How COVID-19 is shifting benefits among small businesses
COVID-19 has brought new meaning to benefits that may have previously fallen lower on an employee’s priority list.
COVID-19 has fundamentally reshaped the benefits landscape, with employees and employers alike recognizing the need for coverage that protects the health and well-being of both individuals and their families. This has magnified the role benefits play in attracting and retaining top talent among employers, especially within the small business community.
Related: Uncertainty and financial stress driving closer scrutiny of employee benefits
Despite spikes in unemployment rates, sourcing and retaining strong talent remains an issue for many business owners. In fact, according to a recent NFIB study, locating qualified employees ranks just behind the cost of health care. As small businesses plan for the future, finding ways to connect with their workforce and aligning their benefits offerings with employees’ values and priorities will be critical.
The emergence of new benefits offerings
COVID-19 has brought new meaning to benefits that may have previously fallen lower on an employee’s priority list, such as income protection resources. In a recent LIMRA study, approximately one in four employers said they think short-term disability and life insurance are more important now than before. And, roughly 40 percent said critical illness and hospital indemnity coverage is more important in today’s world, than before the pandemic.
The benefits that may have positioned a business as an employer of choice in the past, may no longer be the same. And not offering any benefits is becoming a larger obstacle when it comes to finding and keeping the talent needed. Many owners think their company is too small or benefits are too expensive, but most of the businesses we work with have fewer than 100 employees and more than half have fewer than 25 employees.
There are supplemental offerings that are becoming increasingly relevant, such as mental health benefits. With stress, anxiety and depression on the rise, more employees are looking to their workplaces to provide benefits that support not only their physical, but also their mental well-being. A survey by the National Alliance of Healthcare Purchaser Coalitions reported that 53% of employers surveyed are providing special emotional and mental health programs for their workforce because of the pandemic. And according to the latest from Principal, 32% of employers have increased mental health/wellbeing benefits to meet the moment.
Much of this stress is prompted by the pandemic’s impact on employees’ personal finances, driving interest in financial wellness benefits. We’re seeing more employers place emphasis on helping their employees navigate financial challenges both individually and among their families, with benefits and resources that help them take better control over their money.
How financial pressure plays a role in the evolution of benefits
With continued financial uncertainty pressuring bottom lines for small businesses nationwide, open enrollment brings tough decisions that may usher in an era where employers re-evaluate their benefits offerings.
Employers know benefits like healthcare remain table stakes, and according to Principal research, have actually increased the benefit by more than a quarter since March. That said, businesses that may have been significantly impacted by the pandemic may be looking to pass along increased costs. This could result in higher premiums for employees, which could prompt changes in other benefits.
One shift we may see as a result is a move toward voluntary benefits. But, employers should take caution on potential impacts. According to LIMRA, employee interest in purchasing 100 percent employee-paid products ranges from 35 percent for life insurance to 39 percent for critical illness coverage, while many are unsure whether they would enroll.
It’s a balancing act to put together a top-notch employee benefits package. There’s a lot to consider, including budget, employee needs and what benefits to offer. But small businesses making investments in benefits right now are not only helping employees, they’re also positioning themselves as an employer of choice.
The path forward for small businesses
A total benefits overhaul is an overwhelming prospect. For small business owners, communication has to be the first, most important step in finding a benefits package that works for employees’ evolving needs.
One simple thing businesses can do to help determine what shifts to make and when to make them is to ask employees what’s important to them. These conversations don’t usually mention specific benefits like disability or life insurance, but instead open the door to employee concerns, like whether or not they can pay the mortgage or keep medical bills from piling up.
It’s a conversation that can help get to the heart of employees’ current needs, and how those may have changed during COVID-19. These shifting priorities should guide decisions around future benefit offerings. And these benefit offerings will position the business to win and keep the talent needed for success.
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