Apr 20, 2023

Top 6 HR & Benefits FAQs for Startups

Explore the top 6 HR & Benefits FAQs for Startups.

The world of startups is a challenging one. To help your startup run more smoothly, it is important to first get your HR and Benefits issues squared away. In this particular blog post, I am going to share the top 6 HR and Benefits frequently asked questions facing startups today.

How should I determine how much to compensate (pay and benefits) my employees and future hires?

There are many benchmarks available for the salary, incentive pay, and employee benefits, so it's important that you have a good advisor to help you to first assess who you are competing with for top talent.

Then you need to leverage benchmark data and make decisions on your compensation philosophy. This requires an in-depth analysis of benefit plan options and well-structured job descriptions to determine the optimal pay rates for each position that aligns with the compensation philosophy.

When should I start to offer benefits to my employees?

There is no correct answer to this question, but benefits are available to companies with as few as two employees.

Typically a benefits package is set up when the founders of the business start to recruit their first employees since benefits are a big part of the compensation package necessary to recruit good candidates.

How can I offer benefits to my employees, that are cost-effective and competitive with larger companies?

The idea that benefits costs are lower for larger companies is a myth.

Small businesses with as few as 5 employees have access to broad and affordable benefits packages including medical, dental, vision, life, disability, 401k, Flexible Spending, and Commuter plans. The important thing is to engage with a trusted benefits advisor that is experienced in evaluating the multitude of available options.

What is the best way to go about finding and recruiting top talent?

Recruiting is like sales. You need a great product to offer and you need to find the client, they don’t find you.

So recruiting great people starts with developing a talent strategy and process; a sales pitch that highlights the big idea of the business and clearly articulates why it is a great career opportunity for the right person.

And like great sales, identifying where to find people is crucial, so identifying the best sources and methodologies for finding great people is important and requires time and the involvement of the executives of the business. A modest investment in a solid recruiting process and recruiting tools will pay significant dividends.

What are the biggest risks to my business related to HR and Benefits?

HR compliance and benefits laws differ by state, but there are numerous requirements that create significant burdens for employers that require expertise and diligence.

Generally speaking, the highest risk areas are: Classification of employees as exempt vs. non-exempt, inadequate or unclear employment policies, errors in offering and administering employee benefits, and mishandled employee relations issues.

Additionally, losing key employees is a risk associated with not having an organized, well-communicated set of policies and procedures, and proper support mechanisms to make them feel valued and appreciated.

What’s the difference between Gusto, Namely & Rippling and PEO’s like Trinet, and HR Outsourcers like Melita?


Gusto/Namely/Rippling are software vendors that offer free or discounted software in exchange for commissions paid by your employee benefits insurance carriers/vendors.

Their model is to employ software to automate many of the workflows of HR and Benefits and provide integrated payroll services to combine HR, Benefits, and Payroll into a single system. Although it is beneficial to have software for helping with the management of these activities, by no means is it an outsourced solution.

The business is still fully responsible and accountable for establishing and managing its own policies and processes, and the administration of the business's HR, Benefits, and Payroll. Additionally, the benefits advice and guidance are typically boilerplate and not personalized to the goals and competitive benchmarks of the client.

Trinet (PEO)

Trinet is a PEO (Professional Employment Organization).

PEO’s require a co-employment arrangement whereby they hire your employees so that they can be pooled with their other clients as part of one large employer. In doing so, you borrow all of their infrastructure including technology, payroll, benefits, and basic HR policies.

Because PEO’s are one-size-fits-all there is no flexibility and exiting the PEO once you've grown is a complicated process that requires implementing your own infrastructure for HR, Benefits, and Payroll. In some cases, the PEO benefits are more cost-effective than obtaining benefits independently, but in many cases, they are actually more expensive.

Melita (HRO)

Melita is an HRO (HR Outsourcer) which is a hybrid of the models mentioned above.

Melita helps your business build and design your own HR, Benefits, and Payroll infrastructure and employs cloud-based HRIS technology to do so. Similar to Trinet, Melita manages all aspects of HR, Benefits, and Payroll, but there is no co-employment relationship so there is greater flexibility.

You have the choice between ADP’s Workforce Now or Zenefits as the technology platform upon which Melita will build and manage your HR, Benefits & Payroll infrastructure.

As your business grows you are able to hire your own HR staff and take over various functions when desired. And to make the transition smooth and seamless, Melita will even train your staff.

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