Health benefits helping SMBs with employee recruitment and retention
Despite commanding a large workforce, small enterprises face a tightening labour market. A new Abacus survey commissioned by Medavie Blue Cross found that almost a third (27%) of small business owners in Eastern Canada struggle with employee recruitment or retention.
Travis Kelly (pictured), director of brokerage sales, Ontario at Medavie Blue Cross, said small businesses aren’t tapping into a highly effective tool to entice employees: health benefits.
Untapped recruitment strategy
The Abacus survey uncovered several reasons 80% of small businesses don’t offer health benefits as part of their total compensation package.
“The primary driver is that more than half – 57% – of small business owners think it’s too expensive,” Kelly told Insurance Business. “21% don’t believe the employees want them or that it’s not important to their employees, which is interesting because the same research found that 98% of employees in Ontario think that benefits are an important part of their total rewards package. So there’s a bit of a disconnect there.”
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Additionally, 9% of small business owners say they don’t know where to start creating a health benefits plan for their employees, according to Medavie Blue Cross’ research.
Health benefits can be dealmakers or dealbreakers when negotiating job offers or ensuring small businesses retain their skilled labour. This is especially true today in Gen Z and Millennial workers, said Kelly.
“Younger employees are more likely to consider coverage for services like mental health or physiotherapy essential rather than extras. Having these health benefits is a relevant response to today’s realities that will allow businesses to set themselves apart when competing for that skilled labour,” he added.
Cost flexibility
The costs of employee health benefits will continue prohibitive for many small businesses. According to a WTW survey, employer-sponsored health benefits costs are increased by a record 10% globally in 2023 amid inflation and increased healthcare usage.
But Kelly pointed out that business owners can start with small, flexible plans to ensure their staff are financially protected in meaningful ways. According to Medavie Blue Cross, the most important benefits for small-business employees beyond dental, drug, and vision coverage are:
Hospital coverage (77%)
Critical illness insurance (74%)
Diagnostic tests (73%)
Long-term disability (72%)
Health practitioners (70%)
One way to address affordability concerns is to take advantage of a pooled benefits plan. Kelly explained: “Building a robust benefits plan might involve high costs in a traditional model. But you can share those costs amongst many small business owners by pooling together.”
Businesses between two and 10 employees have a variety of options. A pooled plan offers flexibility but also a shared responsibility to keep things affordable and sustainable over the long term.
Where should small business owners start? Kelly recommended kicking off serious discussions on a health benefits plan by connecting with a broker. During these consultations, brokers should help their clients to balance costs with employee needs.
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“A broker will be able to assess the needs of that business, figure out what makes sense, and which trusted health benefits provider or partner can best help them navigate plan design options. A broker will also ensure those solutions are budget friendly and flexible, and offer the right kind of support for employees,” Kelly commented.
A health benefits plan can be a dealmaker or dealbreaker when negotiating job offers or ensuring small business owners keep the skilled labour they have. According to the Abacus survey, almost three in four (72%) employees in Eastern Canada would leave their current jobs for one that offers a health benefits package.
“It’s an obvious benefit because having health benefits shows that you’re taking your employees’ health and wellbeing to heart, which sends the right message to prospective talent,” concluded Kelly.
