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Business Solutions Center
Top 4 Reasons to Offer Employee Benefits
By: Jennifer Martinez, Associate Vice President, Nationwide Employee Benefits
The adage that people are a company’s most important asset is never truer than today, especially for small businesses.
I recently interacted with the CEO of a manufacturing company who emphasized the value of talent. His operation is highly successful and has experienced a 600 percent growth in revenue from 2009 to 2017 under his leadership. I asked him what he considers key to his success, initially believing he might note a relationship with a global automaker, or perhaps financing, or even marketing. His response was confident and resounding, “It’s our culture.”
According to the 2017 American Express Small Business Monitor survey, his belief mirrors one in three small businesses who say, “You’re only as good as your people.” In today’s business environment, people are key because they engineer, impact, or directly deliver service and customer experience. We know today that customer experience or ease of doing business is what attracts and retains customers, which either stimulates or contracts growth.
However, the challenge remains, how do you find the right talent to grow your business? This becomes acute in a tight labor market where unemployment continues to decline.
Employee benefits can elevate your brand among job seekers
In December 2017, the US Bureau of Labor and Statistics (BLS) reported that our national unemployment rate in November was 4.1 percent; that was lower by .5 percent from the prior year. The BLS also noted year-over-year rate declines in 78 percent of the 388 metropolitan areas. For example, San Antonio came in at 3 percent, Los Angeles area at 3.8 percent, and Minneapolis at 2.4 percent.
Small businesses are taking note and investing more in employee benefits to differentiate as an employer of choice to attract the right talent. One group which stands out are Hispanic small business owners who are more likely to live in a metro area 1. According to a 2017 Nationwide small business owner survey, Hispanic small business owners are 23 percent more likely than the general population to invest in and offer a broad range of employee benefits. This investment goes beyond health plans to include retirement benefits, dental, and disability. Their benefit decisions even address the growing demand for pet insurance.
Employee benefits can help you retain your talent
Prospective employees, some of whom companies will need to dislodge from other employers because of the tight labor market, are also seeking a compensation package that goes beyond salary.
Harvard research notes that two out of three employees consider benefits as essential to accepting a job offer 2. Even after their start date, 80 percent of employees would choose additional benefits over monetary compensation like a pay raise. This explains why companies plan to invest savings from the 2018 tax reform bill to improve their benefit offerings, e.g. Starbucks expanded parental leave in late January 3.
What’s driving this demand? Changing demographics.
In 2015, Millennials (Gen Y) surpassed Baby Boomers as the largest living generation 4. Gen Y – which is coincidentally the most diverse – now makes up over 33 percent of the labor market and they value work/life balance.
Because of shifting generational attitudes and beliefs, the traditional workplace setting of rigid hours, strict dress codes, and formality is giving way to more flexible, engaged, and purpose-driven teams. This impacts all sectors, even the most conservative like financial services.
Nationwide is a great example. The company recently adopted jeans into its dress policy, emphasizes noble purpose through robust corporate citizenship, provides work-from-home options, offers student tuition benefits, and has increased training on mindfulness and meditation. These perks are even more relevant because they expand upon a strong suite of existing employee benefits that include life, disability, dental, vision, pet, supplemental accident and hospital, legal, and even travel insurance.
Small business owners may not have the luxury of large budgets; however, they can creatively package employee benefits with non-monetary perks like flexible work environments. This holistic approach can help ensure that recruitment investments and efforts are fully realized versus undermined by quick turnover.
Employee benefits can protect your livelihood
Benefits are often framed from a purely talent perspective and can easily become an expense management decision. Despite business owners clearly understanding the importance of protecting their property and assets, the expense perspective sometimes overshadows the importance of protecting an owner’s livelihood and ability to work.
The Social Security Administration notes that only one in three private sector workers have long-term disability (LTD) insurance 5. The low adoption of LTD is concerning given that among today’s 20 year-olds, about 25 percent of them will be disabled before their 67th birthday 5.
Disability impacts an owner’s health and their wallet. A quick glance at an emergency room bill clearly illustrates why 62 percent of all personal bankruptcies are due to medical expenses piling up 6. This includes individuals who had some type of health insurance. And that doesn’t even speak to the amount of money in lost wages when an individual is unable to work due to a disability, which LTD can help cover.
Last year I visited an insurance agency owner whose office had a gallery of beautiful family photos. I learned his wife was a stay-at-home mother who homeschooled their three young children. His mother also lived with them and provided additional child care. I saw his demeanor change as we talked about the importance of offering employee benefits, in addition to commercial insurance, to his small business clients. A business owner himself, he came to realize that his own income, and his family’s welfare, were at risk. He had overlooked protecting his income through disability insurance while focusing on building a business and satisfying customers. It’s no surprise that by the afternoon he was covered.
Employee benefits can be a key component of business strategy
Small business owners’ concerns are often placed in categories like cash flow, government regulations, marketing, or legal. As entrepreneurs, they can easily get caught focusing on driving growth through business development and sales. Employee benefits may seem secondary, may be overlooked, or may be considered a frivolous check box. That perspective places a business at risk.
In today’s environment, employee benefits are a strategic tool to win in a competitive marketplace, in an environment where consumers demand excellent service, and at a time where the workplace is being redefined.
A business is truly only as good as its people, and an owner is never exempt from accidents or injury. Small business owners who invest in employee benefits will be building a winning culture that values, attracts, and retains employees while protecting the owner’s own assets.
You can learn more about employee benefits here.
Source 1 : http://www.pewhispanic.org/2016/09/08/5-ranking-the-latino-population-in-metropolitan-areas/
Source 2 : Harvard Business Review, The Most Desirable Employee Benefits, Feb 2017
Source 3 : http://www.foxbusiness.com/markets/2018/01/24/starbucks-to-increase-wages-improve-benefits-for-150k-employees.html
Source 4 : http://time.com/3854518/millennials-labor-force/
Source 5 : https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf
Source 6 : https://www.huffingtonpost.com/simple-thrifty-living/top-10-reasons-people-go-_b_6887642.html