Benefits and Compensation, Recruiting

Small Business Struggle to Offer Benefits for Talent Attraction

In a recent Recruiting Daily Advisor survey, respondents were asked which types of benefits they use to attract talent. It should come as no surprise that a majority offer health insurance (92%), dental insurance (86%), paid time off (85%), life insurance (83%), and retirement benefits (81%) as a way to get candidates in the door. We call these benefits the “tried and true” and additional research is showing that small businesses are struggling to offer these types of benefits to their workers. 


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More than half of small businesses (56%) plan to offer new benefits to their employees in 2019, according to research from Clutch, the leading B2B research, ratings, and reviews firm. While these benefits may not be “reinventing the wheel” they are new to the businesses that are beginning to offer them. These benefits include paid time off (19%), health benefits (15%), and retirement benefits (11%).
As we know, offering new benefits can help attract talent while also helping to reduce employee turnover. These benefits are often less expensive over time than the cost of recruiting and training new employees.
“You’ve already invested the time, energy, and money to train [your employees],” says Bethany Holliday, director of human resources for Cornerstone Insurance Group & Employer Solutions—in a press release announcing the research findings. “It costs a whole lot less to keep people happy than it does to try and find new people.”

Nearly One-Third of Small Businesses Lack Formal HR Resources

What may be the most surprising stat from the Clutch research is that 30% of small businesses do not have formalized HR resources, such as an in-house HR staff, outsourced HR functions, or a contract with an HR consultant.
Of companies without dedicated HR resources, only 1 in 10 (10%) offer benefits to their employees. Meanwhile, roughly two-thirds of companies with HR resources (64%) offer benefits to their employees.
Experts say that small businesses are disproportionately likely to have a formalized benefits and HR structure as they grow. Small businesses should be aware of the value of formalizing their HR infrastructure and be open to working with HR consultants.

Small Businesses Most Likely to Offer New Benefits by Employee Request

Nearly one-third of small businesses offering new benefits (30%) are doing so to fulfill employee requests. More than one-quarter (27%) are doing so as a means of improving morale and reducing turnover.
Far fewer companies are offering new benefits because they are required by law (13%) or as a result of union negotiations (9%). HR experts believe that small businesses will continue to respond to their employees’ desire for more robust benefits.
“We kind of shifted from paying a lot to now offering a lot of benefits,” says Christopher Willatt, founder and owner of AlpineMaids—in the press release. “HR is really geared toward convincing our employees that this is a great job and doing everything to retain them.”
Clutch advises that small businesses need to be prepared to meet employee benefits requests to attract and retain a talented workforce. And as our research shows, these benefits can be of little to no cost to employers. For example, offering your workforce a flexible schedule to accommodate the work/life balance some workers crave is one alternative that costs virtually nothing in the grand scheme of things.