Small Businesses Score Big on Benefits Satisfaction

In honor of Small Business Week, our research team took a dive back in to data from our Employee Benefits Survey: 2014 to identify how small employers are designing their benefits packages compared to their peers.

For the following analysis and discussion, data from 50 corporate employers with 50 or fewer employees were cross-tabbed and compared with more than 200 larger corporations. Here is what we found . . .

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Nine in ten responding small employers provide health care coverage and three in four provide a retirement plan. Yet, compared with larger corporations, not surprisingly, small employers were less likely to offer a wide variety of other benefits (e.g., health care plan options, domestic partner coverage, retiree coverage, mental health coverage, prescription drugs, dental, defined benefit plans, financial education, voluntary benefits, life insurance and disability).

As a percentage of payroll costs, surveyed small employers spend 26% on employee benefits, while larger employers spend 33%, on average. The survey data shows fixed benefit costs are more critical for small employers that don’t have the law of large numbers to rely on. For instance, compared to large employers, small employers are far more likely to fully insure health care and disability and use flat dollar amounts for benefit payouts as opposed to percentage-of-earnings formulas.

[Related: Total Rewards and Workforce Strategies]

But that’s not the full story! We asked employers to subjectively rate their employees’ engagement and benefits satisfaction. To our surprise, ratings came back just as high for small employers as they did for their larger peers. And so, 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.

  • 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 workhours 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.

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.

[Related: ACA Resources for Small Businesses]

What’s the common theme? Flexible, personalized, culture-based benefits—something that can’t be bought or scaled easily (i.e., a flaw of large numbers). So while we doubt many employees would be willing to trade their pension for a tool belt at the holiday party, when it comes to engagement and satisfaction, small employers are demonstrating sometimes a little can go a long way.

Neil Mrkvicka
Neil Mrkvicka
Senior Research Analyst at the International Foundation

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