Owners of Small and Midsized Businesses Turn to Employee Benefits to Attract and Retain Top Talent
- Principal survey finds businesses also plan to increase benefits for key employees
In response to the ever-changing environment small and midsized businesses (SMBs) operate in today, Principal Financial Group recently conducted a “check-in” with business owners. The survey, which polled more than 1,000 business owners at the beginning of 2022, revealed that they are turning to employee benefits to improve their ability to attract qualified candidates and retain current employees.
“Offering an executive bonus plan or a non-qualified deferred compensation plan can help meet the needs of employees critical to the success of the business.”
According to the survey, 70% agree employee benefits help to improve recruitment efforts, while 71% of business owners said offering more employee benefits helps improve retention. Additionally, two-thirds say employee benefits improve productivity – this percentage has consistently increased in each survey conducted since 2015 (42%).
“As business owner confidence improves and the need to invest in and grow their business intensifies, the need to attract and retain talent is more urgent than ever,” said Nate Schelhaas, senior vice president and head of life protection solutions at Principal. “Employee turnover remains a top concern for owners in 2022 and having a customizable and competitive employee benefits package is crucial to addressing this challenge and enabling growth.”
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Business owners offer key employee benefits at record levels
As business owners continue to look for ways to attract and retain the most qualified candidates, they’re putting employee benefits in place aimed at securing key employees who play important roles in their organization.1 In fact, 84% of SMBs offer key employee benefits and 55% want to offer more. The number of key employees continues to increase among SMBs; 40% say they have four or more key employees compared to 35% in 2021.
Common key employee benefits are disability income insurance, deferred compensation, executive bonus plans and retirement protection disability coverage. Compared to one year ago, significantly more business owners offer disability income insurance for their key employees (44% vs. 35% last year).
“Key employee benefits are growing in their importance as it becomes more challenging to lock in top talent in high-demand jobs,” said Kathleen Souhrada, vice president of nonqualified and life administration at Principal. “Offering an executive bonus plan or a non-qualified deferred compensation plan can help meet the needs of employees critical to the success of the business.”
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A focus on digital platforms for employee benefit decisions
The survey also found that 25% of business owners use digital platforms to help with insurance and employee benefit needs. Among owners with 10 or more employees, digital platforms are the third most-used resource to help with employee benefit needs.
“SMBs typically don’t have a dedicated human resource professional. Access to online resources and digital platforms simplifies the process to help them select the appropriate offerings for their workforce,” said Schelhaas. “Digital tools help streamline the customer experience from initial set-up to ongoing administration and claims payment. At Principal, our digital strategy responds to customer’s unique, personalized needs, which is essential in today’s competitive labor market.”
Additional findings from this survey include:
- Demographic shift: Compared to past years, there are now significantly more business owners who are female (44% in 2022 vs. 36% in 2021), Millennial (40% in 2022 vs. 26% in 2021) or have owned their business 10 years or less (57% in 2022 vs. 34% in 2021).
- Business protection keeps its top spot: Business protection remains the number one priority and has since 2010, this includes key employee life and disability insurance to protect against an unexpected death or disability that could disrupt business operations.
- More business owners say retirement is farther away: 48% of owners say retirement is 11 or more years away, compared to last year’s 37%.
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