In 2022, small and midsize businesses (SMBs) in the United States weathered macroeconomic volatility and a tight labor market. As a marketplace leader, Principal® is uniquely positioned to help them as they recover from from the past years’ unprecedented challenges, including new demands on hiring and retaining key employees.
This year we:
Gained audience share and amplified our position as a trusted provider by uniting with organizations that support small business leaders, including Inc., the Small Business Digital Alliance (SBDA), and First Women’s National Bank.
Answered technology needs for SMBs by reimagining the most critical service interactions and end-to-end journeys for business leaders and their employees. This included streamlining our award-winning online benefits administration tool.
Addressed topical business challenges by investing in surveys and tools to identify what matters most to this segment.
Spotlighted some of our most successful customers, as they shared how they use benefits and retirement plans to help them retain talent. Business succession is also an important topic for SMBs and we are working closely with them to co-create easy-to-use business valuation tools and help them understand the various succession alternatives.
These led to good news: Principal is winning market share as our SMB capabilities, expertise, and local presence set us apart from the competition.
The U.S. labor market is dominated by SMBs
99.9% of all U.S. businesses employ less than 500 people
Source: United States Small Business Economic Profile (PDF) sba.gov
The year’s top SMB challenges
According to an October study published through the Principal Financial Well-Being Index, retention was the top business issue and has been since August 2021. In response, business decision makers are prioritizing wages and say that they will maintain or expand benefits to attract and retain employees. In fact, 58% of businesses report that they won’t reduce employee pay or benefits when tough economic times potentially come.
Keeping key employees has also been in the spotlight. According to a Principal survey of 1,000 business owners, 84% of SMBs offer key employee benefits, and 55% want to offer more.
In short, business owners want to take care of their employees. We are engineering a complete and seamless smaller employer experience to make it easier for them to do just that. For example, while competitors focus on onboarding or the claims experience only, we lead with experience, investing to improve the most valuable interactions across the entire journey.
Here are some examples:
- Smaller businesses typically don’t have a Human Resources department. Principal helps solve this by reducing administrative burden and offering a broad product set and product bundles so they can work faster and with fewer carriers.
- Smaller businesses value cashflow predictability. Principal addresses this by employing a renewal strategy with smaller, more predictable rate increases.
- Smaller businesses value knowing what other employers are doing. Principal highlights this by sharing the stories of real customers and giving SMBs tools to help them research and benchmark their benefits. For example, in 2022 we modernized the Principal® Benefit Design Tool and incorporated new customer insights to help business owners understand how affordable it can be to offer employee benefits.
Our continued commitment
We know workplace benefits help SMBs compete in the war for talent, support employees, and grow their businesses. Our 12% year-over-year increase in specialty benefits sales reflects both the appetite for businesses to take care of employees and our unique capabilities and expertise, which are earning us more opportunities to compete and win market share.
by # of employees
by # of NQDC/BOES employees
Stories from our clients
Hear two of our SMB clients share how Principal solutions help them grow their business and meet the diverse financial needs of their employees.
The business: Renteria Vineyard Management, provider of agricultural labor to many of the industry’s top wine labels while also producing it’s own fine wine.
Offering a great benefit package is important and essential to recruiting top-level talent because it's a highly competitive market. If you're going to stand out, I think these are necessities in order to attract and retain.”
—Oscar Renteria, owner, Renteria Vineyard
The business: Bob’s Red Mill, a natural foods manufacturer in Oregon with a reputation for its holistic approach to both a healthy diet for customers and a healthy, happy workplace for employees.
The benefits we offer are really just a tool to help employees achieve their goals. We’ve created an atmosphere where employees can focus on the important things and not worry as much.”
— Crystal Granger, senior benefits administrator, Bob’s Red Mill
Renteria’s and Bob’s Red Mill’s viewpoints may not be representative of other clients' experiences. Renteria Vineyard Management, Farm Worker Concierge Service, Napa Valley Farmworker Foundation, Farm Worker Concierge Service, and Bob’s Red Mill are not affiliates of any company of the Principal Financial Group®.
Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Company®. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., member SIPC and/or independent broker/dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392. ©2023 Principal Financial Services, Inc.
This report contains forward-looking statements. Actual results may differ materially from the results anticipated in these forward-looking statements. For a complete explanation, and a list of the risks, uncertainties, and factors that could cause or contribute to such material differences, see our forward-looking and cautionary statements.