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Employers Plan to Increase Benefits to Spur Hiring, Recovery

Industry Trends and Research

While recent variants of COVID-19 could bring extra hurdles to recovery efforts, most small and medium-sized businesses expect their financials to continue improving and are ready to move forward when given the chance.

According to results from the latest Principal Financial Well-Being Index, small and medium-sized businesses (SMBs) report an increased focus on key employee well-being initiatives and benefits to help make them more competitive. In fact, more than 90% of surveyed businesses plan to increase at least one benefit in the next 12 months and most businesses (82%) expect their financials to keep improving over the period. 

Data also shows that nearly 70% of surveyed businesses have improved financials compared with this time last year, and 84% are comfortable with their cash flow despite the continuing impact of the pandemic.

Principal’s quarterly pulse survey of 500 employers from companies with two to 10,000 employees spans a diverse array of industries, with more than half of the employers falling within finance/insurance, professional/scientific/technical, construction, manufacturing and information management. This latest wave was conducted June 14-22, 2021.  

Competing for Talent

With the resiliency that SMBs have shown over the past 18 months, the competition for talent is apparently underway. According to the Index, 63% of businesses reported being fully operational, driving the need for additions to their workforce. More businesses say they’re hiring, up from less than a third in March to nearly half in June.

“As businesses start to ramp up operations, employers are dealing with the complex American labor shortage and a workforce empowered to determine where they want to work and what they want from an employer, making benefit offerings more critical,” observes Amy Friedrich, President of U.S. Insurance Solutions at Principal. “Winning the differentiation battle has gone from experimenting with e-commerce to supporting a remote workforce and offering a full suite of resources at their fingertips, including benefits,” notes Friedrich, who adds that business must become competitive recruiters to grow again.  

And the role employee benefits play in the recovery seems more apparent than ever. As such, employers are choosing certain benefits to address specific employee needs. A list of 18 benefits tracked by the survey—from retirement plans to pet insurance—made gains. Given the impact of the pandemic, a greater percentage of businesses plan to increase telehealth (42%), health benefits (41%) and mental health/well-being services (38%) in the next 12 months.

Retirement Plans and Financial Wellness 

Employers also acknowledged the importance of retirement plans and financial wellness to their workforce. According to Principal’s Index, more than 80% of businesses see retirement plan offerings as essential in the attraction and retention of talent, and 74% of employers feel it is their role to help employees prepare for retirement.

Similarly, there is broad agreement among employers that investing in financial wellness programs is a key to recovery. Nearly 70% of employers agree with the positives of financial wellness programs, ranging from improving employee long-term financial planning to helping attract and retain talent. But only 62% of businesses currently offer financial wellness benefit programs, according to the Index. 

As for what is viewed as the most useful financial wellness offering for employees, 45% of businesses see access to a financial professional as the most useful (out of 25 options in the survey). That’s followed by tax preparation services (35%), identity theft protection (34%) and savings programs for higher education (34%).

The efforts to increase benefits are also accompanied by changes in the way businesses are presenting them to their workforce. For instance, 65% of businesses are improving digital access to benefits for employees, while only 14% still lack any digital options. According to those surveyed, this digitalization addresses the need to help employees better understand their benefits (71%), onboarding employees online (62%) and the need to reduce paper (40%).