Study: Small businesses see benefits as key to attract, retain quality talent

According to a recent study by Lincoln Financial, small business owners believe the right employee benefits, retirement plan services, and well-being solutions can help attract and retain quality talent, which is one of their biggest challenges, together with managing the cost of employee benefits.

Lincoln Financial’s research of more than 550 U.S. small business owners' employees’ experiences with workplace selection and communication needs reveals that they want to invest more in workplace solutions for their employees' health and finances.

The study pointed out several areas where small business owners wanted to offer additional benefits to employees. These include helping employees cover medical expenses (46%), helping them become more financially secure (55%), and helping them to save for retirement (55%).

Reasons why these areas are priorities

The survey found that attracting and retaining talent are among the biggest challenges faced by small business owners, explained Jimmy Reid, EVP and president of workplace solutions, Lincoln Financial.

Most small business employees surveyed said benefits for their health, finances, and well-being are "must-haves" for an employer to provide, said Reid. Small business owners recognize that if they're not meeting employees’ expectations when it comes to benefits, they're potentially missing out on a significant portion of the talent pool.

“A well-rounded, comprehensive benefits package can help small businesses attract and retain top talent,” Reid said. “Small businesses are at risk of losing crucial information and institutional knowledge if a key employee decides to leave, often more so than companies with larger employee populations. Benefits can be a significant retention factor for those employees to help them feel confident about their financial future, regardless of what comes next.”

Promoting the well-being of employees is also top-of-mind for small business owners, Reid added. Holistic benefits offerings – like retirement, wellness solutions, health and supplemental health – help employees manage their stress when it comes to finances and overall well-being, which, in turn, can help small business owners mitigate employee absences. “Healthier, less stressed employees are more engaged and productive, and ultimately, positively impact an employer’s bottom line,” he added.

Challenges in offering benefits

Although many small business owners consider these workplace benefits top priorities, quite a few of them are not investing in them. In explaining some of the reasons for this disconnect, Reid said that according to Lincoln Financial’s research, small business owners face numerous challenges in 2025. These include maintaining profitability, cost of health insurance and non-health employee benefits, economic uncertainty, cost of labor, and attracting and retaining quality talent.

“How each small business owner approaches these overlapping challenges depends on their unique needs and priorities, but the common denominator is a recognized need for more education in the areas where they can’t spend the time they want,” Reid said. “For many, that starts with benefits.”

For small businesses, Reid explained, there is a gap between having an interest in, and actually offering benefits, which, in some cases, can be attributed to the business owners’ limited understanding of available offerings. According to the study, only 63% of small business owners said they are very familiar with options related to covering medical expenses — and familiarity is even lower for other types of benefits. “Helping employees be more financially secure tied as the top area in which small business owners would like to invest more money, but less than half (45%) say they’re very familiar with the offerings available to help their employees be more financially secure,” Reid said.

Selling workplace benefits

So, what are some of the steps that financial professionals can take to sell workplace benefits to their small-business owner clients and prospects? “Through our survey, we learned small businesses are looking for support and education,” Reid said. “A financial professional working with a comprehensive benefits carrier can serve as a supportive partner to help deliver a robust, well-rounded benefits package and partner with small businesses to alleviate administrative burdens. These partnerships allow owners to focus on what matters most — their employees and their business.”

In addition, carriers that can educate employers and employees about the scope of available benefits – what advantages certain benefits provide, what options to choose, or even that the benefit is available to them  – will be the best suited for small businesses. “Therefore,” Reid said, “financial professionals should focus on providing foundational information for business owners, along with potential approaches to educate, inform, and engage their employees.”

According to Reid, the survey found that small business owners are often highly attracted to bundled, consolidated benefits packages and individual benefits that serve more than one purpose. While only 20% of small businesses currently bundle all their benefits under a single carrier, and about 18% bundle non-retirement and non-health benefits, half of the remaining small businesses see bundling as very appealing. “There’s a clear opportunity for financial professionals to help employers successfully find the right bundled benefits for their unique situation,” he said.

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Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at amseka@INNfeedback.com.