How to finetune your workplace benefits package to help you recruit and retain employees

Supply chain challenges may come and go, markets often are up and down, but what remains a persistent, No. 1 challenge for small and midsize businesses? How to recruit and retain employees, according to Principal^® research.

Yes, competitive pay serves as a draw. But keeping pace with larger employers’ salary and wage options may not be doable for many business decision makers. That same Principal research found another lever for a recruit-retain edge: employee benefit packages. A record 81% of small and midsize businesses were going to add benefits, noting them as key to attracting and keeping employees.

How do you create employee benefit packages to match employee needs and wants with your business and your budget? We gathered insights from business owners and Principal experts.

Organizations you belong to, groups you volunteer with, and associations you’re a member of can help you level set and learn what’s working for others. Colleagues may offer insights or simply help brainstorm as you discover if your benefits are out of sync with employee expectations. You may also find opportunities to set yourself apart.

“Offering a great benefit package is important and essential to recruiting top-level talent because it’s a highly competitive market,” says Oscar Renteria. Renteria knows what he’s talking about. He owns Renteria Vineyard Management (a Principal^® client), which provides agricultural labor to many of the wine industry’s top labels while also producing his own bottles.

“Because of the durability of benefits as a way to realistically compete for talent, those benefits aren’t viewed as a cost center to be cut during challenging times,” says Kara Hoogensen, senior vice president and head of workplace benefits, Principal. “Stable businesses see them as an important investment”.

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 is, why? You might discover they were offered benefits you hadn’t considered, or didn’t know were important.

Use those learnings to add nuance to employee outreach and communication about benefits. How do you find out what your current workforce wants and needs from benefits? Tools to help include:

• Surveys that allow employees to rank both existing benefits and potential new benefits
• Discussions with a representative group of employees about benefits
• One-on-one interviews with department representatives

Many business leaders are already committed to benefits discussion with their employees, sometimes as part of a larger effort to maintain or increase staff. “There’s tremendous cost and difficulty in rebuilding a workforce once it’s lost,” says Hoogensen. “Rather than repeat the hiring challenges of the past, businesses are choosing to protect their most valuable asset—their people.”

A few years ago, current and potential employees for Renteria began to ask for long-term disability insurance. Renteria found that the addition of benefits like that and a focus on company culture resulted in lower turnover. “We’ve become an employer of choice and, in turn, we’ve been able to look for employees of choice,” Renteria says.

The discoveries you make after talking with current and potential employees shine a light on who your employees are and what they value. Maybe a younger workforce is navigating student loan payoffs while those nearer retirement may need to catch up on savings.

That enables you to fine tune benefits to help make a difference in their lives. “Think about how to personalize added benefits,” says Nate Schelhaas senior vice president, Principal. “It helps them understand that you’re contributing based on their needs, and that means a lot.”

And certain benefits can do that for you, providing for different workplace needs. For example, financial wellness programs may help some figure out a budget for student loan repayment, while for others it’s about maxing retirement contribution. “You can offer the same benefit to different ends of the multigenerational workforce,” says Schelhaas. “It means something to both, but they use it differently.”

Renteria partners with a service that connects employees to resources and classes. “Depending on an employee’s need, we’ll consider customizing anything for them,” Renteria says. “Whether it’s for their kid’s education, their need to acquire a driver’s license, coaching for their own personal development—if they ask for it, we’ll help develop a plan.”

While recruiting and retaining employees overall is a focus, key employee retention is another critical area. Principal research found that 93% of small and midsize businesses rank retaining key employees as an important business issue.

A variety of benefit options can help, from performance-based incentives, help to achieve financial goals, and income diversification. Long-term incentive plans, for example, are awards generally given to senior executives and key employees to extend ownership. A nonqualified deferred compensation plan allows key employees to decide how much of their pay or bonus is deferred, and until when.

At Shaw Industries, which is a Principal client, David Morgan, executive vice president, operations, has seen wins from offering this benefit. “Our nonqualified plan at allows employees that are eligible to set aside some income and let it grow in a retirement plan,” says Morgan. “It gives them a second platform to grow financial wellness over time.”

If benefits are a tool to help recruit and retain, communications—year-round and not just at enrollment—can help. in its first year of rollout, Renteria’s employee assistance program (EAP) was underutilized. The company kept at it, with communications geared toward their employee base that explained how an EAP can support mental health and well-being. Four years later, engagement grew 50%.

“It’s about being intentional in communicating: Here are the benefits we have, here’s the why behind the benefits that we’re offering, and here are the needs that we anticipate those benefits are going to meet,” Hoogensen says.

Upskilling gives employees a greater sense of purpose and autonomy while also helping to improve retention. Training and education regularly top the list of benefits that businesses plan to add, according to Principal research.

Renteria operates its own academies to teach specific skills. “Not only do you want to recruit the very best employees, you also want to tap into their potential for personal growth and technical innovation,” he says.

Benefits 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. And you may have future goals with benefits—what you want to add this year, or in five years and so on.

Benefits, says Renteria, means he can retain more experienced workers from one season to the next. Employees can feel more financially secure when supported by insurance, retirement savings, and other benefits to help handle crises and avoid debt.

“Is this a place where people want to be?” he says. “Is this a place where people can grow with opportunities to develop professionally and personally? There’s no better feeling as a business owner than giving employees opportunities and good benefits and seeing them realize their potential.”