- Key insight: See why prioritizing personalized offerings can benefit small employers.
- Expert quote: "Small businesses don't have to outspend large companies to compete." — David Feinberg, SVP, Justworks
- Supporting data: 49% of small business owners share a specific worry about their current benefits.
Source: Bullets generated by AI with editorial review
Rising healthcare costs, inflation, and
New research from professional employer organization Justworks and The Harris Poll revealed 96% of small business owners who are worried about hiring and retention say it's important to offer employees
Rather than relinquish talent or overspend to keep it, decision-makers should reframe their approach to the benefits selection process, said David Feinberg, Justworks' SVP of risk and insurance.
"Small businesses don't have to outspend large companies to compete," he said. "If you're a small-business owner, you actually have this superpower, which is the ability to get closer to your employees than potentially a large employer. Also, adopt the framework that more expensive is not better, as well as more choice is not better. Sometimes that can be a trap: I want to offer five or six plans when, in fact, two or three will do."
Read more:
Building the right benefits program
"You have to start with your budget," Feinberg said, "because if you put the whole menu together … and spend all your money year one, you're going to have the same conversation year two, year three, year four." Between inflation, rising health insurance rates, and additional benefits to plan for, "you probably need to have a three- to five-year outlook on what you're going to spend and then plan against it," he explained.
"You cannot optimize year to year, because the worst thing you could do is effectively maximize your budget in year one, put all the products in place, and then be in a position where you have to cut back in year two or year three," he added.
Next, when choosing solutions, "you need to understand what the metrics are for success — not just for that vendor, but for you," Feinberg said. "What are the actual product offerings, and what problem is it solving? Is it a utilization issue? Is it access to care? Is it ease of use?"
This is where understanding the needs of a population is so important, and smaller businesses are at an advantage: What employees are truly looking for in a benefit is easier to identify; therefore solutions can be more targeted and better utilized. "A mental health benefit to some could be access to the gym, but for others it could be true cognitive behavioral help or access to medication," Feinberg used as an example.
Also when selecting benefits, it's important to decide whether —even if something is not going to be widely utilized — it's impactful enough to offer anyway, he said, citing examples like mental health and fertility options.
Read more:
Ensuring every dollar spent works for your people
Whether piecing together smart solutions, answering complex employee questions, or explaining why an offering cannot be provided, benefit leaders should work with a trusted partner to "get definitive answers as opposed to doing the research on [their] own," Feinberg said. When weighing healthcare options in particular, expert help can make the process less stressful for leaders and easier for employees.
"There are two hyperspecific products that I always get excited about, and I tell everybody they should do the research on," Feinberg said. "The first is the value of high-deductible health plans. With the triple tax savings, when you combine that with an HSA, they actually do a lot more than just provide access to health insurance — they can be a savings vehicle. It requires a good bit of edging, and you should not go it alone. The other is ICHRA. This is the first time I've seen a true defined contribution product in group health insurance, and we've seen some really strong early traction. One of the things we've seen is businesses are able to run a lot leaner, stay smaller, and potentially be more distributed, and so ICHRA can provide that budgeting to allow you to stay lean, as well as if you're multistate, perhaps optimizing for a distributed workforce."
By getting a strong read on what their employees want, partnering with the right experts, and remembering that high price doesn't always mean best benefits, leaders of smaller businesses can attract and retain the talent they need to thrive.
"Affordability is real, and they have to make sure that every dollar they spend works for their folks," Feinberg said. "They should do their homework, work with that trusted partner … [and] focus on their people."
