Job seekers have a world of remote-friendly opportunities at their disposal. Inflation and interest rates are on the rise, while employees continue to expect more competitive pay and benefits. And in today’s society, business owners also are expected to improve diversity and inclusion practices. 

Despite all this, businesses report incredible stability overall. But business owners and managers are feeling the pressure: 70% of owners and managing partners are more stressed now than this time last year, according to the 2022 Principal Financial Well-Being Index℠, a March 2022 survey of business leaders and employees.

What’s a possible solution? Mark West, national vice president for business solutions at Principal®, says to stay nimble. “Try to anticipate business trends, create a plan, build strong peer and customer networks, and keep adjusting.”

Timely ways to tackle three big shifts:

1. Tweak your attraction and retention strategies.

More than half of businesses report job openings they can’t fill. And based on Principal Financial Well-Being Index data, more than one-third of employers have higher job vacancy rates and spend more time on recruitment and retention than one year ago.

“Employers wonder how they can compete for talent: Is it pay, benefits, flexibility?” West says. “It’s really all those things, forming a three-legged stool that falls if one is missing.”

According to the same research:

  • Pay: Forty percent of businesses are increasing wages across the board, 36% are adding or increasing employee bonuses, and 35% are offering sign-on bonuses.
  • Benefits: Thirty-seven percent of businesses are increasing the quality of their benefits, and 32% are adding new ones. Disability insurance, vacation time, and mental health and well-being programs are the top choices to improve employee satisfaction and well-being.
  • Flexibility: Forty-nine percent of businesses are offering flexible work schedules or increased time off, and 34% are expanding remote opportunities so employees can relocate.

2. Keep diversity, equity, and inclusion (DEI) policies up to date.

Don’t forget that DEI also is an increasingly key strategy for attraction and retention. The reckoning on racial injustice in 2020 inspired businesses to push for bolder, more deliberate DEI policies. Then 2021’s “Great Resignation” reinforced how central those policies are to hiring and retention. Seventy-eight percent of workers expect their employer to prioritize DEI.  

“While it’s always the right thing to do to have equity in our organizations, it’s also the profitable thing to do,” says Miriam Lewis, chief inclusion officer for Principal. Ethnically and culturally diverse businesses are as much as 36% more profitable than the least diverse companies. 

Three ways to make progress in DEI:

  • Adjust recruiting. Consider how your recruiting and screening process may limit the diversity of candidates. Are you largely relying on referrals? Recruiting locally for jobs that could be remote? Consider expanding your horizons or even screening candidates with artificial intelligence to reduce bias.
  • Upskill employees. Providing opportunities to sponsor or upskill existing employees across education levels and demographics is a great way to increase diversity throughout all levels of your organization. Also consider laying out expected career tracks by position--rather than individual--to minimize unconscious bias in growth and development.
  • Support good mental health. Mental health benefits tops employees’ list of things they want their employers to add in the next year, according to a May 2022 survey by Principal of 128 full-time employees across industries. And this is only more important when considered through the lens of inclusion. The unfortunate truth is that diverse employees are more likely to face microaggressions and discrimination in and out of work. Mental health resources such as employee assistance programs (EAPs) can help provide support.

Learn more: Why Diversity, Equity, and Inclusion Are Good for Business

3. Lean into positive workplace transformation led by women, millennial, and BIPOC business owners.

Connecting with a diverse set of business owners and expanding your point of view may help you better understand your team and your options.

The 2022 Principal Business Owner Insights survey of more than 1,000 small and midsize businesses and the Principal Financial Well-Being Index show that an owner’s generation, race, and gender often reflect their motivations for providing certain employee benefits. Do these insights inspire you to see ways to show greater empathy toward employees through benefits?

  • Generation: Millennials tend to offer more employee benefits overall, go out of their way to accommodate flexible work, and show greater concern for mental health.
  • Race and ethnicity: BIPOC (Black, Indigenous, and people of color) owners rank non-medical benefits, supplemental key employee benefits, and survivor income significantly higher than do white business owners.
  • Gender: Women business owners are likelier to say that adding certain benefits, such as paid family leave, is their ethical responsibility.

What’s next?

Try our Principal Benefit Design Tool to see how your own employee benefits compare to businesses of similar size, industry, and region.  

 

The subject matter in this article is intended to be educational in nature and is not intended to be taken as a recommendation. ​

Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Company®. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., member SIPC and/or independent broker/dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392.​ ©2022 Principal Financial Services, Inc. 

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