clothes to start working at a new organization. Casual dress codes allow workers to be themselves, contributing to belonging in the workplace.

8. Unlimited PTO

Paid time off (PTO) is an essential benefit for recruitment and retention. Without a PTO plan, employees can experience burnout. This reduces productivity and employee morale. By giving your employees a chance to rest, they can continue to work at full capacity.

Unlimited PTO is when employees can take as much time off as they like without having to accrue it. Most organizations put a cap on their unlimited PTO, but it is generally more generous than traditional vacation time and sick leave.

Offering unlimited PTO is a great way to attract talented employees. Our 2022 Employee Benefits Survey Report shows 93% of employees surveyed value PTO.

9. Trivia night

Another fun activity that can promote engagement and a positive culture amongst current employees is hosting or attending trivia nights. Many restaurants host trivia nights where you and your employees can get together. You can also host your own.

10. Flexible work schedule

A flexible work schedule allows employees to choose their work hours as long as they finish their work. Many organizations still require employees to work their full 40 hours but leave the scheduling up to them. This allows employees to accommodate travel times, taking kids to school or daycare, dentist or doctor appointments, and other life circumstances.

This helps you attract job seekers, especially Gen Zers and Millennials. According to the second installment of our 2022 Employee Benefits Survey Report, 89% of Gen Z employees and 87% of Millennials said a flexible work schedule is very important to them.

11. Yoga classes, meditation classes, and other group activities

Another fun perk to offer is regular group activities. This can include yoga classes, meditation sessions, and other activities for 30 minutes to an hour each week, for example. These activities allow your staff to destress, helping them remain happy and engaged throughout the day.

12. Employee achievement awards

Recognizing employee achievements is an essential part of employee retention. While just providing feedback and recognizing accomplishments in small ways is often enough, some organizations invest in achievement awards. This gives you a way to formally recognize your employees' contributions in a fun way.

Achievement awards could include providing gift certificates to top employees and holding award ceremonies, among other prize options.

13. Occasional meal money and gift cards

Another inexpensive way to retain employees is by providing occasional gift cards or reimbursement for meals. This could be for special occasions, such as birthdays, or for all employees to enjoy once a quarter, for example.

One thing to note is that while meal reimbursement is generally considered a de minimis fringe benefit by the IRS, gift cards are always considered taxable income. This means you’ll be required to withhold employment taxes for the gift card's value.

14. Food and beverages

Who doesn’t like free food? Giving your workers access to coffee, tea, and healthy snacks is a great way to make employees feel welcome and appreciated.

You can also supply a workplace microwave, electric kettle, coffeemaker, and utensils to facilitate employee lunches and snacks.

15. Birthday and anniversary celebrations

Celebrating the birthdays and work anniversaries of your employees is another way to promote belonging and give employees something to look forward to. This can be a simple recognition, or you can provide cake or ice cream. Some organizations also choose to get employees gifts for their birthdays or anniversaries.

When honoring birthdays, it’s important to ask each employee how they feel about having their birthday celebrated at work. Some may not want their birthday celebrated in the workplace for one reason or another.

16. Volunteer days

Giving employees PTO for volunteering is a great way to create a more positive work environment while helping your employees make changes in their community. You can also have volunteer days where your entire organization volunteers in the local community, hosts fundraisers, or sets up clothing or food drives.

Other affordable benefit considerations for your compensation package

While the free and low-cost benefits above are great perks to offer to enhance your benefits package, they may not go far enough to attract and retain the employees you want.

Our 2022 Employee Benefits Survey Report asked employees about the benefits they value most.

The most valued benefits to employees include:

  • Health insurance
  • Dental insurance
  • Vision insurance
  • Retirement benefits
  • Paid family leave
  • Mental health benefits
  • Professional development benefits

While offering these benefits can be expensive, they don’t have to be. We’ll discuss affordable ways to offer these essential benefits to your team.

17. Affordable health benefits

One of the most significant barriers to offering health insurance for small to medium-sized employers is the rising cost of traditional group health insurance. While group health insurance may not be affordable to every organization, quality alternatives exist.

Health reimbursement arrangements (HRAs) are employer-funded health benefits that allow you to reimburse employees for their qualifying medical expenses, including individual health insurance premiums, up to their monthly allowances. This gives you complete cost control while giving your employees more freedom over their benefits. They are also tax-free for employers and employees.

Three of the most popular types of HRAs are:

  • Qualified small employer HRA (QSEHRA)
    • A QSEHRA is designed for organizations with fewer than 50 full-time equivalent employees (FTEs). A QSEHRA has annual contribution limits set by the IRS.
  • Individual coverage HRA (ICHRA)
    • Available for organizations of all sizes that want to customize their benefit with eligible employee classes and no allowance caps. Employees must have an individual health insurance plan with minimum essential coverage (MEC) to participate in an ICHRA.
  • Group coverage HRA (GCHRA), also known as an integrated HRA
    • A GCHRA integrates with your existing group health insurance policy. This gives you an affordable way to extend your existing health benefits.

If you have employees who receive advance premium tax credits or you want to offer a health benefit to 1099 contractors, a health employee stipend might be right for you. A health stipend allows you to offer employees a monthly allowance for health and wellness-related expenses. However, stipends are taxable for both the employer and the employee.

With both HRAs and stipends, you can provide a health benefit that fits your budget.

18. Employee stipends

Offering employee stipends is a cost-effective way to enhance and enrich your compensation package with meaningful benefits your employees love. With employee stipends, you can offer a custom monthly allowance for expenses of your choosing.

For example, with a wellness stipend, you can reimburse your employees for their wellness expenses, such as gym memberships, wellness mobile apps, yoga classes, and home exercise equipment up to their available allowance.

This gives your employees more freedom to use their benefits on the needs and activities of their choice, rather than being forced into a one-size fits all benefits program.

With stipends, you can offer allowances for a variety of fringe benefits, including, but not limited to:

With PeopleKeep’s WorkPerks employee stipend administration software, you can create custom benefits or offer one allowance for all of your eligible expenses. For example, you could provide eligible employees with a $150/month stipend for any combination of wellness, entertainment, or remote work expenses they choose.

While most employee stipends are taxable, some fringe benefits are tax-advantaged. With stipends, you have complete control over your budget by setting maximum allowances for your employees. This enables you to provide affordable benefits no matter your business size or budget.

Conclusion

While not every small and medium-sized organization can offer traditional benefits, such as group health insurance and retirement plans, there are many affordable and creative employee benefits options available. These perks can be combined to create a standout compensation package without breaking the bank.

If you’re ready to offer affordable personalized benefits to your employees, PeopleKeep can help. Our personalized benefits administration software makes it easy to set up and manage HRAs and employee stipends in minutes each month.

Schedule a call with a personalized benefits advisor to learn more about affordable benefits options for your small business

1. https://www.pewresearch.org/fact-tank/2022/03/09/majority-of-workers-who-quit-a-job-in-2021-cite-low-pay-no-opportunities-for-advancement-feeling-disrespected/

Originally published on November 30, 2022. Last updated November 30, 2022.
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