Small Businesses Find value in Voluntary Benefits

By Stephen Miller Jul 11, 2008
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Workplace benefits are viewed as an important employee retention tool by small businesses. More than half (55 percent) of employers with fewer than 500 employees say benefits play a very important role in employee retention, a top objective, according to the 6th Annual MetLife Study of Employee Benefits Trends.

But many benefits programs are not being used to their full retention potential. According to the MetLife study:

  • Employees at small companies are less satisfied with their workplace benefits than those at large companies. Onlyabout one-third (34 percent) of workers at small companies say the benefits they receive are a very important reason to remain with their employer, compared with more than half (53 percent) of employees working at large companies.
  • Most employees at small companies indicate an interest in paying more to get more; 91 percent of those surveyed say they are interested in having more voluntary benefits offered, with 40 percent saying they are very interested.

Voluntary benefits cover a variety of insurance products and other services that typically are paid fully by employees through payroll deductions. The range of possibilities is large; examples include auto and home insurance plans, elder care assistance and financial planning advice.

Employers often negotiate lower group rates for these benefits. The discounted premiums or costs, plus the convenience of automatic payroll deductions, can make voluntary benefits an appealing addition to the benefits mix. “Supporting voluntary benefits in the workplace can help address the challenge of expanding the breadth and depth of a benefits program to improve employee satisfaction without adding to the employer’s overall benefits spend,” comments Robert Bucci, vice president, MetLife Institutional Business.

Room for Improvement: Benefits Communications

The MetLife study reveals that small employers proportionally are paying more for benefits than larger competitors, yet their return on that investment is less. "Without the advantage of economies of scale, smaller employers need to be innovative in their benefits implementation, from the inclusion of voluntary benefits, to adding health and wellness programs, to increasing the flexibility of schedules to permit greater work/life balance for employees," advises Bucci.

"Hand in hand with this is improved benefits communications and decision support tools," he adds. "These are essential for helping employees understand their options and gain a greater appreciation of their workplace benefits.”

Small employers and their employees agree that benefits communication is an area that needs improvement:

  • Benefits communication is viewed as "highly effective" only by about one-third of employers and employees.
  • Receiving personalized benefits information, breaking down the costs for benefits options, would make it easier when making choices, say more than half (54 percent) of employees at small businesses.

Stephen Miller is an editor/manager for SHRM Online.

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