To vie for top talent in today's labor market, offering competitive employee benefits is no longer a “nice-to-have” – it’s a necessity. And businesses, regardless of size, are expected to provide attractive compensation packages. Building a competitive employee benefits package, however, can be challenging – especially for smaller companies with limited resources.

A competitive employee benefits package gives employees practical support for their health, finances, and work-life balance while staying realistic for the employer’s budget. For small and mid-sized businesses, that usually means combining core benefits like medical insurance, dental, vision, a retirement plan, paid time off, and disability coverage with lower-cost options such as flexible schedules, an employee assistance program, telemedicine, and voluntary benefits. Employers can control costs by benchmarking their options, adjusting contribution levels, offering multiple plan designs, and working with a broker, benefits administrator, or PEO.

A benefits package is a mixture of employee benefits and perks that companies offer to their employees. A competitive benefits package is a well-designed package that meets the various needs of the workforce, provides options and plans that are comparable – or better – than those offered at other companies, and helps attract and retain top talent.

As you build your own competitive benefits package, consider the following:

• Include plans with easy access to healthcare providers.
• Provide a variety of plan designs with coverage of services that appeals to employees with varying needs.
• Offer several ancillary benefits to meet employees in their various stages of life, such as retirement plans, disability insurance, flexible spending account and/or health savings account options, paid time off, dental and vision plans, and life insurance.
• Provide benefits that are comparable or better than those offered at other companies in your industry and/or region.
• Ensure benefits meet the needs of your workforce.
• Reflect trends within the labor market, such as flexible schedules or remote work options.

While offering a competitive employee benefits package may seem like a substantial investment, the positive, long-term results can be significant for companies of all sizes.

Let’s look at some of the most common reasons a business should consider offering competitive benefits:

Improve Your Ability to Recruit Top Talent

Building a winning team means competing for the best talent, but that also means providing Fortune 500-level benefits that larger companies often provide.

Decrease Absenteeism

When employees can easily access care or resources, they are more likely to seek care or help. This can:

• Reduce the number of days they are absent due to illness
• Lead to preventative care that can prevent more serious health issues
• Reduce stress in their personal life

Reduce Employee Turnover

When employees have a comprehensive – and competitive – benefits package that meets their needs, they are more likely to be satisfied with their current employer and less likely to seek a new job. That leads to less employee turnover, which can boost a company’s productivity and bottom line.

Increase Loyalty

Providing a comprehensive benefits package that addresses overall well-being (social, financial, physical, mental, and emotional) shows your employees you appreciate and value them. And when they feel valued, they are more likely to be loyal to your company.

Improve Employee Morale and Company Culture

When you add up each of the above reasons, it equals better overall employee morale and company culture. When your employees are present, productive, engaged, and happy, they will contribute to a company culture that’s hard to beat.

As we’ve noted, a competitive employee benefits package is an investment you’re making in your employees and your growing business. So, it stands to reason that you want to ensure you’re getting the most out of this investment.

With that goal in mind, we recommend following these steps to ensure you’re crafting a competitive benefits package that will appeal to today’s workforce, meet employees’ needs, and help you build and retain a team that will take your organization to the next level.

8 Steps to Building a Competitive Employee Benefits Package

1. Assess what your employees need and want.
Begin by gaining a clear understanding of what your current employees want and need. If you are currently or have previously offered benefits, ask questions that provide feedback on your current offerings. If you’re offering benefits for the first time, ask your employees questions that will provide insights such as:

• Which benefits they prefer
• What they value in a medical plan
• What their current stage of life is
• What are common reasons they miss work

Utilize an employee survey or enlist a group of employees for a focus group tasked with gathering feedback and recommendations.

Also, keep in mind that today’s workforce spans five generations. Within each, employees have varying needs and expectations. Baby Boomers may be more focused on retirement and medical plans, while Millennials may value flexibility and remote work options.

2. Define your benefits strategy.
Offering employee benefits is an investment that can reap several rewards for your company, but it’s helpful if you have a clear picture of what you hope to accomplish by offering benefits. As a company, consider the following questions:

• Why are you choosing to offer benefits?
• How will your benefits fit into your strategic HR initiatives, such as your recruiting strategy, improving employee morale, minimizing employee turnover, and/or strengthening company culture?
• Are your benefits in line with your company values? For example, if one of your values is to care for your employees or to promote work-life balance, are you reflecting that value with the benefits you are offering?
  

An HR expert, such as G&A Partners, can help you understand the role benefits can play in strategic HR initiatives and how they can make a significant impact on your business.

3. Research benefits and labor trends in your industry, region, and company.
A competitive benefits package should be designed to entice job candidates, so it’s important to know what other businesses within your industry and region are offering (as well as current workforce trends). When you work with an HR outsourcing provider or benefits specialist, you’ll have access to experts who can provide these valuable insights.

If you’re currently offering benefits, research which benefits had the highest and lowest enrollment figures and which options employees utilized. Use employee survey responses to further examine these results.

4. Understand what you’re legally required to offer.
Federal labor laws – such as the Affordable Care Act (ACA) and Family & Medical Leave Act (FMLA) – may dictate that you provide certain benefits to your employees. Additionally, several states have passed or introduced legislation regarding retirement plans, paid medical leave, disability leave, and more. Tracking regulatory compliance requirements becomes even more complex if you have employees working in more than one location. So, it’s essential that you know what you are legally required to offer as you build your employee benefits package.

A leading national PEO like G&A Partners will provide compliance guidance and can advise you on how state and federal laws and regulations impact your benefits offerings.

5. Determine your benefits budget.
How much can you spend on benefits? This is an important factor to know as you begin the process of selecting plans. Consider your budget for health insurance but also ancillary options, such as dental, life, vision, or retirement plans. If you have a tight budget, explore healthcare plan designs with lower premiums and ancillary options such as dental and vision that you can offer to your employees without covering any of the cost.

6. Decide how you’ll acquire benefits.
You have options when it comes to acquiring employee benefits, such as self-sponsoring a plan, using a benefits broker, or partnering with a professional employer organization (PEO). When searching for affordable health insurance for small business employees, many companies turn to PEOs that can offer Fortune 500-level benefits at a price that won’t break the bank. Further, with a PEO like G&A, you’ll often see lower plan cost increases year to year, leading to long-term savings on benefits.

7. Gather and compare plan options and carriers.
No matter how you choose to acquire your benefits, you’ll need to gather plan and carrier options for health insurance and any ancillary benefits you’re considering, then compare them to determine what’s best for your business.

Some considerations include:

• How many plan designs will be available to your employees? More plan designs allow your employees to choose the option that fits their unique needs.
• How large is the provider network? Your employees are more likely to utilize their benefits if they can find providers in their area.
• How much do the plan options cost – you and your employee? Of course, your business’ budget is top of mind, but you’ll also want to consider how different premiums and deductibles will impact your employees.
• Who will handle benefits administration and enrollment? This is a time-consuming part of offering benefits, and often, the responsibility falls on the business. However, if you’re working with a PEO like G&A, our benefits experts will handle open enrollment, answer employee questions, assist with ongoing benefits administration, and more.

8. Select your health insurance and ancillary benefits.
Now you’re ready to choose the benefits offerings and plans that will become your employee benefits package. You’ll want to choose a mix of benefits that includes:

• Benefits you’re legally required to offer
• Benefits that meet your employees’ needs
• Options that reflect current benefits trends in your industry and region
• Offerings that fit within your benefits budget and strategy.

By combining a good mix of traditional benefits (such as health, life, disability, dental, and retirement plans) with non-traditional ancillary options that may carry a lower or no cost (such as paid time off and holidays, employee assistance programs, flexible spending accounts, and flexible schedules), you’ll be able to craft a competitive employee benefits package within your budget.

The U.S. Bureau of Labor Statistics issues reports regularly that show the average cost of benefits per hour worked for employees. Data from March 2026 indicates that employers of private industry employees averaged $13.79 on benefits per hour worked per employee. (Get the latest data here.) Using that average, here are the average monthly and annual costs per employee (based on a 40-hour workweek).

*based on a 40-hour workweek

Of course, several factors will impact the cost of employee benefits for your business, such as:

• How you acquire your employee benefits (for example, through a broker, PEO, or self-sponsored plans)
• Type of plan designs you offer
• Your choice of benefits offerings and perks in your benefits package
• How much your company contributes toward insurance premiums
• Your location, company size, and industry

Ultimately, the most significant factor is budget. While your goal may be to provide everything your employees need, the reality is that you must balance that desire with how much your business can afford.

Thankfully, there are several strategies to help you manage the cost of employee benefits for a small or mid-sized business while still building a comprehensive and competitive benefits package.

Some options to consider:

• Work with a PEO: A professional employer organization uses its collective buying power to negotiate better rates on high-quality plans and has the HR expertise to advise you on how to build the best benefits package for your company.
• Partner with a broker: A benefits broker will shop and compare plans for you, then advise on which is best for your business.
• Research potential tax credits: There are tax credits and other incentives available for growing businesses that offer benefits such as retirement plans. These credits often offset administrative costs.
• Explore different plan designs: Ensure you’re comparing all available plan options and reviewing how the costs vary for each.
• Adjust the employer contribution: Many ancillary benefits do not require an employer contribution, such as dental or vision insurance. Yet often the plans you can offer are better than what your employees would find on their own.
• Include low- or no-cost perks and benefits: Flexible schedules and paid time off are examples of perks you can offer that don’t carry a hefty price tag, yet they are still highly desirable to employees.

Once you’ve built your competitive benefits package, it’s time to share it with your employees. It’s best to do so with two goals in mind: to educate employees on the selections available and to encourage enrollment and utilization of the benefits.

Educate Employees

For most small businesses, an employee benefits package can significantly boost your success. But if your employees aren’t aware of the selections available, they are less likely to appreciate and value them.

Be sure to market your benefits package to your employees, much as you would a new product to your customers. Prior to and during open enrollment, provide multiple resources to help inform and educate employees, such as:

• A benefits booklet that highlights all offerings, how they work, and the cost
• Easy-to-access videos that explain different plan options and how to enroll
• Email communications that highlight your benefits package
• Town hall meetings, where you can explain why you’ve chosen specific benefits and employees can ask questions
• On-demand webinars so employees can watch when it’s convenient for their schedule

A broad strategy that utilizes different types of resources and communication will help expand your reach within your workforce.

Drive Enrollment and Utilization

Continue communicating with employees during open enrollment with reminders about upcoming deadlines. You can also utilize benefits software to identify employees who have not yet enrolled, so you can specifically target them with additional communications.

However, your efforts shouldn’t stop once open enrollment ends. Encourage utilization all year by providing ongoing communications about your benefits. For example, you may spotlight the ease of your telehealth resources, which can save employees time and money. And during stressful or busy times, you can remind employees about mental-health benefits.

A wellness program is another way to promote a healthy lifestyle and remind employees to schedule preventative care appointments.