How One Decision Can Solve 3 Problems for Your Small Business

Small business owners and their HR staffs are all too familiar with the arduous challenges of balancing business and employee needs. Rising costs, particularly related to health care/medical insurance, are central to business concerns. However, maintaining balance also requires effectively managing, engaging and leveraging human capital assets, which often represent a company’s largest expense or its profit nucleus.

The 2011 Aflac WorkForces Report, a study conducted by Harris Interactive, reveals that the top three issues for small businesses (those with three to 99 employees) are increasing employee productivity (51 percent), controlling health/medical insurance costs (47 percent) and retaining employees (43 percent). While there is no single cure-all for these three priorities, small businesses are learning more about how voluntary insurance plans can provide a significant, three-pronged impact.

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1. Controlling Health/Medical Insurance Costs

With health care costs rising, employers likely will continue to struggle to find reduction strategies while providing the coverage their employees need. This reality has heightened significance for small businesses, which, due to their size, could be significantly impacted by even a small misstep in managing health care costs.

As a result, many small business owners and their employees are looking for more flexible benefits solutions to address rising health care expenses. More employers are realizing that making voluntary insurance policies available to employees has no direct cost and may reduce corporate taxes by cutting FICA tax contributions. Adding voluntary plans to a company’s benefits offerings helps to satisfy a top benefit challenge for more than six out of 10 small businesses—offering robust benefits while staying within budget/cost constraints.

2. Curbing Productivity Loss

Small business operations increasingly require more consistent and higher productivity from smaller staffs. Frequently, any loss in productivity can substantially impact a small business’s ability to compete.

Unfortunately, personal distractions, such as financial and health struggles, often dictate workers’ productivity. In fact, 47 percent of small business employees said they are currently dealing with a health or financial problem that impacts their ability to get their job done. Further, roughly 58 percent of small business owners believe their company has lost between 5 and 20 percent work productivity because employees are concerned about personal issues they are experiencing. Another 32 percent of owners say they’ve lost 20 percent work productivity or more.

A very real connection exists between health and finances—a workers’ financial stability can be threatened by an unexpected illness or accident, and conversely, the ability to obtain adequate medical care can be influenced by finances.

Voluntary insurance plans, including policies for accident, cancer, critical illness, dental, life, short-term disability and vision, help employees cope with out-of-pocket costs associated with serious accidents or illnesses—expenses major medical insurance is not designed to cover. In these cases, policyholders receive cash benefits that can be used to help with daily living expenses, such as rent, gas and groceries, as well as unreimbursed medical expenses.

3. Controlling Turnover Costs and Boosting Retention

According to the U.S. Department of Labor, it costs a company one-third of a person’s annual salary to replace him or her. These expenses can derail even the best small business management. As small businesses strive to profitably help drive the U.S. economy and move beyond the recession, having the best available talent is of paramount importance.

Benefits packages can directly impact employee retention. The Aflac study found that 63 percent of small business owners think their overall benefits package is very influential in employee satisfaction and loyalty, and another 18 percent believe it is very influential in an employee’s decision to leave the company.

Voluntary plans not only enhance a company’s benefits package and competitive status versus larger organizations’ benefits programs, but they can also demonstrate to employees that they matter. With no direct cost to the company, adding voluntary benefits as an employee option may ultimately help avoid the high cost of turnover.

Resolve Three Problems With One Choice
There remains a great need to help employees improve their health care coverage and prepare for life’s unexpected occurrences. Previously considered a nice-to-have benefit, voluntary insurance may now be considered a cost-effective supplement to core benefits and an essential solution for small businesses.

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Thomas Giddens Thomas R. Giddens is Senior Vice President, Director of Sales, at Aflac. He began his career with the company in 1983 as assistant vice president in the marketing department before leaving headquarters for the field, where he excelled for more than 20 years. Prior, Tom was a regional sales coordinator in Atlanta and consistently exceeded goals, earning the number one spot for regional sales coordinator four times and a promotion to state sales coordinator.

6 Reactions
  1. Insurance is a big deal to many employees right now and I know it kept my brother at his last job much longer than he would have preferred.

  2. Hi Thomas,

    I noticed you end this piece with the recommendation of voluntary insurance. Do you have any suggestions if your employer doesn’t offer this option?


  3. Offering health insurance to one of my managers was the key to getting her to stay. People can move from job to job for more money, but it’s much harder to do with your health insurance.

  4. I know health insurance can be a determining factor. I used to have to work multiple jobs just to have health benefits. It’s really crucial.


  5. Lily @ Entrust Cash Advance

    #2 is important – there are other ways to curb productivity loss as well including limiting your employees’ access to distractions like social media sites (when used for purposes unrelated to business) and cell phones, etc.