Competing for top talent is tough, especially for small businesses that don’t provide employee benefits. Today, we’ll look at the recruiting landscape for small businesses, why it makes sense to offer employee benefits and the difference between traditional and flexible group benefits.
The recruiting landscape for small businesses
Small businesses face stiff competition when it comes to recruiting top talent because the job market is tight and, as a small business owner, you’re competing with companies of all sizes.
Let’s dive deeper into the recruiting realities small business owners face:
- Tight job market – The Canadian Federation of Independent Business (CFIB) indicates there’s a labour shortage in Canada and that the smaller the business, the higher the vacancy rate. For example, in the third quarter of 2019, businesses with four employees (or fewer) had a 5.4% vacancy rate. To contrast that, businesses with five to 19 employees had a 4.8% vacancy rate and companies with more than 50 employees had a vacancy rate of less than 3%.
- Stiff competition for employees – Statistics Canada reports that 97.9% of businesses in Canada are small businesses (one to 99 employees) and 73.4% of these small businesses have one to nine employees. But this can be misleading when it comes to recruitment. As a small business owner, it’s important to remember that you’re not only competing with other small businesses for top talent. You’re competing with businesses of all sizes and budgets, including global companies, cool tech start-ups and everything in between.
- Employees want benefits, including mental health support – A recent report by Morneau Shepell indicates that 60% of employees—and 51% of employees under financial stress—would take a lower-paying job if it offered better support for personal well-being than their current job. This includes benefits that support physical and mental health.
- Entrepreneurship is on the rise – The desire to never work for someone else again also takes top talent out of the recruitment pool. According to BDCs 2019 report, A Nation of Entrepreneurs: The Changing Face of Canadian Entrepreneurship, 44,700 Canadians started a business in 2018 (the highest number in 10 years).
Boost recruitment results by providing employee benefits
You can boost your recruitment (and retention) efforts by offering employee benefits, especially in our current competitive job market. For job seekers, benefits are no longer a nice-to-have; they’re essential.
Offering benefits helps you stand out against other small and medium-sized businesses. According to a 2011 LIMRA report, the smaller the business, the less likely they are to offer benefits. While times have changed since 2011, they haven’t changed dramatically which means you can differentiate your small business from the rest by offering employee benefits.
Figure 1: In 2011, LIMRA found that mid-size companies are more likely to offer benefits than small businesses.
How employers benefit from providing employee benefits
Offering employee benefits helps you compete with the big guys for top talent (and makes it more likely your current talent will stick around).
Providing a benefits program also gives your business tax advantages. According to the CRA, the eligible contributions you make to your employee benefits program are tax deductible for your company. Plus, any amount your employees use through their healthcare spending account (HSA) is considered a non-taxable benefit for them.
For more information (and examples) about how business owners who work in the business can use pre-tax dollars for healthcare expenses, read our article How Small Business Owners Can Reduce Taxes with Healthcare Spending Accounts.
Aon’s 2020 Global Medical Trend Rates Report shows that businesses around the world are implementing flexible benefits and wellness initiatives to help control business costs, including medical plan and prescription drug costs.
Benefits help employers and employees so let’s take a quick look at the difference between traditional and flexible benefits.
Benefit options for small business owners, from traditional to flexible
Traditional benefits are often a structured medical and dental plan for a monthly premium. Costs are typically $300-$500 per month per employee (that’s $3,600 – $6,000 per employee per year). But even this estimate might be low. A 2015 survey by the Conference Board of Canada found that, on average, benefits cost $8,330 per full-time equivalent.
With traditional benefits, employers pay the premiums every month, even when employees don’t submit any claims.
The cost of traditional benefits can be prohibitive for many small business owners.
An alternative to this is a flexible benefits plan, like what we offer at BeniPlus. Our Benefit Wallet is a flexible spending account; benefits can include health and dental, wellness, savings, giving and personal insurance. This puts you—the business owner—in the driver’s seat when it comes to budget. You decide how much to spend on benefits per employee. Even at $200 per month per employee ($2,400 annually), you’d spend much less than you would with a traditional plan while offering your team the benefits they want to use. There are no monthly premiums, upfront costs or hidden fees and you only pay when employees submit claims.
As a small business owner, you can boost the results of your recruiting efforts by offering benefits to your employees at a price you can afford.
Take 10 minutes today to get a quote for our simple, flexible and affordable employee benefits program that can help your business stand out in the restaurant industry.