We have all heard the stories: The onsite haircuts at Google, nap rooms at Zappos, in-office bikes and free studio time at Peloton, and even a “personal growth stipend” at OpenDoor. While these perks may sound extreme, they are buzz-worthy add-ons that round out a comprehensive benefits package and make signing on at these bigger companies just that bit more exciting. But can a small business owner ever compete?
The answer here is yes, although small business owners will typically need a little help!
Big companies diffuse the risk:
The reason that these large companies can offer such extensive benefits is largely because of their size. A company that has 5,000 employees is a more desirable “catch” for a pet insurance peddler because while you’ll have a big base buying the benefit, the chances that everyone’s doggo is going to get sick at once are fairly slim. However, if a small business with just 50 employee signs on, and just five opt for the benefit and even one pup has a problem, that pet insurer is going to take a financial hit. In short, that larger customer base that the big business brings to the table diffuses the risk for the benefit purveyor and is thus a more attractive client than a small company.
Big companies can honor my diverse interests:
In the example above, we discussed pet insurance as a “niche” benefit that big businesses can and do offer. However, if you own a 10-person operation and only one person has a four-legged friend, it’s not going to be an appealing perk to add to your roster because it doesn’t suit the needs of enough folks and it therefore isn’t a good benefit to choose because you’ll have low usage and it isn’t motivating from an employee recruitment and retention perspective. Big businesses, by the numbers, are likely to have a higher number of dog owners, making it a good offering because it is a benefit that can be used. Further, because you have a higher number of employees, you can expect a more diverse array of interests that you can represent, which is why you’ll often times see the big businesses offer other niche benefits, such as discounted concert tickets, gym memberships, and even college tuition reimbursement.
Big companies have a dedicated benefits person:
When you own a small business, chances are that you find yourself wearing a lot of hats, often to varying degrees of success! While you might dedicate a few hours or even days reviewing the benefits offerings available to your employees, big employers have a whole staff member whose only job is to sniff out the best benefits at the lowest price. They also have more time for negotiations and move within networks where they can rely on the advice, expertise, and news of good deals from their peers to inform their own purchasing process, putting big businesses at a distinct advantage over their smaller peers. Then, on the receiving end, they are super skilled at advertising said benefits to staff, handle all the enrollments, and even keep data on usage to better inform the following year’s benefits bundle.
Big companies have big purchasing power:
Probably the biggest reason that large companies can offer big benefits is because they are able to negotiate more effectively. Now, it is not in the words that they say, but rather because they represent a big catch for any company that is offering benefits. A broker at a health insurance company would score big if he snagged a client with 1,000 employees, versus having to meet with, negotiate, draw up contracts, and on-board 20 different companies totaling 1,000 employees. Knowing this, larger companies can essentially steer the conversation in terms of price because they represent a huge opportunity for revenue for the broker and their business and, knowing this, they can more easily walk away and find a company that will give them the benefits they want at the price they request.
So how does a PEO factor into all of this? Well, essentially a PEO can turn your small business into a large business! This is because when you partner with a PEO, you are joining all our collective clients, to create one large cohort of customers. This shared purchasing power allows for us to negotiate for the best benefits at the best price and brokers want to work with us because we are now a large client who represents that big account that they simply don’t want to lose! The brokers also want to work with us because we have that diverse pool of clients including a mix of young and old, blue collar and pencil pushers, that not only have a diverse array of interests and expectations about their benefits, but much like a big company, can also share the risk when it comes to said benefits. Also, when partnering with a PEO you gain access to our benefits experts! Now you don’t need a dedicated staff member because our tireless crew will pull your benefits plan together, enroll your employees, and then stick around to answer any and all questions and even keep a close eye on your benefits usage so that we can help guide your choices in the coming years.
While you might not always be able to compete with the real movers-and-shakers in the benefits industry, being able to work with a PEO will help you get access to a solid benefits package at a great price as well as a number of alluring perks. This will put you on par with most of the bigger companies, and certainly help you edge out the competition in the form of similarly sized and resourced companies, when it comes to using your benefits package to appeal to both new and old employees.