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New resource aims to help small businesses use their employee benefits plans more strategically

by Bruce Shutan

Small businesses and their brokers stand at a crossroad in a difficult economy when it’s becoming more critical for them to spruce up their employee benefit offerings and create greater awareness about plans that are available in order for them and their employees to realize the greatest value. They also need to think about benefits as an investment rather than an expense with the returns potentially being greater employee loyalty, engagement and retention.

MetLife has published new benefits research, Small Business Benefits: Cost-Effective Strategies for Maximizing ROI, that should help employers with fewer than 500 employees better understand how to optimize the value of their benefits program without necessarily adding significantly to their overall benefits spend.

The insights from this supplement to MetLife’s 7th annual Employee Benefits Trends Study should also help small businesses better understand how to use these plans more strategically as they strive to achieve their business goals.

“Small businesses are really important to our country and are a growing sector that represents about 70% of new jobs historically,” says Georgette Piligian, MetLife’s senior vice president, small business strategy and operations. She cites U.S. Census Bureau statistics showing that 99% of all American companies employ fewer than 500 people.

Maximizing ROI

There are several key messages that Small Business Benefits: Cost-Effective Strategies for Maximizing ROI delivers. One is the link between a company’s successful benefits package and addressing objectives such as employee benefits satisfaction and loyalty. Another is to help smaller employers maximize the return on investment associated with their benefit programs, particularly for programs that have not been adequately communicated.

Considering that only about one-third of employees in smaller companies (those with fewer than 500 workers) say that the benefits communication they receive is effective, Piligian says the new resource offers employers best practices to target employee needs.

As part of that approach, for example, these firms should attempt to show the correlation between having disability insurance and protecting an income stream (arguably an employee’s most valued asset) in the unfortunate event that they become sick or injured and cannot work – a likelihood that may often be underestimated by the average worker.

Employees who work for smaller businesses generally express less satisfaction with their benefits compared to employees who work at much larger companies. This is likely because historically the benefits packages at small businesses have been less robust which may undermine efforts to attract and retain exceptional talent against larger competitors. In good economic times and bad, talented and engaged employees are important to an employer’s sustained viability.

Piligian says employers should be mindful that financial protection is a growing priority for employees at a time when benefits appreciation is growing. Nearly half of working Americans polled by MetLife say they’re taking greater interest in the benefits they receive at work because of the recession.

Low cost, high yield

Perhaps the most important point for this audience to realize is that benefits can be expanded along with their perceived value with little or no increase in overall costs. Employee-pay-all plans offered on a voluntary basis featuring the benefits of group rates can help round out coverage.

While the carrier’s findings show that life, disability and dental insurance products are major contributors to an employee’s sense of loyalty in addition to some form of group medical coverage (which 96% of all companies offer); there are some significant missed opportunities.

For example, only 65% of firms with fewer than 500 employees offer dental plans compared with 93% of those with more than 500 employees. It’s also worth noting that 88% of employees who work for small firms are not only interested in receiving more benefits but are also willing to pay for them.

Other areas where small employers can make a significant difference involve providing access to financial planners for retirement advice (46% of surveyed small business employees have expressed such interest), or adopting an employee wellness program.

Whatever shape the benefits package takes, there’s a need to continuously communicate a small employer’s commitment to their workforce and help strengthen employee engagement. Methods can include a letter from the business owner explaining why benefits are being offered, offering appropriate resources for financial planning and other areas, and dedicating an entire month to raising awareness about a specific benefit.

These strategies “need to address the listening and learning patterns of the organization” at a time when the workforce is becoming increasingly diverse, Piligian adds. “Our research shows a correlation between benefits satisfaction, job satisfaction and employee retention. The cost of replacing people with critical knowledge is significant.”

To obtain a copy of Small Business Benefits: Cost-Effective Strategies for Maximizing ROI and learn more about creative and cost-effective strategies that can help small businesses optimize their benefits programs, visit whymetlife.com/sbtrends2009.


About the author
Bruce Shutan, former managing editor of Employee Benefit News, is a freelance writer based in Los Angeles.

MetLife

Metropolitan Life Insurance Company
New York, NY 10166
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[All States]

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