Small businesses have strategic opportunities to strengthen their offense in the competition for employee talent using workplace benefits.  More than half (55%) of smaller employers, those with fewer than 500 employees, say benefits play a very important role in employee retention. However, many current benefits programs may not be having the intended impact:

• Only about one-third (34%) of workers at these smaller employers say the benefits they receive are a very important reason to remain with their employer, compared to more than half (53%) of employees working at larger companies.
• Just 37% of employees at smaller companies, compared to 49% of employees at larger firms, say they are highly satisfied with their workplace benefits.
• The majority (60%) of smaller employers say they have a strong sense of loyalty to their employees—compared to 45% of larger companies—yet only 44% of workers at these smaller companies believe that their employer has very strong sense of loyalty to them.
  

These results are somewhat surprising given that, among employers that offer benefits, a higher percentage of smaller companies are paying all of the costs for many benefits including medical, dental, vision and prescription drugs than are larger companies. More than one-third of smaller employers (36%) say they pay the entire share of employees’ medical coverage and 29% pay all the cost of prescription drug coverage compared to only 15% and 13%, respectively, among employers with over 500 employees.

Without the advantage of economies of scale, smaller employers need to be innovative in their benefits implementation. Voluntary benefits in the workplace, for example, can help address the challenge of expanding the breadth and depth of a benefits program to improve employee satisfaction without adding to the employer’s overall benefits spend.  Smaller companies should also consider adding health and wellness programs, or increasing the flexibility of schedules to permit greater work/life balance for employees.

Improved benefits communications are also essential in helping employees understand their options and gain a greater appreciation of their workplace benefits. Only about one-third of employers and employees believe that current benefits communications are highly effective. More than half (54%) of employees at smaller businesses say that receiving personalized benefits information with costs for options would make it easier when making benefits choices.

Smaller companies that can provide a broad benefits offering supported by targeted communications are better positioned to compete with larger employers for qualified workers and retain top talent, while also helping their employees build a financial safety net for the future.