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Are Small Businesses Shortchanged on Benefits?

Surveys of benefits satisfaction at large and small firms show there's more to it than money spent

Workers at the smallest companies don’t have good benefits packages—and they’re not happy about it, a recent survey shows. But other research reveals that workers at slightly bigger employers are just as satisfied with their benefits as those at the largest companies. Together, the findings suggest that there are ways to stay competitive with benefit offerings without breaking the bank.


Supporting the idea that employees at small companies are dissatisfied, newly released results from the latest annual U.S. Worker Survey, conducted in December 2014 for insurance providers Colonial Life and Unum, show that employees at very small companies—those with less than 10 employees—are much less likely to have benefits than other workers:

  • Only 44 percent of employees at very small companies have benefits at work, compared with 82 percent of all employees.
  • At slightly larger firms with 10-99 employees, 75 percent of workers are offered benefits.
  • Nearly all (96 percent) of employees at larger companies with 1,000 or more workers have benefits.

The survey of more than 1,500 U.S. workers revealed that those working for the smallest companies are significantly less likely than employees at large companies to say they value their workplace benefits in the following areas:

  • Benefits package. Only 25 percent of employees at very small companies who are offered benefits rate their benefits as excellent or very good, compared with 58 percent of employees at large companies.
  • Benefits understanding. Less than two-thirds (62 percent) of employees at very small companies who are offered benefits report a good understanding of their benefits, well below the 80 percent reported by workers at large firms.
  • Value of benefits. Just over half (55 percent) of workers at very small businesses who are offered benefits agree that they highly value the insurance benefits provided by their employer, compared with 70 percent at large firms.

“It might be easy to assume smaller employers can’t afford to offer rich benefits programs and provide comprehensive education and enrollment support, but that’s not the case,” Gil Youmans, director of small market solutions for Colonial Life, said in a news release.

“Small employers can gain access to most of the same benefits and support services as larger employers at no cost to their business. One way to do this is by partnering with a voluntary benefits provider that offers benefits education and enrollment support at no additional direct cost as part of its services.”

Beefing up the benefits program can help put smaller employers on a level playing field with larger companies when it comes to attracting and keeping top talent, Youmans added, noting that “Most employees expect benefits at work, the survey shows. A strong majority of employees—67 percent—prefer to purchase insurance coverage through their employer.”


The International Foundation for Employee Benefit Plans recently looked at data from 50 corporate employers with 50 or fewer employees and compared it with data from more than 200 larger corporations. Although the difference between firms with 10 or fewer employees (the focus of the Colonial Life/Unum survey, above) and those with up to 50 employees isn’t trivial, it’s still surprising to see such divergent results.

The International Foundaton’s survey showed that when employers were asked to rate their employees’ engagement and benefits satisfaction, the ratings came back just as high for small employers as for their larger peers.

That’s despite the finding that as a percentage of payroll costs, surveyed small employers spent 26 percent on employee benefits while larger employers spent 33 percent, on average. Moreover, 9 in 10 responding small employers provide health care coverage and 3 in 4 provide a retirement plan.

“We took a more detailed dive back into the data and found a few areas with a common theme in which small employer benefits stood out,” wrote Neil Mrkvicka, senior research analyst at the International Foundation, in his analysis of the findings. He pointed out that small employers can hold their own—or lead the way—in the following areas:

  • Holidays—Small employers offer more paid holidays (e.g., Christmas Eve, Easter, Good Friday and the day after Thanksgiving).
  • Flextime—Small employers are just as likely as larger employers to offer flexible work hours and compressed workweek options.
  • Casual dress—Small employers are more likely to offer casual dress codes throughout the full workweek.
  • Personal gifts—Small employers are more likely to give celebratory gifts on holidays and condolence gifts when an employee’s family member passes away.

“Additionally, employers were asked to describe the most appreciated and engaging benefit they provide. Health care, paid time off and 401(k) plans were commonly mentioned by small employers, but flexible schedules, casual dress and the overall work environment came up nearly as often,” Mrkvicka noted.

“What’s the common theme?” he asked. “Flexible, personalized, culture-based benefits—something that can’t be bought or scaled easily. … When it comes to engagement and satisfaction, small employers are demonstrating sometimes a little can go a long way.”

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter @SHRMsmiller.

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