As a business owner, it’s hard running day-to-day operations and still have time left over to think about the “what-ifs.” What if I lose a key employee? What if a competitor sets up shop down the street? What if a pandemic shuts down my business for an undetermined period of time? If we’ve learned anything in the last two years, it’s that we must plan for the what-ifs.
We know that the COVID-19 pandemic has had a huge impact on small-business owners. According to the 2022 MassMutual Business Owner Perspectives Study, about half of small-business owners experienced lower-than-expected revenue during the pandemic. However, those owners who fared better with higher-than-expected revenue placed more importance on long-term business planning.
The good news is that 87 percent of the business owners we surveyed said their revenues are either growing or stable post-COVID-19. In addition, only 19 percent said the pandemic accelerated their timetable to exit or sell their business.
Top challenges faced during the pandemic
With all the challenges business owners faced during the COVID-19 pandemic, there was one that stood out from the rest: workforce and staffing. Specifically, it was maintaining employee productivity and morale and hiring new employees in a highly competitive market. In fact, nearly half of the business owners we surveyed said that was their number one issue, followed by supply chain problems and customer acquisition and retention. This is not all that surprising when you consider that, even in the best of times, attracting and retaining top talent is the number one business planning concern of business owners.
COVID-19 aside, 69 percent of business owners said keeping key employees loyal to the business is important. That ranked higher than knowing their business value and planning for retirement.
However, business owners don’t appear to be addressing the issue in a manner that signals this level of concern. There appears to be no difference in what is offered in terms of benefits to all employees versus what is offered to those who are the most critical to the success of the business. In fact, only 1 in 4 offer any type of supplemental insurance benefits and even fewer offer supplemental retirement savings plans.
Moreover, business owners are going it alone when it comes to putting strategies in place to attract and retain top talent. According to our research, their number one go-to resource for help is themselves or their business partner.
Reevaluate your key employee retention strategy
Business owners should ask themselves this question: If you were to leave your current business to start a new business, who would you take with you? Those are your key employees, and they should be taken care of. The good news is that 90 percent of business owners report taking steps to address the challenges of hiring and retaining key employees, with health insurance, increased wages and bonuses, and flexible work schedules as the most common benefits offered.
But, are these the right benefits?
Not all employee benefits are created equal and certain ones are more valued by today’s employees than others. Some of the most desired employee benefits aren’t what you might think. Competitive pay is a good start, but just the beginning. (A March 2022 Pew Research Center study found that 63 percent of employees who left their company during the Great Resignation did so due to “low pay.”)
Retirement savings plans, preventative health and wellness incentives, and financial education programs are popular elements of today’s compensation packages. In addition, bonuses used to pay life insurance premiums, employer-paid disability income insurance, or nonqualified deferred compensation programs can help keep your most valuable employees in place.
Considering the employee benefits that the workforce desires most will help you develop a benefits package that will help you keep your current employees loyal and attract the best new talent in the future. In that same Pew Research Center study, nearly half of the employees they surveyed left their companies because “the benefits weren’t good enough.”
Business owners could benefit greatly from speaking with a knowledgeable professional outside of their business for information on the many types of benefits that may be of value to key employees. A go-it-alone approach is most likely not in the best interest of your business or your business’s most valuable asset.
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