Owners of Small and Midsized Businesses Turn to Employee Benefits to Attract and Retain Top Talent

Rhea-AI Summary

Principal Financial Group conducted a survey among over 1,000 small and midsized business owners to assess the significance of employee benefits in recruitment and retention. Results showed that 70% of participants acknowledged benefits' role in attracting talent, while 71% attributed improved retention to offering more benefits. Furthermore, 84% of businesses provide key employee benefits, with a notable increase in the adoption of disability income insurance. Digital platforms are increasingly utilized to navigate employee benefit selections, reflecting a shift in how businesses manage their employee compensation strategies.

Positive

• 70% of business owners believe employee benefits improve recruitment.
• 71% say more employee benefits enhance retention.
• 84% of businesses offer key employee benefits, with 55% wanting to expand these offerings.
• 44% of businesses now provide disability income insurance for key employees, up from 35% last year.
• Digital platforms are utilized by 25% of business owners to assist in benefits decisions.

Negative

• None.

Principal^® survey finds businesses also plan to increase benefits for key employees

DES MOINES, Iowa--(BUSINESS WIRE)-- In response to the ever-changing environment small and midsized businesses (SMBs) operate in today, Principal Financial Group^® recently conducted a “check-in” with business owners. The survey, which polled more than 1,000 business owners at the beginning of 2022, revealed that they are turning to employee benefits to improve their ability to attract qualified candidates and retain current employees.

According to the survey, 70% agree employee benefits help to improve recruitment efforts, while 71% of business owners said offering more employee benefits helps improve retention. Additionally, two-thirds say employee benefits improve productivity – this percentage has consistently increased in each survey conducted since 2015 (42%).

“As business owner confidence improves and the need to invest in and grow their business intensifies, the need to attract and retain talent is more urgent than ever,” said Nate Schelhaas, senior vice president and head of life protection solutions at Principal^®. “Employee turnover remains a top concern for owners in 2022 and having a customizable and competitive employee benefits package is crucial to addressing this challenge and enabling growth.”

Business owners offer key employee benefits at record levels

As business owners continue to look for ways to attract and retain the most qualified candidates, they’re putting employee benefits in place aimed at securing key employees who play important roles in their organization.¹ In fact, 84% of SMBs offer key employee benefits and 55% want to offer more. The number of key employees continues to increase among SMBs; 40% say they have four or more key employees compared to 35% in 2021.

Common key employee benefits are disability income insurance, deferred compensation, executive bonus plans and retirement protection disability coverage. Compared to one year ago, significantly more business owners offer disability income insurance for their key employees (44% vs. 35% last year).

“Key employee benefits are growing in their importance as it becomes more challenging to lock in top talent in high-demand jobs,” said Kathleen Souhrada, vice president of nonqualified and life administration at Principal. “Offering an executive bonus plan or a non-qualified deferred compensation plan can help meet the needs of employees critical to the success of the business.”

A focus on digital platforms for employee benefit decisions

The survey also found that 25% of business owners use digital platforms to help with insurance and employee benefit needs. Among owners with 10 or more employees, digital platforms are the third most-used resource to help with employee benefit needs.

“Small and midsized businesses typically don’t have a dedicated human resource professional. Access to online resources and digital platforms simplifies the process to help them select the appropriate offerings for their workforce,” said Schelhaas. “Digital tools help streamline the customer experience from initial set-up to ongoing administration and claims payment. At Principal, our digital strategy responds to customer’s unique, personalized needs, which is essential in today’s competitive labor market.”

Additional findings from this survey include:

• Demographic shift: Compared to past years, there are now significantly more business owners who are female (44% in 2022 vs. 36% in 2021), Millennial (40% in 2022 vs. 26% in 2021) or have owned their business 10 years or less (57% in 2022 vs. 34% in 2021).
• Business protection keeps its top spot: Business protection remains the number one priority and has since 2010, this includes key employee life and disability insurance to protect against an unexpected death or disability that could disrupt business operations.
• More business owners say retirement is farther away: 48% of owners say retirement is 11 or more years away, compared to last year’s 37%.

To see more survey results, visit the 2022 Business Owner Check-In (PDF)

About the survey

The survey was conducted by Dynata and included 1,018 online interviews conducted between January 10-21, 2022. Results were weighted based on the number of employees and annual sales. Potential respondents for this survey were selected from among those who have agreed to participate in Dynata surveys. Because the sample is based on those who agreed to be invited to participate, no estimates of theoretical sampling error can be calculated.

About Principal^®

Principal Financial Group^® (Nasdaq: PFG) is a global financial company with 18,500 employees¹ passionate about improving the wealth and well-being of people and businesses. In business for more than 140 years, we’re helping more than 51 million customers¹ plan, insure, invest, and retire, while working to support the communities where we do business, improve our planet, and build a diverse, inclusive workforce. Principal^® is proud to be recognized as one of the World’s Most Ethical Companies², a member of the Bloomberg Gender Equality Index, and a Top 10 “Best Places to Work in Money Management³.” Learn more about Principal and our commitment to sustainability, inclusion, and purpose at principal.com.

1 As of December 31, 2021
2 Ethisphere Institute, 2021
3 Pensions & Investments, 2021

Dynata is not an affiliate of any member of the Principal Financial Group.

© 2022 Principal Financial Services, Inc.​​​

Principal^®, Principal Financial Group^®, and Principal and the logomark design are registered trademarks of Principal Financial Services, Inc., a Principal Financial Group company, in the United States and are trademarks and service marks of Principal Financial Services, Inc., in various countries around the world.

Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Company®. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., member SIPC and/or independent broker/dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392

2089160-032022

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¹ The survey defined key employees as high impact and highly compensated employees whose performance most affect the financial success of a business: top executives, sales leaders, critical/high demand talented employees.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220329005091/en/

Ashley Miller, miller.ashley@principal.com, 515.878.6295

 

Source: Principal Financial Group

FAQ

What does the Principal survey reveal about employee benefits for businesses in 2022?

The Principal survey indicates that 70% of businesses view employee benefits as critical for recruitment, with 71% citing benefits as vital for retention.

How many businesses offer key employee benefits according to Principal's survey?

According to the survey, 84% of small and midsized businesses offer key employee benefits, with 55% planning to expand these offerings.

What percentage of businesses uses digital platforms for employee benefit decisions?

The survey found that 25% of business owners utilize digital platforms to assist with insurance and employee benefit needs.

What significant demographic trends were reported in Principal's 2022 survey?

The survey highlighted an increase in business owners who are female (44% from 36% last year) and Millennial (40% from 26% last year).

What are the common key employee benefits mentioned in the Principal survey?

Common key employee benefits include disability income insurance, deferred compensation, executive bonus plans, and retirement protection.