Ask a room full of business owners to list their top five concerns and pretty much every list will include “attracting and retaining top talent.”
According to the Bureau of Labor Statistics, the construction industry had a 4.4% average turnover rate in April 2024, the third highest in the nation (“Arts, Entertainment, and Recreation” was first and “Accommodation and Food Services” was second). That might not seem like that high of a turnover rate, but as is often the case, the average doesn’t reflect individual situations. Losing one vital member of a 20-person team can significantly slow operations, especially if you can’t recruit equivalent talent or experience.
Today’s workforce is more transient than ever. While there are signs that job-hopping is starting to slow down from its post-COVID-19 height, business owners are still grappling with the fact that nearly 1 in 2 American employees is “watching for or actively seeking a new job,” according to a 2023 Gallup poll.
Considering that it can cost half a year’s salary or more just to replace someone, it’s no wonder so many business owners are worried about employee retention. How can you keep your company thriving if you can’t even keep your people?
Fortunately, you have a few options that can help make your business more “sticky,” the most important of which is employee benefits for small businesses.
Make Benefits a Benefit Again: 5 Ways to Improve Your Company’s Retention Rate Through Employee Benefits for Small Businesses
Employees leave companies for a variety of reasons: dissatisfaction, relocation, higher pay, career advancement. But they also stay at companies for a variety of reasons, the most popular of which is benefits.
In fact, 75% of employees said they are more likely to stay with a company as a result of their benefits package – higher than any other factor – and 40% said they would leave for a job they perceive to have better benefits.
“Benefits” is a big category, so I’ll clarify what we’re talking about here. It includes traditional items like health insurance, time off, and a 401(k), while also including more modern offerings like a wellness stipend, free/discounted gym memberships, childcare, flexible hours, and more.
Let’s look at how you can make your company’s small business benefits program more attractive – without breaking the bank.
1. Nail the Expected Benefits
For most people, benefits brings to mind the basics: health, vision, dental, 401(k), life insurance. Really, these are hardly even considered benefits anymore – they’re expected.
The problem is that when something is expected, frustrations can easily mount when reality doesn’t meet our expectations.
Let’s look at an example:
Health insurance is far and away the most expensive part of any small business benefits package. One of the ways small businesses try to control the cost is by shopping around for different providers. Companies that do this tend to “insurance hop” every year or two, forcing their employees to enroll again and learn a new company’s different processes.
In the end, while the company may have saved a few bucks, they also gave their employees the impression that the bottom line matters more than they do.
When it comes to expected benefits, keep it simple, straightforward, and low-cost to your employees.
2. When it Comes to Unexpected Benefits: Listen to Your People
Free snacks, in-office happy hours, unlimited PTO, “pawternity leave” (a.k.a., paid time off to care for pets) – unexpected benefits come in an endless variety these days. Sometimes it almost seems like companies invent strange new benefits as a publicity stunt for recruiting.
Ultimately, the thing that makes a benefit a benefit is that your people want it. And the best way to know what your people want? Ask them!
I’m proud of my company for a lot of reasons, but this is one of my favorites: We make a genuine effort to listen to what our people want so we can offer benefits that they will actually want and use.
Here are just a few examples:
- Prepared meals during back-to-school time – The end of summer is a busy time of year for families. They’re packing in their final trips, getting back in the rhythm of the school year, and fall sports are starting up. After hearing several people remark on how packed their nights were, we decided to give everyone a number of free meals from a prepared meal service in August and September. They could use the meals for lunch during the day or to grab a quick meal at night – whatever made their lives easier.
In the end, it was a relatively small expense for us, but it let our people – and their families – know that we cared about their quality of life beyond the workplace. - Charitable opportunities – Inflation has made charitable giving harder for many people. When it comes down to groceries or giving, groceries win every time. The last couple years, we’ve participated in several fundraising projects to make it possible for our teams to still give back. In 2024, we helped an organization raise money to buy a new car to transport veterans to their appointments at the VA hospital.
- Service days – We love helping those in need, so we give paid service days every year. In 2024, Omaha got hit hard by tornados, so we decided to go beyond that and send a team to help with cleanup efforts. Sure, they missed a day of work, but the act of serving builds character and camaraderie that you can’t put a price tag on.
3. Keep Your Company’s Culture in Mind
I talked about the three C’s of health insurance in my last article, and I want to circle back to the final word of the three: culture. When it comes to making your benefits a benefit again, your company’s culture plays a key role.
For instance, health insurance is far and away the most expensive part of a small business benefits package, and companies are always looking for ways to manage costs. One increasingly popular option is foregoing pharmacies for direct distributors (e.g., CostPlusDrugs.com) where you can get most medicines for a fraction of the retail price.
But the process of getting drugs directly is a totally new concept to most people. Suddenly, rather than the familiar process of picking up their prescription at the pharmacy down the street, they have to order everything themselves without the guidance of a professional.
That doesn’t mean it can’t be done. It just means that when you do make changes to your benefits package, make sure you get your people on board first through education and assistance. Even a great, efficient, cost-effective move could be a negative in the long run if it contributes to employee attrition or you end up undoing it.
4. Bring Their Families Close
One thing a lot of people miss when it comes to small business benefits and how to retain employees is the power of bringing in your people’s families. In 2023, we had a holiday party and invited spouses to come, too.
They probably didn’t care much about our company speaker or all the inside jokes. But when it came time to hand out awards, you could see the pride as they watched spouses stand up and be recognized. Not to mention the value of putting faces to names and building relationships with other team members. In addition, we kept repeating our company mantra – protect your purpose – to help drive home the message of why we do what we do.
Why is that important? Because people will always have good days and bad days. Inevitably, your workday will impact your home life. By bringing those families closer to the company and helping them understand what we do and why we do it – at least then it might make those moments more understandable. Plus, when spouses can get excited about your company and your mission, everything goes better.
5. Control Costs, Then Invest the Savings in Your People
As I said last time, your number one cost-controlling strategy for small businesses when it comes to benefits is education. By helping your people keep healthcare costs low, you can keep the cost of your most expensive benefit – health insurance – low. And then, as a result, you can have more money available to put into providing better benefits, both expected and unexpected.
It’s true. By deploying these strategies at Ellerbrock-Norris, we have added benefits the last four years running without increasing out-of-pocket costs for our employees. And we’re helping our clients do the same.
Come back next time, when we’ll talk about how you can increase retention even more through key personnel planning. In the meantime, let’s discuss your employee retention plan and how you can make employee benefits a benefit again.
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