Amid rising supply costs and soft sales pipelines, small and midsize business (SMB) leaders are growing anxious about the economy. And many are looking for ways to cut costs. But employee benefits shouldn’t be on the chopping block. In fact, a strong benefits program could be a key differentiator when it comes to hiring, retention, and long-term competitiveness.
Although it’s counterintuitive, now is the time to invest in benefits, not cut them. Here are three reasons why.
1. Your Workforce Expects Solid Benefits
When it comes to building a business strategy, Jeff Bezos lives by a simple axiom: “Focus on the things that don’t change.”
He’s talking about customer expectations here (which, in Amazon’s case, means low prices, an extensive product selection, and lightning-fast deliveries). But the rule also maps seamlessly onto employee expectations.
To borrow from Bezos’s logic: in 10 years, employees won’t complain about the fact that their company offers dental insurance or a 401(k) match. But they will complain if these benefits shrivel up.
That’s because benefits are no longer nice-to-haves – they’re an employee expectation. And gutting a benefits program could push employees away. In fact, over a quarter of SMB owners named a lack of good benefits as a top reason workers quit. That’s the last thing businesses need in an already-tight labor market.
My suggestion: Start thinking about your benefits program as a necessary retention tool – and if you view benefits that way, consider how you can further refine the benefits you offer. To best meet workers’ benefits expectations…
- Protect the benefits people care about most. Nationwide, employees care most about employer-covered healthcare, life insurance, and retirement planning assistance.
- Account for your workforce’s demographics. A younger workforce may value benefits like paid mental health days, while older employees likely care more about a life insurance plan.
- Keep your industry-specific needs in mind. For example, if you’re in an industry with high physical injury rates, hospital indemnity insurance is likely a must.
By maintaining your benefits program, you can show employees that their experience matters in the good times and the bad.
2. Better Benefits Can Attract New Hires
Earlier, I noted that we’re in a tough labor market. Although the Great Resignation may be slowing down, employees know they’re still in high demand. And with endless options to choose from, they’re looking for an employer that can offer the best benefits package.
This is a huge opportunity for SMB leaders. With a few strategic investments, leaders can boost the quality of their benefits program and stand out in a crowded job marketplace, whether or not there’s a recession.
To start, here’s what I recommend:
- Explore multi-line benefits partners. These partners can bundle multiple insurance products (e.g., dental, vision, and life) to give your employees the best coverage at the lowest cost.
- Craft a tech-enabled benefits experience. Gen Z workers are the first “digital natives” – and they’re rapidly flooding the labor pool. In the benefits arena, leaders can cater to this demographic by working with a tech-first benefits partner that offers intuitive digital resources (e.g., a mobile benefits portal or one-on-one video consultations with benefits professionals).
- Add essential ancillary benefits. This category includes vision, life, disability, and supplemental health coverage. For employees, it’s often cheaper to purchase these plans through their employer. And leaders can choose a contribution level that aligns with their financial needs.
- Consider helpful “lifestyle” benefits. This covers a range of benefits that can have a huge impact on employees’ quality of life. For instance, paid mental health days can help employees avoid burnout. And a summer hours policy can provide a seasonal morale boost. Something we’re trialing here at Beam: seven half-day Fridays for employees to enjoy over the course of the summer.
3. Robust Benefits Can Carry You Through a Downturn
In a downturn, many SMB leaders aggressively cut costs, funding just what they need to scrape by. But that’s not a forward-thinking approach.
When the economy stabilizes, the businesses that come out on top will have taken advantage of growth opportunities throughout their company – including their benefits program. It’s one reason why downturns lead to 47 percent more “rising stars” (as compared with periods of economic calm).
As the saying goes, never let a good crisis go to waste. Instead, use a downturn to gain a competitive advantage in the benefits arena. This way, you can position your company among the rising stars on the other side.
Alongside the tips I’ve mentioned so far, a few best practices can help you stay on the leading edge:
- Watch your competitors’ benefits trends. Consider paid leave benefits, for instance: many employers are cutting back on all forms of parental leave, and just 20 percent offer dedicated mental health days. Bucking these trends can help differentiate your company – an advantage Beam itself is already seeing with our paid Summer Fridays.
- Keep an eye on changing employee needs. Today’s employees may be content with remote work days. But tomorrow’s workforce may want benefits that further improve their work-life balance, like flexible hours, unlimited vacation (a policy Netflix famously perfected), and paid sabbaticals (which Gusto offers to tenured employees).
- Work with your benefits partner to tweak your benefits program. The right partner will offer expert guidance about the highest-impact benefits for your business. And they’ll help you optimize your program for peak utilization.
In my experience, it’s okay if you continue to tweak your benefits mix as economic circumstances change. The key is to define where you want to be relative to the market, and make sure to deliver on that promise to avoid negatively impacting the employee experience.
Never Sacrifice the Employee Experience
In a down economy, it’s easy to focus on staying in the black at all costs. But a company is nothing without its people. And the employee experience is the one thing you should never cut.
My message to SMB leaders: as you navigate this economic uncertainty, keep the employee experience top of mind. That means continuing to invest in benefits and thinking long term, beyond the current cycle. If you can help your teams manage their workloads, sharpen compensation/total rewards messagings, and create a more aligned culture to your company goals, you can consistently attract and retain workers – no matter the economic headwinds.
Alex Frommeyer is the co-founder and CEO of Beam Benefits, a digitally-led employee benefits company that offers dental, vision, life, disability, and supplemental health coverage. The company simplifies and modernizes the $100+ billion ancillary benefits industry through its intuitive online platform, self-service tools, AI-powered underwriting, and thoughtful coverage for improved overall wellness. Its Beam Perks™ program offers incentives to members and rewards them for healthy behaviors. Beam has raised over $160 million in funding and is available in 44 states across the U.S. Learn more at beambenefits.com.
Benefits stock photo by Photon photo/Shutterstock