In 2021, an average of nearly 4 million US employees per month made the decision to quit their jobs. Carrying the tradition into the next year, another 4.3 million quit in January of 2022.
Contrary to what the simple narrative would suggest, this unprecedented churn is not a product of people’s unwillingness to work. Instead, prompted by a flooded job market and a new sense of labor empowerment, workers across nearly every industry are opting to leave their current roles for better fits.
The factors driving this period, dubbed “The Great Resignation”, will differ by industry, but can be condensed down to one simple idea: unlike any time in recent memory, workers have the ability to leave their current roles for better pay, benefits, balance, and more.
While most organizations will see this time as a challenge, others will see it as an opportunity. In fact, with a shift in ideal workplace dynamics, desired conditions, and preferred compensation, a door has opened for small businesses. Leveraging their ability to more easily control and change their operations, SMBs now have the opportunity to attract talent by tailoring benefit packages to the current labor force trends.
In this article we will explore how employee benefits packages evolved and how they can be used to attract top talent. Additionally, we will share a few options that your small business can integrate into its current benefits package offer.
The History of Employee Benefits
In the late 1800s, the American Express Company, then just a railroad business, barreled towards an inevitable crisis.
Following the industrial revolution, blue collar workers across the country flocked towards urbanized workforces, which offered more lucrative wages and stronger job security than traditional, labor intensive roles. As an inherently unsafe and physically demanding sector, rail faced a mass exodus of employees that could doom the industry – or at least severely damage profits.
To compete in the labor market, American Express needed a solution that would attract more employees and reduce turnover, without paying more than necessary. Enter pension plans.
Introduced in 1875, American Express’s private pension plan was the first in United States history – a move that was quickly replicated by banks, utility businesses, and large manufacturers across the country.
Promising future payouts for qualified, tenured employees, plan’s like American Express’s helped secure long term labor forces without considerable increases in wages. While pension plans have changed dramatically over the last century and a half, the company’s basic hypothesis was correct: employers can, in fact, leverage benefit plans to attract top talent, especially in lieu of better pay.
Employee Benefits, Today
Over the years, the type of benefits that attract employees have continuously transformed to meet the needs and wants of the labor market.
Although pensions fell out of the mainstream, retirement benefits remain a consistent offering across most industries. Today, 401(k)’s are a standard benefit in the US, with better retirement offerings still used to make a position more attractive to prospective employees.
Similarly, healthcare plans are a standard bargaining chip for employers as well. Unsurprisingly, a 2019 Kaiser Family Foundation study found that 49.6% of non-elderly, adult U.S. citizens receive healthcare through their employers.
Throughout the decades, companies have even expanded their offerings beyond traditional retirement and healthcare plans. Typically these benefits (or “perks”) are relevant to the current interests of the labor force. Classic examples include company cars in the 1970s, pet-friendly offices in the 1990s, and sleeping pods in the 2010s.
Over the decades, benefits have differed in their appearance, value, and impact in the American workplace. Stripping away the aesthetic differences, however, it becomes clear that benefits remain a primary tool to attract and retain talented employees. As a result, small businesses should prioritize innovating their benefits packages to stay competitive – the labor market is simply too flooded not to.
In the remainder of this article we will explore key opportunities for small businesses to implement attractive benefits packages.
Small Business Employee Benefits Packages
Like a bottomless pit, there simply is no end to the list of benefits a small business can offer. From traditional offers, like paid time off and family and medical leave, to more new-age perks, like fitness memberships and streaming services, the options are plentiful, if not infinite.
For the purposes of this article, we will explore just four benefits that are sure to make your business more attractive to top prospects.
Admittedly, some of these proposals are ambitious. Still, with an unprecedented labor market, we believe unprecedented responses are worth consideration. As you develop your new benefits packages, we encourage you to consider these options and tailor them to your company’s hiring strategy.
Let’s dive in.
Financial Health Packages
Of the many ripples caused by the COVID-19 outbreak, the pandemic forced an economic downturn for a majority of Americans, regardless of their income level. Startlingly, a survey by Bright Plan found that 65% of Americans are stressed about their finances; 53% reported they decreased their emergency savings to wade the tide.
For decades, businesses of all sizes offered basic financial packages – 401(k) retirement plans being the most common. As workers’ values and needs continue to shift in the wake of the pandemic, upgraded financial health packages will greatly improve the attractiveness of a company.
Along with 401(k) plans, small businesses can look to refine their retirement packages to have more long term impact, as well as offer emergency savings programs – something many Americans desire in the wake of the pandemic. To go a step further, businesses can even offer more comprehensive safety net insurance plans.
In addition to monetary packages, small businesses can offer additional education and coaching, financial planning, and similar services to better support their employees’ financial health.
On the outset, such aggressive plans could feel like unnecessary, costly overcorrections. While upgrading your package may not seem essential, it’s important to remember this: a mere 17% of laborers rate their financial status as “excellent”. American workers are in desperate need of change.
With 4 out of 5 workers craving more fiscal stability, progressive financial health packages should not be ignored as a method to attract more employees.
Student Loans Benefits
It should not be a surprise that addressing student loans can give small businesses a leg up on the competition. With 43 million borrowers, student debt took center stage in the mainstream conversation during the peak of the pandemic; President Joe Biden even campaigned on providing loan relief and forgiveness.
While 2020’s CARES Act addressed nationwide concerns at the beginning of the pandemic, 2022 has yet to provide a stable plan moving forward – as of writing, loan forgiveness is scheduled to end May 1st.
This incoming deadline brings opportunity for small businesses.
As the government continues to balk the issue, small businesses have the opportunity to offer financial assistance towards student loans in order to better attract employees. These plans can range in structure and execution, but should offer financial assistance towards education-related loans.
Statistically speaking, the attractiveness of a student loan plan is undeniable. An astounding 93% of surveyed individuals report they are not prepared to resume payment, per the SDCC. Just as eye-opening, 61% of the survey’s respondents that previously comfortably paid their loans stated they are struggling. Offering student debt assistance meets the needs of millions of laborers.
To help make these plans more feasible, businesses can leverage the Consolidated Appropriations Act. Passed in 2021, the federal bill enables employers to file tax free contributions for providing student loan debt assistance of up to $5,350, per employee.
Just how eye-grabbing are student loan benefits? According to SHMR’s 2022 employee wellness study, only 8% of employers offer student loan assistance. These packages are not only rare, they’re practically non-existent.
Any small business looking to attract top talent, especially young professionals, should heavily consider offering student debt programs.
Complete Healthcare Coverage
In 1929, Baylor University Hospital in Dallas introduced the country’s first medical plan: a package offering 21 days of free hospital visits in return for 50 cents per month. Originally designed to drive revenue for their under-utilized hospital, the innovative concept quickly became a standard workplace benefit. By the 1960s, 70% of all US employers offered some sort of healthcare plan.
Due to the United States’ laissez-faire nature and the universal necessity for healthcare, insurance has become a primary commodity for attracting and retaining employees – a fact illustrated best by a 2021 Policygenius survey, which found that 33% of workers would leave their jobs if not for their health insurance plan. Without being too cynical, healthcare insurance is a standard bargaining chip for recruiting and holding top talent.
While most Americans are still reliant on companies for their healthcare, the fatigue from decades of confusing, unideal insurance plans has presented small businesses with a new opportunity: offering complete, comprehensive healthcare coverage.
Unlike the standard insurance packages of the last half century, comprehensive healthcare plans offer exactly what they say, complete health insurance for all health-related costs.
The appeal is undeniable. With healthcare costs continually rising in the country, and insurance being an expensive endeavor in its own right, comprehensive health insurance offers employees financial security that few can match. By joining a company with such a package, laborers would be freed from the financial burden of healthcare costs that far too many Americans are familiar with.
Without a doubt, offering a comprehensive healthcare plan will turn heads.
While only retrospect can give us legitimate clarity, early adopters to complete healthcare plans have already shown promise. Notably, Dr. Bronner’s, a natural soap company, credited their progressive model as a primary reason for their record-breaking year, earning over $190 million in revenue in 2021. Validating their decision to offer comprehensive healthcare (among other benefits), the company reported $41 million in profit for the same year.
Given the necessity of healthcare and the desire for more progressive models, offering a complete healthcare package will surely differentiate small businesses in a flooded labor market.
Reimbursed Work-From-Home Expenses
Jolting the entire world’s workforce, the COVID-19 caused a near-overnight shift in our understanding of workplace dynamics. While the office had been a constant for decades, a collective shift to remote work caused employees and employers alike to reconsider their current models.
In just two short years, remote and hybrid work transformed from a novelty to an expectation, with studies indicating that 83% of workers prefer hybrid models to traditional in-office workplaces. While the statistic is sure to surprise no one in 2022, the message is still clear: workers want more flexible workplaces.
Beyond just offering remote and hybrid options, small businesses can make themselves more attractive in the labor market by going a step further: financially supporting remote work environments.
According to the International Foundation of Employee Benefits Plans, only 31% of employers reimburse their employees for their remote needs, such as office supplies, internet plans, and work-related tech; an additional 8% offer general stipends for work-from-home expenses.
With remote work already a popular offering, additional financial reimbursement is sure to catch the eye of prospective employees. If your small business is implementing a remote or hybrid model, be sure to consider leveraging a reimbursement plan as well.
Managing Progressive Benefits Packages
Benefits packages have been a part of the American workplace for nearly 150 years, consistently leveraged to attract and retain laborers of all levels and across all industries. While the perks have transformed, the underlying value of these benefits has never changed.
In the midst of The Great Resignation, the ability to attract top talent has never been more valuable. New benefits packages, whether small like gym memberships or large like comprehensive healthcare plans, can be used by small businesses to differentiate themselves in the labor market like never before.
No matter the type of perks or benefits your small business chooses to implement, your business will have to adapt your payroll services to account for the changes. Also, look at the workforce management trends of 2022 to retain and attract top talent.
With over two decades of experience, CAVU HCM is prepared to assist your company wherever it needs. With expert-led payroll services and enterprise-grade software, our team is ready to help you implement and navigate your business’s benefit packages – no matter how complicated. Allow us to guide you through all of your payroll needs, including uncovering tax credits, managing workers’ compensation, and more.