A booming economy combined with high-employment is a double-edged sword, especially for small businesses looking to grow. Hiring when times are good means a shrinking selection and fierce competition for talent. But it’s not all bad.
Employees from big corporations are more likely to go to smaller companies. They cite the close-knit, familial feel of a smaller company as the reason for the preference, as well as the access to leaders and the opportunities to learn and see the impact of what they do.
Is pay always the deciding factor for employees, and if so, why? What benefits are important to employees? What incentives do they seek?
QuickBooks Payroll surveyed 1,000 employees from small businesses with 20 employees or fewer in more than 600 locations across the U.S. to find out.
Money belies a bigger struggle
Despite being at their current job for only 24 months or less, 47 percent of respondents from the QuickBooks Pay and Benefits Report say they’re underpaid, and 43 percent say they will most likely be switching to a new job in the next two years.
When asked to choose between pay and benefits:
- 55 percent would accept a job with no benefits.
- 61 percent says they would give up benefits for a base pay raise.
If it’s not obvious why employees would accept a job with no benefits or give up benefits for a pay raise, consider this: 40 percent of Americans struggle to pay for food, housing, and even utilities, while 60 percent confess to not having enough in savings to cover a $1,000 emergency.
One in 5 has no retirement savings at all. But it’s not just about not making enough money to make ends meet.
Wages: A seed that grows (very) slowly
It’s no secret that wage growth has not kept up with the cost of living, and 65 percent of respondents from the QuickBooks report agree. A closer look reveals wages, after inflation, really haven’t changed much over the last 44 years.
But it wasn’t always this way. For more than two decades after World War II, pay rose in tandem with productivity. The Economic Policy Institute (EPI) analyzed data from the Bureau of Labor Statistics (BLS) and found productivity rose 77 percent between 1973 and 2017, but hourly pay only rose 12 percent. Employees are producing more, but their pay has not enjoyed the same growth.
Bad practices don’t go unnoticed
Respondents in the QuickBooks survey also share instances when their employer has used bonuses, benefits, and the low cost of living to keep base pay low. But employees don’t just feel underpaid in the monetary sense.
When asked to define how they feel underpaid, they say their “expertise is not properly rewarded or recognized,” suggesting emotional defeat as well.
Questionable practices further come into light from 25 percent of those who say they’re eligible for overtime, but their employer refuses to pay them for it. This number could be higher, as 16 percent of those who say they’re not eligible for overtime to say they’re misclassified.
What’s valued? Raises, healthcare, and flexibility
There is some good news: 74 percent of the respondents in the QuickBooks survey say they got a raise in 2018 at a 9 percent average increase. When pitted against dental, vision, retirement savings, and wellness benefits, healthcare is the most desirable benefit among respondents. And of those who do get benefits, 1 in 3 says benefits have improved.
When asked about an incentive they’d want most, 76 percent want a flexible working schedule. But a flexible working schedule doesn’t always mean working from home.
In another survey from TSheets by QuickBooks, employees appreciate the ability to come in late or leave early not just as a great perk but as a catalyst for productivity.
Bet on your people, and they’ll back your business
In accounting, “assets” and “expenses” carry very different weights. The best assets not only don’t depreciate, but their value grows over time. An expense, on the other hand, is something with a short shelf-life, something that you spend money on. Think rent, utilities, and stationery.
In business, your employees affect every aspect of your operation, from service quality to product, culture, and even reputation.
Thirty-one percent of the respondents in the QuickBooks survey has been with the company for six years or more, suggesting retention is possible even for small businesses. And treating your employees as an investment may be the mindset you need to win in this war for talent.