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How to create employee benefit packages that help you recruit and retain
Your business depends on assembling the benefits that current and potential employees want and need.
How much would it cost you to replace a super-skilled, super-valuable employee?
Experts say the tally is about one-third an annual salary—if not more for experienced or highly specialized workers.
Those costs—and keeping the employees you have and attracting new workers—is very much on the mind of small and midsize businesses. According to recent research by Principal®, retention and recruitment remain two key employer concerns.
Competitive pay always serves as a draw. But keeping pace with larger employers’ salary and wage options may not be doable. Luckily there’s another lever you can pull to help you gain an edge: employee benefit packages that are in tune with what the market demands and people want. That same Principal research found that employees say feeling valued and receiving improved benefits are among the best ways to retain or recruit them, right behind increased/competitive salaries.
“When you’re trying to attract and retain employees, the more you show you care and that you’re in it with them, the more it can inspire a happier, healthier, and more productive workplace,” says Mark West, national vice president of business solutions for Principal.
How do you create employee benefit packages to match your business, your budget, and your employees? We have ideas.
1. Talk to colleagues and mentors about benefit packages in their workplace.
Network ties—including organizations you belong to, groups you volunteer with, and associations you’re a member of—can help you learn what’s working for other small and midsize businesses.
“You’re really competing with everyone in the current environment. The more you understand what other business owners are offering out there, the better positioned you’ll be to hire and keep top talent,” West says.
Colleagues’ insights can help with brainstorming outside traditional benefits (think employer-sponsored retirement accounts and health insurance). For example, the Principal Financial Well-Being IndexSM found 33% of employers plan to increase mental health benefits. “Initiate some conversations to find out what others are offering, or what they didn’t offer before that they feel like they need to offer now,” West says.
2. Ask job candidates or former employees about the benefits that matter.
If you’ve made an offer that’s been turned down, or find yourself with a valued employee who’s decided to leave, the next question to ask them is, why?
“One of the things you might find out is that they were offered benefits that you might not have even considered,” West says. “Those questions help you understand what it takes to make someone feel valued enough to stay or to join your company.”
3. Engage employees in the benefits conversation.
Customizing benefits for your workforce requires knowledge about who your employees are and what they value. “A 25-year-old may have student loans, while a 55-year-old may be saving into their own individual retirement account to catch up on savings,” West says. “Understanding what your employees want is critical to your success.”
Dig deep into these insights. It turns out that many employers have a perception gap between how they think employees feel about benefits and how those same workers perceive benefits. For example, 72% of employees want at least one additional benefit, but only 47% of Principal small and midsize business clients offering benefits are interested in adding them in the next 12 months.
A few ideas to initiate conversation:
- Survey questions that allow employees to rank both existing benefits and potential new benefits
- Discussions with a representative group of employees about benefits
- Longer one-on-one interviews with department representatives
4. Adapt, then adapt again.
Benefits, says West, are a continuous conversation. They may change as your business changes, particularly as you grow and add employees. Benefits may also evolve as your employees gain tenure with your company; what was important to them five years ago may not matter today. “You can set and communicate some customized benefit goals, too,” West says. “Establish benefits you want to add this year that your employees want, and benefit goals you have in one year, five years, and so on.”
- How does your benefits package stack up against the competition? Use the Principal® Benefit Design Tool to find out.
The Principal Financial Well-Being IndexSM surveys business owners, decision makers and business leaders aged 21 and over who work at companies with 2 – 10,000 employees. The nation-wide survey, commissioned since 2012, examines the financial well-being of American workers and business employers. In response to COVID-19, the Well-Being Index was transformed from an annual survey to a quarterly pulse, offering three waves, revisiting questions and measuring sentiment regarding timely issues in the small and midsized business marketplace. In the first pulse of the Well-Being Index in 2022, the employee audience was added to the survey to compare and contrast key ideas and sentiment from employers. The survey was commissioned by Principal and conducted online by Dynata from March 11-23, 2022, with a total of 500 business owners, and decision maker participants and a total of 250 employee participants. The research report focuses on providing a holistic perspective on key trends and timely issues in the small and medium business market.
Principal developed a dedicated portal for employers designed to help business handle the effects of COVID-19 and a challenging economy in the months ahead. To learn more visit Navigating Business Now.
This document is intended to be educational in nature and is not intended to be taken as a recommendation.