According to the Principal Financial Well-Being IndexSmall businesses are expected to continue growing until next year. Employers have also become increasingly optimistic over the past six years. Almost 30% saw growth and financial improvement over the previous year.
Main Street shops in 2020
Small businesses expect to stay in growth mode next year as they invest to stay competitive in a tight US job market. According to the index, six out of ten companies expect growth with higher financial values in 2020, despite recognizing challenges.
However, these challenges do not seem to deter the owners from operating across the country. And that's exactly why Amy Friedrich, President of U.S. Insurance Solutions at Principal, in the press release.
Friedrich says: "While speculation about an economic retreat on Wall Street continues, companies on Main Street expect the momentum to continue as long as they remain competitive in the competition for talent."
However, there are still some issues that entrepreneurs have to deal with.
What keeps employers awake all night
Despite the optimism, problems remain that annoy the companies. Healthcare costs and the challenge of increasing revenue top 76% of respondents. Not surprisingly, the rising cost of Health insurance for employees is one of the biggest financial burdens for small and medium-sized business owners. Given the intense competition in today's market, increasing revenue remains a problem.
Third is the cost of offering employee benefits (72%). With more jobs than professionals in the US economy, it can be challenging to come up with a competitive package of services. In particular, 67% of employers say they are making more efforts to keep their workforce.
However, depending on the generation of the business owner's views, these vary. Millennials are more concerned with recruiting / retaining staff, while baby boomers are more concerned about the cost of health care / benefits. Boomers believe that their “family culture” differentiates them from others, while millennials believe that benefits differentiate them from larger companies.
Millennials offer more benefits for a higher return on investment (ROI) for their employees. Concentration on healthier employees (61%), improvement of employee performance (47%) and investment in employee satisfaction / morale (42%).
Thirty percent of millennial owners say they are likely to increase their budget to pay for employee benefits and talent retention benefits, compared to only 14 percent of baby boomers.
While baby boomers offer less benefits for cost reasons, they have more altruistic intentions. For example, increasing employee satisfaction / morale (68%) and the company's ethical responsibility (53%).
How they handle it
Employers react aggressively to the high costs of health care and social benefits. Execute the entire spectrum with new services, carry out re-training or further education and rely on long-term employees with experience. This includes technology, which is increasingly becoming the most important topic.
More than three quarters of employers in the survey say technology is changing the skills they need from their employees. While 65% of SME owners plan to re-train or train employees as a first measure to cope with technological change, millennials state that they are more likely to replace employees than baby boomers. Over a third or 34% of millennials say they trade employees for boomers (8%) or cut employees (30% of millennials for 7% of boomers).
When it comes to balancing performance costs, 45% of companies are looking to cut their budgets. While 43% have retired, others have opted to reduce premiums (31%) and stop or slow investment in the company (31%).
As healthcare becomes more expensive, companies are trying to improve their perks as an alternative to caring for their employees. In fact, companies offer employees at least three benefits to replace health care / benefits. Among these 50% offer flexible schedules, while 42% have given up the dress code in the workplace. A third (34%) offer free food to persuade employees to stay in the company.
Small companies value long-term factors such as a family atmosphere compared to companies. Such as, retention This is a major pain point, as poor work-life balance plays an important role in employees' decision to leave the company.
Those employers who continue to insure their employees do so because they feel that their employees are part of their extended family. In fact, 68% of health insurers do this because they feel responsible to their employees. While a marginal 32% do so because they consider it part of the business.
With regard to responsibility towards employees, three important points emerged from the survey. Employers see important factors in the provision of health insurance (92%), the support of employees with pension provision (79%) and the provision of a pension plan (77%).
The Principal Financial Well-being Index was conducted from August 13 to 21, 2019. The participants came from companies with 2 to 1,000 employees in the United States. The majority, or 72%, were small businesses with 2 to 10 employees, followed by 26% with 11-100 employees.
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