SMALL BUSINESSES HAVE STRATEGIC OPPORTUNITIES TO IMPROVE THEIR OFFENSE IN COMPETITION FOR EMPLOYEE TALENT, ACCORDING TO METLIFE STUDY
NEW YORK, June 23, 2008
Workplace benefits are being viewed as an important employee retention tool by small businesses. More than half (55%) of smaller employers, those with fewer than 500 employees, say benefits play a very important role in employee retention – a top objective, according to MetLife’s 6th annual Employee Benefits Trends Study. However, many current benefits programs are not being utilized to their full retention potential. According to the MetLife study, only about one-third (34%) of workers at these smaller employers say the benefits they receive are a very important reason to remain with their employer, contrasted to more than half (53%) of employees working at larger companies. In addition, just 37% of employees at smaller companies, compared to 49% of employees at larger firms, say they are highly satisfied with their workplace benefits.
"In the competitive war for talent, small businesses are recognizing that investing in benefits is a strategic decision. However, many benefits programs currently in place are not meeting the wants and needs of today’s workforce and not contributing as they could to employee retention. It is important to realize that investing in benefits does not have to equate to a financial investment. Supporting voluntary benefits in the workplace can help address the challenge of expanding the breadth and depth of a benefits program to improve employee satisfaction without adding to the employer’s overall benefits spend," said Robert Bucci, vice president, MetLife Institutional Business.
Loyalty Gap Exists
A majority (60%) of smaller employers – those with less than 500 employees – say they have a strong sense of loyalty to their employees compared to 45% of larger companies. Yet, many employees are not sensing this – only 44% of workers at these smaller companies believe that their employer has very strong sense of loyalty to them. This is despite another study finding that, among employers that offer benefits, a higher percentage of smaller employers contrasted to larger employers are paying all of the costs for many benefits including medical, dental, vision and prescription drugs.
For example, more than one-third of smaller employers (36%) say they pay the entire share of employees’ medical coverage and 29% pay all the cost of prescription drug coverage compared to only 15% and 13%, respectively, among employers with 500 plus employees. Breadth and depth of benefits offerings may have greater impact on employee loyalty than cost-sharing proportions. Employees at smaller companies indicate an interest in paying more to get more – 91% of those surveyed say they are interested in having more voluntary benefits offered with 40% saying they are very interested.
Room for Improvement: Benefits Communications
Of course, some personal issues confront all employees regardless of their employer’s size. For example, about one-third of all employees say they have a limited amount of time to do necessary research to help them make financial decisions – likely a reason why only about one-third express confidence in their ability to make the right financial decisions for their families. Money is also a concern regardless of employer size – about four in ten employees say they live paycheck to paycheck. With time, money and confidence levels on par, it seems surprising that fewer employees at smaller companies have taken steps to determine their family’s financial needs in relation to financial protection such as life insurance, retirement income and disability income insurance than their neighbors at larger employers. For example:
- 52% of workers at companies with less than 500 employees have taken steps to determine their families’ life insurance needs compared to 62% of employees at larger employers.
- 47% of workers at companies with less than 500 employees have taken steps to determine their families’ retirement income needs compared to 59% of employees at larger employers.
- 33% of workers at companies with less than 500 employees have taken steps to determine their families’ disability income needs compared to 47% of employees at larger employers.
Communication materials may be one cause for the disparity. Both smaller employers and their employees are in agreement that benefits communications is an area that needs improvement. Only about one-third of employers and employees believe that current benefits communications are highly effective. More than half (54%) of employees at these smaller businesses say receiving personalized benefits information with costs for options would make it easier when making choices.
"The MetLife study reveals that smaller employers proportionally are paying more for benefits than larger competitors, yet their return on that investment is less. Without the advantage of economies of scale, smaller employers need to be innovative in their benefits implementation – from the inclusion of voluntary benefits, to adding health and wellness programs, to increasing the flexibility of schedules to permit greater work/life balance for employees. Hand-in-hand with this is improved benefits communications and decision support tools. These are essential for helping employees understand their options and gain a greater appreciation of their workplace benefits," added Bucci.
The 6th annual MetLife Study of Employee Benefits Trends was conducted during the third quarter of 2007 and consisted of two distinct studies fielded by GfK NOP. The employee survey polled 1,380 full-time employees, age 21 and over, at companies with at least two employees. The employer survey consisted of 1,652 interviews with benefits decision-makers at companies with a minimum of two employees, representing a mix of industries and geographic regions. The study is available at whymetlife.com/trendspr.
Celebrating 140 years, MetLife is a subsidiary of MetLife, Inc. (NYSE: MET), a leading provider of insurance and financial services with operations throughout the United States and the Latin America, Europe and Asia Pacific regions. Through its domestic and international subsidiaries and affiliates, MetLife, Inc. reaches more than 70 million customers around the world and MetLife is the largest life insurer in the United States (based on life insurance in-force). The MetLife companies offer life insurance, annuities, auto and home insurance, retail banking and other financial services to individuals, as well as group insurance, reinsurance and retirement & savings products and services to corporations and other institutions. For more information, please visit www.metlife.com.