Principal Business Owner Insights: How employee benefits help growing businesses
Business owners faced historic challenges in the pandemic, but now they’re gaining in confidence and growth, according to the latest Principal Business Owner Insights survey of 1,018 small and midsize businesses (those with fewer than 500 employees).1 A record 36% of these businesses classify themselves as “growing.”
This is our eighth Business Owner Insights Survey since 2008. For the first time it’s also an annual survey to more closely monitor business trends. It’s among a wide range of proprietary Principal research catering to business decision makers.
This year’s survey shows that employee turnover has hit record levels, with more than one-fourth of businesses reporting increased turnover—up from 20% in 2021 or as little as 11% in 2015. As a solution, more than 70% of owners now see employee benefits as critical to help improve retention.
This research also helps pinpoint business planning opportunities, especially the gaps between owners’ priorities and their plans. Consider these as benchmarks to help frame your own business decisions.
How do your business priorities compare?
We asked business owners to rank their priorities and share whether they have a plan in place.
1. Business protection
Business owners have chosen this as their No. 1 priority since 2010, yet fewer than half have a plan.
2. Health and wellness solutions
Among those offering solutions, 54% offer comprehensive health insurance, down from 60% a year ago and 78% two years ago. Thirty percent of businesses offer an employee assistance program (EAP).
3. Succession planning
Succession planning reaches the Top 3 for the first time since this survey began in 2008. It’s best practice to update plans regularly. Among those with a plan, 26% haven't reviewed it in more than two years—an improvement compared to 32% in 2021 who hadn’t reviewed.
4. Income protection
It's been a Top 4 priority since 2010, yet less than half have a plan. Of those that do, 46% own individual disability income insurance.
5. Non-medical and voluntary benefits
Dental (51%), paid family and medical leave (50%), maternity leave (48%), vision (46%), and life insurance (46%) are the five most popular options.
Key findings on employee benefits and business protection
Business owner protection still reigns.
This protection seems like an imperative, considering it’s been the top choice since 2010. Yet it’s also one of the largest opportunities—fewer than half of owners (47%) have enacted a plan.
Owners report a confidence boost with two key goals.
From 2021 to 2022, business owner confidence surged most—by 10 percentage points—in both these categories:
- grow by adding employees (now 60%) and
- seek business investments (now 52%).
Benefits help attract and retain.
Seventy percent of small and midsize businesses say that employee benefits help them recruit qualified employees, and more than 70% say employee benefits improve retention. Two-thirds say employee benefits improve productivity.
Use the Principal® Benefit Design Tool to see what other organizations of your size, industry, and region offer their employees.
Key employees are on the rise.
The number of businesses with four or more key employees has grown to 40%, compared to 35% in 2021 and 21% in 2008. More than half of business owners (55%) would like to reward these key employees with additional benefits. (That rises to 66% among owners of businesses with 50 or more employees.)
- Contact your financial professional—or let us help you find one.
1 The 2022 Principal Business Owner Insights survey is based on 1,018 online interviews conducted in January 2022 by Dynata.
Insurance products issued by Principal National Life Insurance Co. (except in NY), Principal Life Insurance Company®, and the companies available through the Preferred Product Network, Inc., Plan administrative services offered by Principal Life. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392.