11 minute read
Helping small businesses weather the great resignation
Six ways brokers can help small-business clients offer the kind of benefits their workers want.
By Stephanie Shields
Over the past decade, the idea of providing benefits as a solution to small businesses’ retention woes has fallen slowly by the wayside. But now a confluence of factors in the wake of the pandemic — supply chain disruption, personal and familial challenges, and rampant inflation — are making recruiting even more difficult. As a result, your small-business owner clients will have to reconsider a recruitment tactic they have long taken for granted.
The numbers don’t lie; 6 in 10 small businesses say they are struggling to attract talent amid the “great resignation,” according to Alignable’s poll of more than 6,000 small businesses. Many companies have raised their wages in response — Forbes reported large companies expect to pay a 3.9% increase in wages this year. However, high turnover remains a challenge for employers two years into the pandemic, with a record high of 4.53 million resignations in March.
With these numbers in mind, it’s clear that small-business owners can — and should — look beyond salary to attract talent and improve retention. To stay competitive without breaking the bank, small-business owners must address the intangible aspects of work — such as job satisfaction and employee wellness — and offer employees a comprehensive set of benefits that helps them take care of themselves and their families.
How employee benefits can stem the worker shortage tide
Offering health care and other benefits can give small businesses a competitive edge over their peers. Although large corporations have been offering benefits for years, fewer than half of small businesses have offered retirement savings plans for employees, according to JPMorgan Chase. In 2020, only 31% of private-sector establishments with fewer than 50 employees offered health insurance, according to KFF.
Benefits are also overwhelmingly popular with employees. Seventy percent of employees see dental and vision coverage as a must-have, according to a 2022 MetLife survey. Benefits packages are equally important for retaining employees. A 2022 report by Willis Towers Watson found that 6 in 10 employees cite their employer’s retirement benefits as an important reason they remain with their current employer.
Small businesses that already offer benefits shouldn’t assume they’re in the clear. A Ceridian poll found that 37% of employees who receive benefits would like to see their employers prioritize enhanced mental and physical benefits in 2022. Therefore, it’s critical for companies to reevaluate their own benefits with a fresh set of eyes and an understanding of their employees’ needs.
Here are some common misconceptions small-business owners may have regarding benefits.
• Employers must cover the cost of benefits.
A common complaint among small-business owners is that providing a benefits program is too costly. But by using a voluntary benefit program that provides services that are either fully or partially covered by the employee, employers can offer a wide range of benefits — such as disability, life insurance, dental, vision, hospital indemnity, critical illness coverage and more. Employees simply select what services they prefer and pay for them through deductions from their paycheck. Benefits providers handle administration and can provide educational materials for small businesses to distribute to their employees, leaving businesses with money to spare.
• Offering supplemental insurance isn’t that important.
Nobody wants to offer their employees a high-deductible health insurance plan, but some small-business owners have no other cost-effective option. In fact, 31% of employees were enrolled in an HDHP as recently as 2020, and that number has been on an upward trajectory, according to KFF.
However, HDHPs do mean that outside of preventive care, employees are left covering their medical bills until they have spent thousands of dollars out of pocket. So it’s wise for small-business owners to provide employees with a safety net.
That’s where supplemental insurance — such as for accident, critical illness and hospital indemnity — comes in. These insurance plans can help cover the gaps in major medical insurance, providing additional security for those who decide to invest in extra coverage.
• Benefits are too expensive to offer 1099 contract workers.
Many small businesses employ 1099 contract workers because they are quick to onboard and require minimal oversight. However, most small-business owners have been reluctant to offer benefits to these contractors because small-business owners don’t want to run the risk of misclassifying their contract workers, which can be costly.
As the public discourse about whether workers in the gig economy should qualify as independent contractors or should be employees with full benefits continues, small-business owners may find themselves competing with deep-pocketed corporations for scarce labor. One consideration for small businesses is to provide their employees with access to information about professional or trade associations, which often offer benefits to their members.
WHAT DO WORKERS WANT?
Ceridian polled workers about attitudes toward their workplaces for 2022 and found: • 64% of employees said they felt very or somewhat optimistic about their work life in 2022. • 22% of employees said a promotion was among their work/life goals for 2022. • 37% of employees said they wanted their employers to prioritize enhanced mental/physical benefits in 2022. • 31% of employees said they wanted to see their employers prioritize enhanced financial wellness offerings, such as access to earned wages at any time and retirement planning, in 2022.
Another option a small-business owner might consider is joining a professional employer organization, which enables small to mid-sized businesses to provide their employees with access to better and more affordable benefits. PEOs also help streamline a lot of administrative human resources functions, like payroll, benefits, compliance and workers’ compensation. Although there are benefits to joining a PEO, there can be drawbacks, which is why it’s important that small-business owners understand all the pros and cons.
Offering or providing access to benefits to nontraditional workers is a long-term play for small-business owners aimed at improving company loyalty. Employers that decrease presenteeism — lost productivity due to illness — and reduce turnover among their workforce can recoup their initial investments. They won’t have to spend money finding and retraining employees, and they’ll experience productivity gains and improved morale as a result.
There are more ways to provide benefits than ever before. The excess of options means business leaders may end up feeling overwhelmed or encounter financial roadblocks.
Here’s how brokers can help small businesses with limited budgets and expertise overcome those challenges to deliver a smart benefits strategy that addresses the labor shortage without breaking the bank.
1] Assess the workforce demographics to ensure strategic benefits offerings.
For the first time in history, there are five generations in the workplace. Although everyone may need health and dental insurance, it’s crucial that small-business owners offer a combination of traditional employer-paid benefits alongside a large number of employee-paid options that can cater to both newcomers and those in the twilight of their careers.
2] Assess which benefits are tax deductible and eligible to use tax credits.
Small-business owners should work with a certified public accountant to identify which benefits will provide them the biggest tax breaks and credits. Often these include retirement plans, tuition reimbursement plans, health reimbursement arrangements and paid leave. For instance, employers with fewer than 100 employees may be eligible for an annual tax credit of up to $500 if they create a 401(k) or SIMPLE IRA plan with automatic enrollment.
3] Leverage voluntary benefits.
Small-business owners must be selective about which voluntary benefits they choose to offer. That’s why benefits brokers are an excellent resource.
Brokers can assist small-business owners with paperwork, compliance and annual renewals, putting together a custom package that makes sense for their unique needs.
4] Develop a communication and engagement strategy.
A business owner’s work doesn’t stop once an employee benefits program is in place. Employers must promote the program and help employees understand the benefits they are offering. Insurance brokers and carriers can offer employers tools and resources to help educate their employees, integrating those resources with a small busines’s existing communication strategy.
Additionally, brokers and employers should ask employees for feedback on the program so they can constantly improve their benefits plan.
5] Adopt benefits administration technology.
In order to meet employees where they are, employers should adopt a digital platform that provides decision-making support, such as videos and education tools. Choosing a carrier that integrates well with these digital platforms will allow small-business owners to give employees an easy, intuitive and flexible user experience.
6] Supplement voluntary benefits with workplace perks.
Workplace perks are a great way to shore up recruitment efforts — but they must be the right kind of perks. Gone are the days of throwing up a Ping-Pong table and a beanbag chair as a concession for working long hours. A recent Glassdoor survey found 60% of workers now place more emphasis on perks related to physical and mental well-being.
For small businesses, that might mean providing access to mental health services, wellness and dependent care specialists, summer half-day Fridays, and more.
The great resignation may be here for the foreseeable future — the quit rate, for example, shows little sign of waning. But by following these six steps, brokers can help small-business owners rest easy knowing they are offering what employees want — the safety and security that come with a comprehensive benefits package.
Stephanie Shields is head of employee benefits at Equitable. She may be contacted at stephanie.shields@ innfeedback.com.
Most retirees are financially fragile
I get by with a little help
Most retirees and pre-retirees are financially fragile, with the average retiree able to withdraw about $5,000 each year from their savings, according to a recent longevity study.
A majority rely on their own instincts for retirement planning, but they also say they regret not doing more planning, according to “Disconnected: Reality vs.
Perception in Retirement Planning,” a study by the Stanford Center on
Longevity, sponsored by the firm Finance of America Reverse. As boomers surge into retirement, this study found the median savings of respondents between 50 and 74 was $128,000 and 55% said
their financial situation was fragile or they’re just able to get by fi-
nancially. Going by the 4% rule, respondents could withdraw an average of $5,120 annually, with 72% going by their instincts for planning and 60% saying they should have done more planning. Only 10% of respondents were very comfortable with their finances.
64% of retirees want an advisor’s help in
determining an invest-
ment strategy. 53% want help deciding when to take Social Security benefits. SOURCE: Stanford Center on Longevity
20% of DIY investors still rely on professionals
Many investors may say they want to manage their money on their own, but their stated preference doesn’t always match their behavior. That’s one takeaway from a Hearts & Wallets survey that found that although an increasing number of Americans rely on multiple sources of information and advice to make investment decisions, 20% of
households cite some kind of financial professional as
their primary source. Forty-three percent of households use seven or more sources to at least some degree today, triple the 14% of households that used that many sources in 2010. Millennials with $100,000 to less than $1 million or with $1 million-plus are the generation-wealth groups most likely to rely on a high number (seven-plus) of sources, at least to some degree.
Baby boomers are much less likely to rely on a high number
of sources to some degree, and this lower use of sources may relate to their higher reliance on an advisor, when they do have one.
More BIPOC Americans open to receiving advice
Americans who identify as BIPOC (Black, Indigenous and People of Color, including Hispanic and Asian/Asian American) report receiving less professional assistance than they did a year ago. That was a main finding of the 2022 Retirement Risk Readiness Study from Allianz Life.
But although fewer
BIPOC respondents are currently getting professional help with their finances, the number who are open to working with a professional in
the future is on the rise. The percentage of BIPOC respondents who have never used a financial professional but said they would consider using one grew for each group: 37% for Black/African American respondents, up from 32% in 2021; 34% for Hispanic respondents, up from 30% in 2021; and 39% for Asian/Asian American respondents, up from 34% in 2021.
Specific financial planning needs for each BIPOC community have likely
evolved during the pandemic, the study found. Black respondents were more likely than other groups to want to work with a professional on short-term financial planning issues. For Hispanic respondents, advice on how to leave a legacy to family was top of mind. Asian respondents were most interested in holistic financial planning.
Most retirement plans unchanged by COVID-19
Although a significant percentage (40%) of study respondents said their work was impacted by the COVID-19 pandemic, retirement expectations for the majority remain unchanged, according to a panel of industry experts during a webinar hosted by the Employee Benefit Research Institute.
The 2020 Health and Retirement Survey found
It’s a guy thing.
Men were more likely than women to say their jobs were impacted by the COVID-19 pandemic.
SOURCE: 2020 Health and Retirement Study that 40% of respondents said their work was affected by the pandemic, compared to 60% who said that their work was not. Fourteen percent lost their jobs, 50% stopped working, 47.8% were furloughed or laid off temporarily, and 6.5% said they quit their jobs.
The financial situation of 75.7% of respondents stayed the same, and surprisingly, the income of about 5% of respondents actually went up, while about 20% saw a decrease in income.
