Small and medium-sized businesses (SMBs) face a tough challenge. Attracting and retaining top talent is difficult, especially in today’s competitive job market. A comprehensive benefits plan helps overcome this challenge. In fact, 60% of people say that benefits and perks are a major factor in considering accepting a job offer.
Unfortunately, large corporations often have the advantage when it comes to employee benefits. Fortunately, there are ways for SMBs to offer the same, if not better, benefits. Here are some strategic approaches that can help you bridge this gap and boost your recruitment and retention.
Economies of Scale in Employee Benefits
With their large workforce, bigger companies are able to negotiate better rates with benefit providers. This bulk purchasing power reduces the cost per employee and allows access to premium plans. This is highlighted by the fact that 99% of large companies are able to offer their employees while only 58% of small companies offer these benefits.
Strategies for Small and Medium Sized Businesses to Offer Competitive Benefits
While large corporations benefit from economies of scale, SMBs do have options to enhance their employee benefits. By embracing creative solutions and making smart use of resources, you can develop offerings that attract and retain top talent.
Leveraging Technology and HR Platforms
Technological advancements have made sophisticated HR tools accessible to businesses of all sizes. SMBs can utilize benefits administration software to streamline processes and reduce administrative costs. These platforms often offer scalable solutions tailored to smaller organizations.
Partnering with Professional Employer Organizations (PEOs)
Partnering with a PEO allows SMBs to access benefits typically reserved for larger corporations. PEOs pool employees from multiple businesses to negotiate better rates on health insurance, retirement plans, and other benefits. This collective bargaining power mimics the economies of scale enjoyed by Fortune 500 companies. In fact, businesses that use PEOs grow 7–9% faster and have 10–14% lower employee turnover. By outsourcing HR functions and benefit administration to a PEO, SMBs can offer competitive packages while focusing on their core operations.
Offering Flexible and Personalized Benefits
Customization is increasingly important to employees. Implementing flexible spending accounts (FSAs) or health savings accounts (HSAs) allows employees to allocate pre-tax dollars toward expenses that matter most to them. By offering a variety of options, SMBs can cater to diverse employee needs without substantial cost increases.
Utilizing Government Incentives and Programs
SMBs can take advantage of government programs designed to reduce the financial burden of providing benefits. For instance, the Small Business Health Care Tax Credit under the Affordable Care Act offers tax credits to businesses with fewer than 25 full-time employees that provide health insurance. Staying informed about these incentives can make offering comprehensive benefits more feasible.
Trends to Watch Out For
Here are a few emerging trends you should pay attention to. Understanding these can go a long way to honing your benefits package and aligning it better to what employees want.
Emphasis on Mental Health and Wellness Programs
79% of employees consider mental health support at work essential. SMBs can offer wellness programs, access to counseling services, and initiatives promoting work-life balance to meet this growing demand.
Growth of Remote Work Benefits
97% of employees want hybrid or remote work options. SMBs can differentiate themselves by offering benefits that support remote work, like stipends for home office equipment or subsidies for internet services. Flexible working arrangements can be a significant draw for prospective employees.
Technological Advancements in Benefits Administration
Automation and artificial intelligence are transforming benefits administration. Tools that provide personalized recommendations and streamline enrollment processes can enhance the employee experience. SMBs adopting these technologies can improve efficiency and reduce administrative overhead.
Why Better Benefits Mean More Growth
Offering high-quality benefits is an investment in your employees’ well-being and your company’s future. Competitive benefits reduce turnover, saving on recruitment and training costs. While that might sound like a minor savings, replacing an employee can cost a company up to 33% of their annual salary.
A strong benefits package also enhances your brand image, making your company more attractive to skilled candidates. This competitive advantage can accelerate your company’s growth by building a team of dedicated, talented workers.
Overall, offering top-tier benefits is not only possible for SMBs, it is necessary. By adopting the right strategies and embracing smart partnerships, smaller businesses can provide benefits that attract and retain talent without straining their budgets.
Ready to unlock new opportunities and accelerate your business’s success? Contact us for your HR Review and Needs Analysis today!