Employee benefits are becoming an increasingly important part of the package that employees consider when taking—or deciding to stay with—a job. But fewer than half of small businesses currently offer employee benefits, according to a new survey by Clutch. Are you selling your business short by not providing the benefits your team wants? Here’s what you need to know.
The most common employee benefits
The most common employee benefits small businesses provide their workers are:
- Health insurance: 69%
- 401(k) and other retirement plans: 52%
- Family leave: 48%
Paid time off (PTO): 45%
As businesses grow, they typically begin offering more benefits. Nearly seventy percent (68%) of companies with 11 to 50 employees offer benefits and 76% of those with over 50 employees do, compared to just 32% of those with two to 10 employees.
Bigger companies typically have more money to spend on benefits; in addition, once a company has 50 or more employees, it generally becomes subject to the Affordable Care Act and the Family and Medical Leave Act. The ACA mandates employers either provide employees with health insurance or pay a penalty, while the FMLA requires employers to provide unpaid family and medical leave for qualified employees.
What benefits do employees want?
Health insurance and retirement plans are widely popular with employees. However, one area where small businesses are falling short of meeting employees’ needs is paid time off.
Fewer than half (45%) of small companies that provide benefits offer PTO. Among those that do provide PTO, only 5% offer fewer than five business days of PTO, indicating that small businesses understand how important time off is to workers.
But there’s still a long way to go. A separate survey by MetLife reports that unlimited vacation time is the “emerging benefit” employees express most interest in. No wonder that out of the small businesses Clutch surveyed, 19% of those adding new benefits this year are considering adding PTO.
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The more customized your benefits can be to your employees, the better. A whopping 93% of employees in the MetLife survey say the ability to customize their benefits is a must-have or nice-to-have option; almost three-fourths (72%) say having customizable benefits would make them more loyal to their employer.
For a small business, one way to customize your benefits is simply by polling your employees about what they want most. For example, 17% of small businesses Clutch surveyed currently offer student loan repayment, and 8% are considering adding it this year.
Listening to employees
Employees’ opinions have an effect on the small business benefits employers offer, Clutch reports. Almost one-third of small businesses that plan to offer new benefits in 2019 say they’re doing so as a result of employee requests, and 27% are adding benefits as a means to reduce employee turnover. Clearly, small business owners realize that with more companies offering a wide range of benefits, they need to keep pace or lose valuable workers.
However, small businesses are at a big disadvantage when it comes to offering and managing employee benefits: Nearly one-third of small businesses (30%) don’t have formal HR resources in place.
Among small companies that have HR resources, nearly two-thirds (64%) offer employee benefits. Among small companies without dedicated HR resources, just 10% offer employee benefits. Without some type of formal HR program, it can be difficult to implement, educate, and assist employees with their benefits.
Hiring a full-time, in-house HR person isn’t the only way to solve this problem (although 25% of small businesses in the Clutch survey do have an HR employee on staff). You can also work with an HR consultant, use a professional employer organization (PEO), or outsource your HR. These approaches are used by 9%, 8%, and 6% of small business owners, respectively.
Employee benefits are becoming a key differentiator for employees looking for jobs. If you want your small business to attract the best and brightest—and keep them happy—you’d best be thinking about how to offer the benefits they demand.
RELATED: 7 Ways to Keep Your Employees Happy (Without Breaking the Bank)
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