Small businesses are worried about the quality of their benefits offerings post-COVID

The pandemic has taught workers what benefits and perks they need to succeed, and they're feeling more empowered than ever to ask for what they want. But will the bar be set too high for small business owners with tighter budgets?

Seventy-nine percent of small businesses reported feeling comfortable with their cash flow, according to insurance provider Principal Financial’s most recent Financial Wellbeing Index. And for the first time in over a year, over a third of all businesses — both big and small — feel that their financial status has improved compared to this time last year. But despite that positive outlook, small businesses owners are worried that their benefits packages may not be competitive enough to attract and retain talent in a post-pandemic world.

“They've got growth prospects but they're worried they can't get the staff to fill up that need for growth,” says Amy Friedrich, president of U.S. insurance solutions at Principal. “They are worried about their ability to make sure their employees continue to have access to education about the things that are important to them — things that go beyond just basic medical care or savings.”

Read more: Will small businesses survive the delta variant?

The pandemic has radically changed the kind of benefits and support employees are looking for from their employers, the survey found, and could now include everything from expanded retirement savings plans to pet insurance. Overall, a greater percentage of large businesses — with more than 500 employees — plan to increase their offerings in the next 12 months, boosting telehealth services, healthcare, mental health and well-being services.

But for small employers with fewer than 500 workers, affordability can be a barrier — as can awareness and education, according to Friedrich.

“For the small employer, many of them don't even have HR teams,” Friedrich says. “So they certainly don't have someone who's helping them understand benefits — and if they've never had any personal experience with [new products], they literally sometimes don't know they exist.”

Of employers with fewer than 500 employees, under half are aware of proposed legislation known as The Securing a Strong Retirement Act in Congress, which could help them implement or expand retirement offerings, the survey found. In contrast, 90% of businesses with 500 to 10,000 employees indicated they know about the proposed legislation.

Read more: Small businesses are turning to employee benefits to retain talent

In order to fix the problem and empower small businesses with the resources to evolve their benefits options along with their workforce, it’ll require better communication from both small business owners and their providers to decide on the products and services employees want — such as income protection, benchmarking tools, debt reduction and financial analysis — and how to get it to them.

“The folks who are actually providing those benefits have great ideas and access to tools that they can help [small businesses] with,” Friedrich says. “If you're going to serve the small marketplace really well, then you have to have great answers. So lean on the people who should be helping you.”