Small Businesses to Compensate Employees More in 2021

The increased expenditures will include health benefits, paid time off, flexible scheduling and family leave.

March 03, 2021

Small Business Human Resources Department Compensation

WASHINGTON—More than half of small businesses (56%) plan to spend more compensating their employees in 2021 than last year, according to a new report from Clutch.

Clutch surveyed small business owners and managers in 2019 and 2021 to learn about what compensation and benefits they offer employees. The data reveals increased demand for health benefits, paid time off and flexible work schedules.

Experts say that having benefits and a compensation plan is essential for any business. “I think it's just standardized practice,” said Matthew Burr, founder and president of Burr Consulting, in a press release. “Vacation, PTO … all that stuff is expected in our society now. You're not going to be able to recruit and retain people if [you don't offer basic benefits]. It's not going to work out in your favor.”

To decide which specific benefits to provide and how to offer them, companies evaluate their own workforce and business needs. Forty-five percent of small businesses provide their employees health benefits, which are the most frequently offered compensation.

“Health benefits have never been more critical than during the midst of a pandemic,” said Courtney Quigley, a business reputation consultant for Rize Reviews. “This pandemic brought fears and anxiety that changed the way people work, eat, buy and live.”

Providing health benefits is a compensation strategy that can help employees feel secure financially and personally, which will remain a priority even after COVID-19. The two benefits that companies are most likely to offer for the first time are family leave (14%) and flexible work schedules (13%).

The COVID-19 pandemic has challenged employees' work-life balance and made it difficult to avoid burnout. “[Companies] need to ensure that people are disconnecting from technology and not burning out by working 24 hours a day," said Burr.

With family leave, new parents know that they can keep their job while still taking time to care for a newborn. A flexible work schedule allows an employee with childcare responsibilities to schedule their remote work around virtual school hours.

If you're wanting more insight on compensation post-pandemic, attend the NACS HR Forum, taking place live-virtually from March 9-11. Hear from NACS analyst Jayme Gough about wages, turnover and the state of labor and HR in convenience. Virtual hiring practices, building a pipeline of leaders and diversity conversations are a taste of other topics being delivered by key HR leaders from Sheetz, Maverik, Pilot and Kum & Go.

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