5 ways small to mid-sized businesses can attract and retain employees
5 ways small to mid-sized businesses can attract and retain employees According to the U.S. Chamber of Commerce, companies are “facing unprecedented challenges trying to find enough workers to fill open jobs.” In today’s competitive job market, data from our recent survey has found that small to mid-sized businesses can—and should—consider expanding their employee benefits packages to attract and retain talent. In our 2023 Retirement Readiness Annual Report, we surveyed 1,000 full-time U.S. workers to learn more about how retirement readiness and financial well-being have evolved over the last year. And what employees told us about financial benefits could help small businesses build loyal workforces. One of the report’s findings revealed that retirement security appears to decrease by company size. Only 8% of small business employees expect to have a million or more dollars saved for retirement, compared to 17% of midsize and 16% of large business employees. With that in mind, here are five employee financial benefits that smaller companies can implement to help support and retain their staff. 1. Offer a 401(k) program with matching contributions Out of all financial benefits, a 401(k) program is the place to start if you are aiming to attract and retain employees. According to the Retirement Readiness Annual Report, a 401(k) plan is the most desired benefit among employees, yet only 59% of employers currently offer access to a 401(k). A few other stats from the report jumped out at us, showing the demand for these benefits: For employees with access to a 401(k), 83% reported they contribute to that 401(k). 68% of workers receive a match from their employer—a 23% increase from the year before. Of the employees who receive an employer match, 86% contribute enough to get the full match. 92% of employees without a 401(k) match wish their employer matched, a 16% increase in one year. When you offer a 401(k) with employer-matching contributions, your company not only shows that you care about your employees’ future but you also provide a significant financial incentive for employees to stick around. It’s a win-win situation: Employees save for retirement, and you benefit from increased loyalty and reduced turnover. 2. Implement a student loan/401(k) matching program Offering a 401(k) match on student loans can help employees save for retirement while they pay off their college debt. Student loan debt is a major concern for many employees, especially younger ones. And student loans only become more stressful when one is trying to balance saving for retirement at the same time, as our report shows: 40% of workers currently have student loan debt that they’re responsible for paying down. 64% of borrowers said their student debt has impacted their ability to save for retirement. Almost half (49%) of employees believe that employers should play a role in helping them pay off their student loan debt — this was felt most strongly among Gen Z (71% of whom agreed). Through Betterment at Work’s industry-first solution, employers can provide 401(k) matches on student loan payments. This innovative benefit shows that you understand the financial challenges your employees face and are willing to help them manage both short-term and long-term financial goals. 3. Provide an employer-sponsored emergency fund Financial emergencies can strike at any time, leaving employees stressed and distracted. An employer-sponsored emergency fund can offer a safety net that can reduce financial anxiety. According to our report: 49% of employees said an employer-sponsored emergency fund would reduce their financial anxiety. Just over half (52%) of employees reported currently having an emergency fund — a seven percentage point drop from 2022 (59%), and a 14 percentage point drop from 2021 (66%). 51% of small business employees used their emergency funds, dropping to 43% for workers at midsize and large businesses. Of all generations, millennials (53%) tapped their emergency funds the most — compared to 49% of Gen X, 46% of Gen Z, and just 27% of boomers. One of the most striking statistics in our report is that only 8% of employers offer an employer-sponsored emergency fund, yet it is the third most valued benefit for employees — making it the largest gap of any benefit. In a world where nearly four out of five workers (78%) reported that their finances cause them anxiety, offering an emergency fund shows you care about their well-being. This may lead to higher job satisfaction and increased loyalty, as employees feel supported and valued. 4. Offer access to a live financial advisor Navigating the complexities of personal finance can be confusing. By providing access to a live financial advisor as a financial benefit, you can make a significant difference in your employees’ financial lives. Offering this benefit helps employees make informed financial decisions, including planning for retirement, debt management, estate planning, and more. Our report found that: Only 17% of employees report having access to a financial advisor through their employer. For those who don’t have access to an advisor through their employer, 50% reported that they would want that as a financial wellness benefit and 59% would want to meet with them two to three times a year. Small business employees meet with advisors most at 75% of employees —compared to just 42% of large business employees. Thomas Moore, Sr. Director of Betterment for Advisors, sums it up well, stating that access to a financial advisor “presents a huge opportunity for employers to differentiate by providing more holistic wellness programs to their employees — benefits packages should start, but not end, with the 401(k).” 5. Provide access to a 529 college savings plan Education expenses can be a significant financial burden. And for some parents, it’s a double burden if they are paying off their own student loans while attempting to save for their children’s education. By offering access to a 529 college savings plan, you can help employees save for their children's education and alleviate some of that stress. Our report highlights that: Over a quarter (26%) of employees are currently saving money for education expenses, but less than half (45%) are currently using a 529 education savings plan due to inaction and lack of awareness. Only 5% of employers currently offer 529 plans, which is surprising since, according to research, 70% of parents are concerned about having enough funds to pay for college. Offering a 529 plan can help attract employees who are thinking about their children’s future and want to work for a company that supports their goals. Offer financial benefits your employees want Betterment at Work makes it easy for small and mid-market businesses to provide a scalable 401(k) plan with an employer match. Plus, our platform empowers you to offer additional benefits like 529 plans, student loan payment 401(k) matches, and 1:1 advice from our financial advisors. Set up a call today to learn more.
