The recent decisions by Deloitte and Zoom to scale back their investment in employee benefits, particularly around paid time off and parental leave, illustrate the precarious position HR and benefits leaders are in today: striving to maintain a culture that attracts and retains top talent, while navigating intense cost-containment pressures.
It’s a story most small and medium-sized businesses know well, says Grace Jaén, REBC®, CHRS, VP of Health & Welfare at GA& Partners. Staying laser-focused on retaining employees is tantamount to business strategy at smaller organizations; for many, employees don’t have a backup, so when one heads to the door, disruption is a guarantee.
That’s why many SMBs are highly strategic about their benefits offerings, a key driver of recruitment and retention—and their example can shed light for HR and benefits leaders at enterprise orgs on navigating the recalculations they will likely face in today’s environment.
See also: Employees aren’t confused about their benefits; they’re anxious
SMBs don’t necessarily design their benefits strategies with generosity at the forefront, but rather precision, Jaén notes—they know exactly what drives retention, what costs are predictable and what are volatile, and how benefit changes could impact company culture.
Given their size, SMBs usually are “closely attuned” to what employees value, Jaén says, “giving them a clearer, more personal understanding of how benefits are perceived.”
“Larger organizations don’t always have that same level of visibility into individual sentiment, which can create a disconnect,” she adds.
In a recent interview with HR Executive, Wes Cowen, national practice leader for employee benefits at OneDigital, pointed to his firm’s research that found a costly perception gap: Employers may think they’re investing in the right benefits for their workforce, but the offerings often don’t align with what employees want. They’re frequently one-size-fits-all and lack the flexibility to account for how employee benefits needs shift through a worker’s lifecycle with the organization.
“Part of winning the war for talent is offering a comprehensive total reward package,” Cowen says. “And that comes from understanding what employees value and HR informing senior leaders of that—so decisions can have the most significant impact.”
Apart from connecting to employee expectations, SMBs are often accustomed to moving fast and leaning into direct communication, which can benefit organizations operating in today’s environment, where it’s important to acknowledge that tradeoffs may be necessary.
“In contrast,” Jaén says, “employees at larger companies often perceive benefit changes as being driven primarily by bottom-line considerations, whether or not that’s the full picture.”
A shift impacting ‘many employees’
Looking ahead, Jaén expects the trend of organizations “watering down core offerings” that has gained steam in recent years to continue. This is particularly relevant at organizations whose talent pool has shifted—in light of offshoring and automation—necessitating a reexamination of benefits.
“Organizations will likely keep directing their resources toward roles that are hardest to fill and retain, which means many employees may see their current benefits reduced,” she says.
Just as SMBs need to remain driven by retention, larger employers that want an edge in attracting and keeping top talent must consider the value of their total rewards package—yet that investment must be weighed against the risk for lowered revenue and, potentially, the need to scale back benefits or reduce the workforce.
“Once you implement a benefit,” Jaén adds, “it is very challenging to remove it, so employers should be very strategic with their offerings.”
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