Because they don’t have the buying power of larger companies, small businesses are hit particularly hard by rising health care costs, McLellan says. (Daniel Acker/Bloomberg)

Small business owners have a lot to consider when it comes to employee benefits. Health care costs have been rising steadily, and with the implementation of the Affordable Care Act, many small firms may see a further increase in their premiums.

Nevertheless, employers know that robust benefits packages are a huge draw for talented workers and a key component of employee retention. To prevent larger organizations from poaching their best people, small business owners are looking for more affordable ways to take care of their employees — and it isn’t all about health care.

So how can small firms compete? The solution may lie in customization.

Employee needs vary by generation

These days, one-size-fits-all benefits packages simply don’t make sense, especially for small employers. Consider the multigenerational nature of most workforces, with each subsequent generation demanding different perks:

• Maturists (born before 1945): For this group, stability is key. A lifetime job, homeownership, and a comfortable retirement mean everything. They’re looking for a hefty retirement plan and solid financial counseling.

• Baby Boomers (born 1945-1960): Boomers want the job security that will allow them to live large, both before and after retirement. They want retirement plans, time off for vacations and hobbies, wellness programs, and long-term health insurance.

• Generation X (born 1961-1980): This generation is focused on achieving work/life balance, and a bigger paycheck will offset the loss of certain benefits. They enjoy companies that allow flextime and remote work and seek benefits that serve them outside the workplace, such as pet insurance or adoption cost benefits.

• Generation Y (born 1981-1995): The first digitally native generation craves freedom and flexibility. Most will not stay in their current jobs for the long haul, so they want benefits they can enjoy right now, such as tuition reimbursement, flexible attire and hours, and access to the latest technology.

With such widely varying desires, the best way to draw the most talented employees from each generation is to create a flexible, customized package of perks that will meet their unique needs and still be affordable for a small business.

An effective, customized benefits package typically takes into account the following areas:

• Life benefits, including time off, child and elder care, and telecommuting offerings.

Health benefits, including insurance, wellness programs and gym memberships.

• Work benefits, like career visibility, mentorship and professional memberships.

• Financial benefits, like savings accounts, financial advice and retirement contributions.

Don’t be afraid to think small

Here are a few things to consider when creating a benefits package:

• Not every benefit must be big or permanent. You can show appreciation in small, low-cost ways. The occasional pizza party, gift card, or even a few hours off on a Friday can go a long way toward building loyalty.

• Give options. Different people value different things, so allow your employees to customize their benefits package if possible.

• Don’t only think generationally. Your employees are more than their age. They may be motivated by money or something else, or they may seek time off for non-work-related activities or childcare. When building your benefits package, you should consider every aspect of your employees’ lives.

• Benefits should reflect your company culture. This is where ad agencies often shine. Some agencies bring in masseuses, go on field trips to art museums, or engage in fun activities, such as building a miniature golf course.

By taking these factors into account, you can build a nontraditional benefits package that will not only retain your best employees, but also save you money. A recent Harvard study found that instituting a workplace wellness program (massages, meditation, health coaching), for example, can yield an return on investment of more than 3-to-1 on health care cost reduction, as well as reducing absence-related costs over a period of three years.

But creating an effective benefits package requires a well-rounded consideration of your employees and their unique needs. Ask yourself what you would want if you were young and adventurous, just starting a family, or approaching retirement.

Because giving your employees what they need won’t just make your business a great place to work — it will also provide the greatest value in terms of employee retention, health, and happiness.

Drew McLellan owns Agency Management Institute, which provides workshops, consulting, and owner peer groups for hundreds of small- to medium-sized advertising agencies that are focused on growing sustainable, profitable agencies.

Follow and On Small Business on Twitter.