While 85% of small and midsize businesses (SMB) continue to show growth or stability, more than 75% are making changes due to continued inflation and potential recession concerns. SMB employees are also concerned about inflation, in addition to their personal financial situation, and lack of pay raises.
The Principal SMB Sentiment
The latest findings from the February 2024 survey.
Data shows
The most important business issue is maintaining cash flow (96%).
78% of SMBs are concerned about inflation and a recession, and more than three-fourths are making changes. The most common change is cutting and watching expenses (23%).
| Inflation and potential recession concerns |
|---|
| Business has made/making changes (77%) |
| Business growth has been impacted (67%) |
| Business increasing capital on hand (36%) |
Data shows
36% of SMBs want to add mental health benefits within the year.
A flexible work arrangement is the No. 1 mental health benefit employees want.
SMBs and employees agree:
- Offering flexibility is more important than ever (84%).
- A flexible work schedule could help improve mental health (82%).
- Flexibility is important to employee loyalty (81%).
Boomers are less likely to agree with the importance of flexibility.
| Reasons for worsening employee mental health | ||
|---|---|---|
| Ranking | SMB top benefits | Employee top benefits |
| 1 | Inflation/rising cost of living (79%) | Inflation/rising cost of living (88%) |
| 2 | Financial situation concerns (69%) | Personal financial situation concerns (85%) |
| 3 | Uncertainty/fear of the unknown (64%) Rising interest rates |
Lack of pay raises/bonuses (81%) |
| 4 | Anxiety/stress/depression (63%) | Anxiety/stress/depression (80%) Excessive workload |
| 5 | Increasing consumer debt levels (55%) | Not having the right/enough benefits (76%) |
| 6 | Not having the right/enough benefits (53%) | Increasing consumer debt levels (75%) |
| 7 | Personal relationship problems (51%) | Employees not taking time off (74%) |
| 8 | Excessive workload (50%) | Uncertainty/fear of the unknown (72%) |
Data shows
SMBs are significantly less concerned than employees about recruiting and retention issues:
- Attracting qualified employees
SMBs 39%
Employees 82% - Employees leaving/taking other jobs
SMBs 30%
Employees 60% - Upskilling employees
SMBs 34%
Employees 59%
| Reasons for hiring challenges | |||
|---|---|---|---|
| Employees say | Gen Z / Millennials | Gen X | Boomers |
| SMBs can’t afford to pay as much | 78% | 86% | 86% |
| SMBs can’t afford to offer the benefit variety | 79% | 90% | 92% |
| Hard to find employees with the right skill sets | 80% | 76% | 86% |
| Difficult reaching the right candidates | 67% | 65% | 66% |
| Potential employees are looking for remote work | 76% | 67% | 61% |
| Employees are hesitant to leave due to fear of an economic downturn | 70% | 72% | 48% |
Data shows
In the next 12 months:
- 79% of SMBs want to add benefits.
- 75% of employees want their employer to add benefits.
There is a gap in awareness when SMBs add benefits.
- 25% of SMBs added benefits in 2023.
- 8% of employees were aware their employer added benefits in 2023.
| Top benefits to add | ||
|---|---|---|
| Ranking | SMB top benefits | Employee top benefits |
| 1 | Mental health benefits (36%) | Retirement benefits (31%) |
| 2 | Paid family/medical leave (PFML) (27%) | Health insurance (29%) Mental health benefits |
| 3 | Telehealth services (22%) Health insurance Dental insurance |
Paid family/medical leave (PFML) (28%) |
| 4 | Retirement benefits (21%) Financial wellness programs |
Dental insurance (25%) |
| 5 | Employee assistance programs (18%) | Employee assistance program (EAP) (19%) Life insurance |
| 6 | Life insurance (17%) | Short-term disability (16%) |
| 7 | Childcare assistance (15%) | Long-term disability (15%) |
Putting insights to work
Inflation and recession
88% of employees say inflation has a negative impact on their mental health. 85% say concern about their personal financial situation does the same.
Financial wellness guide
Mental health
63% of employees say employers should be concerned about their employees’ mental health.
Mental health guide
Recruiting and retention
45% of employees are actively looking for a new job. This response is higher with Gen Z and Millennials.
Employee retention guideOnline tools and resources to help you and your business
Principal® Benefit Design Tool
See how your benefits compare to what other organizations of your size, industry, and region offer their employees.
SMB Sentiment
Download the infographic to see key SMB and employee insights.
SMB resources
Access resources, tips, and insights to help your small or midsize business prepare for the year ahead.
