As the economy improves, are you worried about retaining your best and brightest employees? For a small business, it can be hard to replace vital workers with specialized skills and deep knowledge of your company. However, offering salary increases to keep employees isn't always possible for small business on a tight budget. That's why more and more companies are finding that employee benefits are critical to retaining employees.
A new study by the Society for Human Resource Management polled HR managers to see how their companies use benefits and what types of benefits are most popular in terms of retaining employees.
Here's some of what they found—and what it means for your business.
First, you're not imagining things: It is getting more difficult to retain employees at all levels. Over one-third (36 percent) of survey respondents have had problems retaining employees in the past 12 months. That's up significantly from 2013, when just 26 percent had this problem.
Benefits are important to retain employees of all types, from high-performing and high-skilled workers on down. One-third of respondents had used benefits to retain employees in the past year, up from just 18 percent who did so the year prior.
What benefits are most important in employee retention? Far and away, health care benefits rule: 80 percent of the companies surveyed used healthcare benefits to keep employees in the past year.
Retirement savings benefits have helped 57 percent of these businesses retain employees. In fact, retirement benefits are more important in employee retention than compensation, which 46 percent have used to retain employees.
I was surprised to see that the use of flexible work arrangements as a retention tool declined in the past year. Only about one-third of respondents used flexible work options to retain employees, down dramatically from more than half who did so the previous year. The report doesn't indicate why flexible work has become less important in employee retention, but perhaps it's because more workplaces now offer this perk, so employees considering a job change are likely find flexible arrangements elsewhere, too.
What can you learn from these survey results about retaining employees?
First of all, when trying to keep employees on board, healthcare benefits are the first thing to emphasize. Many employees don't realize the value of their healthcare benefits unless you educate them about their true cost. Today, most small businesses require employees to contribute some part of their premiums, but typically the employee contribution only accounts for the tip of the iceberg (so to speak). Letting employees know the full amount you’re actually paying for their and their families’ coverage can help them better appreciate what they're getting.
Of course, which benefits to emphasize may also depend on the demographic of the employee in question. The survey notes that flexible work arrangements, while becoming less useful as a retention tool, are still very important to two groups you might not expect: Millennials and workers over 55. Although you might assume working parents most desire flexible work, the survey found that Millennials like to control their own work schedules, even if it means accepting a lower salary. In addition, 55-and-over employees may be starting to phase into retirement, may have health issues or may need to care for aging parents—all demands on their time that make flexible work hours a priority. Since older employees often have valuable institutional knowledge, industry connections and skills you don't want to lose, flexible options are a simple way to retain them.
Last but not least, don't forget about retirement benefits. This survey is only one of many I've seen reporting that retirement benefits are extremely important to employees of all ages. The recession hit Millennials so hard they’ve got financial stability on the brain, while older workers who lost value in their retirement plans need to make up for lost time. Instituting a retirement plan for your workplace is much more affordable than you may think—and well worth the small cost to your business when you consider the payoff in terms of employee retention. (Bonus: It benefits you, too—I know many of you have no retirement plan in place, and that’s a big mistake.)
I hope you're already offering many of these benefits, but if you’re not, your SCORE mentor can help you decide what matters most to your team and suggest places to get the best value. Visit www.score.org to get matched with a mentor today.