How Small Businesses Can Win the Talent War

Voluntary benefits and flexible schedules attract and keep loyal employees


Small businesses have always played a central role in driving the growth of the U.S. economy, as well as bringing innovation and jobs to local communities. However, nothing could have prepared small businesses for the impact COVID-19 has had on their businesses. Prior to the pandemic, small businesses provided nearly half of the country’s private sector jobs, but they also accounted for 54% of the jobs most likely to be lost as a result of COVID-19.

In addition to the pressures of sustaining a business during the pandemic, small business employers had to react to a changing workplace. Many small and large companies went 100% re-mote, forcing many to upgrade their technology at record speed and bring in collaborative tools for their employees to use. Employers who historically relied on an onsite workforce were faced with having to manage the health and safety of its employees and deal with staff shortages due to COVID-19. In retrospect, it’s understandable that in early 2020, small businesses were simply trying to survive.

The impact of COVID-19 has provided an inflection point for many small business employers. It created disruptions that deeply impacted productivity and morale. How employers responded to these chal-lenges determined whether they were viewed positively or negatively by their employees. One notable finding from our Guardian Workplace Benefits Study is that employee loyalty is strongly tied to how they believe their companies handled COVID-19.

Handling COVID-19 well includes measures such as employer flexibility, strength of employee communications, and support provided to employees. Among employees who agree their company handled COVID-19 well, nearly half (49%) say they would like to stay at their company for more than a decade compared to just 28% of those who say their companies handled it poorly. This reveals important insights into employee expectations moving forward and what small business employers should be thinking about given the talent shortage and need to attract and retain talent.

With the Great Resignation a real-ity, companies right now — no matter whether they are large or small — are in a talent war to fill jobs needed to keep their businesses operating seamlessly.

Small business employers today must examine how
the pandemic has changed employee
expectations and focus on tangible and intangible benefits, whether it’s enhancing an employee benefits package with voluntary benefits or a hybrid, flexible work model.

This is where employee benefits brokers can be instrumental to small business-es. As the employee benefits industry continues to evolve, there are now more solutions available that can help small businesses create efficiencies, contain costs and attract and retain employees. For example, our latest Workplace Benefits Study shows there has been an upward trend for small businesses with under 100 employees to offer a better benefits package than competitors in their industry — with 69% aiming to do so in 2021.

Brokers who are counseling small business employers should consider the following solutions:

  • Individual Health Reimbursement
    Arrangements (ICHRAs): Health insurance is expensive, but there are ways to manage those costs, while still providing an affordable option to employees. For example, ICHRAs allow small business employers to contribute to an account based on their budget, and which in turn, employees can then use to purchase primary medical insurance on their own. The cost of traditional primary medical insurance has historically been cost  prohibitive for many small employers and prevented them from offering benefits programs to their employees. The ICHRA program that now exists changes this. The U.S. Departments of Health and Human Services, Labor, and the Treasury projects that 800,000 businesses will offer ICHRAs by 2024, covering approximately 11 million employees.
  • Voluntary Benefits: The pandemic has made employees more aware of the financial gaps that exist, and the growing need to better protect their families should a crisis occur. This has made voluntary benefits attractive to employers who want to diversify their employee benefit options, while at the same time, help increase the overall financial well-being of their workforce. Our study revealed that 52% of employees who work for a company with less than 50 employees said “money/finances is a major cause for stress in my life.”For many small employers, voluntary benefits, like critical illness, hospital indemnity insurance and accident insurance, are financial tools that help to protect their employees if there is an unexpected event, like an accident, injury, or illness. Voluntary benefits are also surprisingly accessible and afford-able for the small business employer. Depending on the carrier, there are three payment options to consider: paid by employer, shared contribution, or paid by employee.For a small business employer seeking to control costs, voluntary benefits can be a win-win because it enables them to offer much-needed benefits for their workforce and either share the cost or pass it on to the employee. For employees, voluntary benefits help pay for medical expenses and out-of-pocket expenses that their primary health insurance may not cover if the employee or one of its family members experience an illness or accident.
  • Benefits Technology: COVID-19 accelerated the adoption of technology, prompting employers, big and small, to re-evaluate their technology needs. In general, we have seen substantial growth in the availability of benefits administration platforms for small employers, with the capabilities to service organizations with as few as 20 employees. With cloud-based, API-integrated benefit platforms, small businesses are now able to create efficiencies in their benefits administration process, while at the same time, improve the overall employee experience. We all know that Open Enrollment can be overwhelming for employees who are trying to make important decisions about their benefits. And oftentimes, small businesses do not have a fully resourced Human Resources Department that can help provide adequate benefits education.Today’s technology can support small business employees during the benefits enrollment process. With AI technology, new platforms, like Nayya, are helping guide employees through the benefits enrollment process with personalized, data-driven recommendations. And the great news is that platforms can service small businesses with as few as 26-28 employees.Finally, as a result of the pandemic, we saw a lot of gains in the adoption of technology among small businesses, particularly those with under 100 employees. Our latest research showed that 79% of small firms said the pandemic impacted their tech adoption with 57% adopting collaboration software, 52% adopting customer service tech and 41% adopting benefits administration technology. We anticipate this trend will continue. We encourage all brokers to work with their small business clients to do a technology assessment and help them navigate this arena.
  • Employee Well-Being: The pandemic has shed a spotlight for employers to do more around employee well-being and mental health resources. Employees have made it clear they’d like their employer to offer resources to help them navigate the burnout, stress and/or anxiety that the pandemic has brought on to themselves and their families. Our research showed that 60% of employers with fewer than 50 employees say they pri-oritize the use of wellness, preventative and health initiatives compared to three quarters (75%) of companies with 100-999 employees. This tells us there is room to improve in this area.At Guardian, we saw an increase in interest and usage for the Employee Assistance Program (EAPs) as well as employers moving to permanent work/flex schedules and offering paid leave. We are also seeing new mental health benefit start-ups emerge, like Spring Health, which offer carriers the opportunity to develop and evolve their offerings. Given the mental health needs revealed, brokers and carriers have increased their discussions about mental health benefits that are available for small business employers since mental health benefits are no longer limited to large corporations.The pandemic has changed the workplace as we know it. In order for small businesses to attract and retain talent, they will need to address employee expectations. What we are seeing is that it’s not only about the insurance benefits but rather what employers can do to support their workforce moving forward. Small business employers today must examine how the pandemic has changed employee expectations and focus on tangible and intangible benefits, whether it’s enhancing an employee benefits package with voluntary benefits or a hybrid, flexible work model. What’s encouraging to see is that with the right strategy and solutions, small businesses can build a win-ning business model that sets them up to succeed.

    Note: For more information, look up Guardian’s 10th Annual Workplace Benefits Study Inflection Point and Guardian’s 11th Annual Workplace Benefits Study. 

ZARIFA BROWN REYNOLDS is the head of Strategic Growth Markets and the Small Market Business Segment at Guardian Life. In this capacity, Zarifa manages a team of professionals focused on distribution and benefits technology strategy and execution as well as a national team of sales consultants. Zarifa focuses on business strategy, P&L management, business development, sales effectiveness, client retention, marketing, product development, recruiting and retaining talent as well as a broad range of general management responsibilities. Zarifa can be reached at