Talent, Turnover Top Reasons to Offer Retirement Plans
While most small businesses do not offer retirement benefits, the large majority (72%) of businesses that do found it beneficial, citing talent attraction, turnover minimization and personal need among the top reasons, according to recent survey results
In its survey of 318 small- to mid-sized business (SMB) owners, Paychex inquired as to whether businesses offered employee benefits, the nature of the benefits being offered, and the perceived value and benefit of those programs. The survey’s variables included respondent and business age, business size and growth, industry and geography.
Overall, the most commonly reported reason for offering benefits – incorporating health insurance, retirement, FSA/HSA and ancillary benefits – was to improve employee morale, followed by the need to attract talent.
Many respondents, particularly small businesses, indicated that they do not feel the need to offer benefits at this time. On the whole, 61% of SMB organizations said they do not offer any form of benefits to their employees. Of businesses earning less than $500k in revenues, 78% reported that they do not offer benefits, while 74% of businesses with revenues of more than $1M indicated that they do offer benefits to their employees.
When asked why owners offer retirement benefits, minimizing turnover was reported as the most important reason (23%), followed by the individual need for the benefit (20%) and attracting talent (18%).
Among larger businesses ($1M+ revenues), attracting talent (47%) and personal need (34%) were cited as the most “critical drivers” for offering retirement benefits. For smaller businesses (<$500k revenues), only 6% viewed attracting talent as a top reason for offering retirement benefits. Instead, they focused on minimizing turnover (24%), improving morale (19%), and meeting a personal need for the benefit (19%), the report notes.
For owners of younger businesses, 28% said that minimizing turnover was the number one reason for providing retirement benefits; 10% of for more established businesses assigned it that importance.
Paychex concludes that, overall, the survey appears to confirm that the majority of SMB businesses that offer benefits find them beneficial, and as the size of the business grows, the value of benefits become clearer and more achievable. In addition, the report notes that, “As largely perceived, if a business doesn't offer benefits to its employees, a competitor will.”
The data included in the report was taken from an online survey, administered by Bredin in February 2016, of 318 principals of U.S. companies with fewer than 500 employees.