Whether you recognize the performance of a single employee or change your entire ownership structure, you have a number of options to consider to empower the people who drive your business.
Competitive pay can be reduced to a number on a scale, but it’s trickier to measure what makes employees feel valued and take true pride of ownership in their work.
Yet it’s crucial for businesses to improve job satisfaction and retention to remain competitive as an employer. And making employees feel valued is the No. 2 way for small to midsize businesses to help retain employees (only behind increasing salaries).
Here’s a spectrum of options to help your employees feel more valued—from more informal and universal to more structured and specialized.
25% of employees say finding a new job with better benefits (other than health care) is a significant or major concern for them right now.
The No. 2 way to help retain employees: making them feel valued.
1. Provide genuine, specific recognition of good work.
Free food and other social perks can help forge stronger teams. But focused, individual feedback is important to show employees their work is valuable to the business—a substantive way to encourage them to stay.
A survey by Workhuman and Gallup
4x likelier to be engaged.
5x likelier to see a path for career growth within their organization.
2. Allow for greater job autonomy.
On top of flexibility and hybrid work, greater job autonomy appears to be here to stay post-pandemic. Employees untethered from the clock and office also may assume more responsibility and leadership in their daily work—especially in flatter organizations.
Businesses that nurture job autonomy often have these characteristics:
- They’re meticulous in hiring to find the right employees and follow through with disciplined onboarding to set expectations.
- Autonomy is managed within loose guidelines, with an emphasis on open communication to prevent it from creating chaos.
- Accountability and high expectations are part of the work culture.
- Results matter more than process.
- Employee satisfaction is a core company value.
3. Customize employee benefits.
As a growing business, you may start by offering a core set of traditional benefits and gradually offer more options. Group benefits (dental, vision, and disability insurance, to name a few) can be tailored to meet the unique needs of employees and the size and budget of your business.
And if your business qualifies for tax credits, starting up a simple defined contribution retirement plan, like a 401(k), may cost you essentially nothing for the first three years.
“You didn’t start your business trying to do everything at once, and the same applies to benefits,” says Patti Bell, assistant vice president of advanced solutions for Principal®. “It’s OK to start small. Find a financial professional who can help you choose the benefits you can afford and set goals for what you want to do in the future.”
Learn more: 5 tips for offering benefit packages
4. Use profit-sharing plans and other incentive pay.
The classic “skin in the game” of a profit-sharing plan helps directly link employees to business growth and see how their jobs drive toward specific goals.
“Not only is it a very generous thing for the company to give us, but when new people come in it’s one of the things I try to point out,” says Eric Ruppel, assistant warehouse manager for Bob’s Red Mill in Oregon, a Principal business client that provides monthly profit-sharing. “It’s a huge motivator. It’s tangible; it changes you, and you realize that you want to stay.”
5. Consider nonqualified deferred compensation and other key employee benefits.
The more you rely on a subset of key employees who are critical to the business’s success, the more you may want to consider how you motivate them to stay engaged and feel valued for their work. Savings plans and other benefits tailored for key employees can help cultivate loyalty and a sense of ownership among core business talent and leadership.
Learn more: Key employee retention and retirement
6. Set up an ESOP (employee stock ownership plan).
One of the most direct ways to help employees own their work is to sell them the business. Bob’s Red Mill, on top of its profit-sharing, spent a decade transitioning to an ESOP and in 2020 became 100% employee owned. A committee of more than 40 employees, representing all shifts and departments, helps oversee the plan.
“Employees are a lot more dedicated not only to their career aspirations but to the company as a whole,” says Trey Winthrop, CEO of Bob’s Red Mill. “You’d never wash a rental car, but you’d wash your own car. We own our jobs—we don’t rent them.”
An ESOP also works hand in hand with the company’s profit-sharing—helping build both short-term and long-term financial security for employees.
“Hopefully we’re able to remove some of the financial stress for employees so they can concentrate on being the best that they can be and bring their whole selves to work,” Winthrop says.
What's next?
How do your benefits compare with other businesses? The Principal Benefit Design Tool can help you take stock of what same-size industries and others in your region are offering.
