Quick look: As 2023 starts to wind down, the National Association of Professional Organizations (NAPEO) provides its Q3 Small Business Snapshot which highlights the current state of employment, and helps brokers and their clients plan as they head into Q4 and beyond.
According to NAPEO’s 3rd Quarter Small Business Snapshot, there’s a wave of strong employment growth among small businesses, despite the decline in hiring rates. These numbers could reflect the realignment of benefits to meet today’s demands as company leaders continue to work in collaboration with their broker partners.
After all, employee retention has continued to be a significant point of discussion throughout 2023. Small- and medium-sized businesses (SMBs), in particular, know the detrimental impact of losing even a fraction of their talent and have refocused their efforts to ensure their top performers are satisfied.
Consequently, an increasing number of SMB leaders have relied more heavily on their broker partners for creative strategies to stay ahead of the competition. In turn, brokers are calling upon their not-so-secret advantage of introducing a PEO partner into the mix.
An earlier NAPEO Small Business Snapshot reported SMBs significantly growing interest (81%) in using a PEO going forward. With the ebbs and flows of workforce trends and regulations, in addition to the changing needs of employees, bridging the connection to a PEO partner helps to streamline HR management and strengthen broker-client relationships.
SMB employment growth rate higher than large companies
The Q3 snapshot reflects an upward trajectory in employment, with SMBs (20-49 employees) showing the most significant growth. While larger companies often have the upper hand in terms of offering robust benefits, PEO partners have helped broker clients even the playing field.
A PEO like ExtensisHR offers Fortune 500-level benefits and cost-effective HR services to keep SMBs competitive. Meanwhile, there’s also the bonus of customization, which doesn’t always apply to larger companies or big-box PEOs. Aligning benefits with what employees need and want improves the overall sentiment and reputation about their respective company’s willingness to invest in their growth and well-being.
National unemployment rate remains at 3.6%
Also, per NAPEO’s research, the U.S. has reached the lowest level of unemployment in over 50 years, with 4.2 million jobs being added since January 2020. States with the largest increases include California, Minnesota, Missouri, and Indiana. Whereas, the states with the largest decreases include Maryland, Massachusetts, Arkansas, and Mississippi.
However, though a low unemployment rate can be reflective of a strong economy, often spurred by higher wages and better benefits, it doesn’t always equal high worker productivity rates. As employers contend with the trend of quiet quitting and voluntary resignations, working with a PEO partner to generate a personalized HR plan is important.
This includes programs and benefits which motivate and encourage worker participation. Though standard medical care and paid time-off remain a priority, providing mental health and wellness support, as well as opportunities for career growth are some of the modern demands which can’t be overlooked.
Small business wages are up 4% year-over-year
Increases in the national minimum wage and inflation are both partially responsible for the uptick in small business wages over the last 12 months. With the cost of living continuing to go up, employees expect more from companies in terms of compensation. And, as the last few years have illustrated, they are willing to take their time to secure a good employment fit.
A PEO partner supports brokers and their SMB clients by keeping them current on industry trends and compliance regulations to ensure they are properly aligned. Benefits and HR strategies which may have worked well previously may now require a closer evaluation to make necessary updates.
The value of a PEO partner for SMBs
Brokers have always been instrumental in their clients’ success, but recently, have extended their services to include a greater advisory role. By working with a PEO partner, brokers automatically extend their network and offerings to meet the unique needs each SMB has. A PEO allows business leaders to focus on their companies’ growth while delegating HR responsibilities to a team of experts who provide:
HR guidance and support
With changing employment regulations occurring every year, it’s beneficial to have a PEO partner who can adjust strategies to meet current requirements and workforce needs. This includes HR and payroll administration, talent management assistance, including recruiting and retention, and training and development among employees.
Next to salary, benefits are one of the top deciding factors among job seekers or employees today. Therefore, SMBs can’t afford a one-size-fits-all solution. Instead, they require a tailored benefits plan which incorporates what employees value most, aligns with budget restrictions and goals, and leaves room for flexibility as the industry changes.
Risk and compliance services
As a PEO partner, ExtensisHR helps to minimize risks and costs associated with employment-related issues through compliance management. Everything from workers’ compensation to wrongful termination claims can be threatening to a company. By safeguarding the business through risk and compliance services, SMBs receive the expert support they need to keep their companies in growth mode.
Data drives profitable decisions across all industries. ExtensisHR’s proprietary Work Anywhere® platformgives broker clients access to tools and personalized data about their workforce. The various data hubs, including mobile app, time & labor, performance management, and other key workforce tools, are designed to consolidate workflows, secure employee retention, and much more. Having easy accessibility to extensive HR capabilities keeps SMBs competitive.
As a PEO partner, ExtensisHR supports brokers and their clients in optimizing their HR processes and creating personalized solutions for meaningful results. And dedication to excellence is reflected by our reputation. We are in the top 1% of PEOs who have been assigned a Certified Professional Employer Organization (CPEO) by the IRS, as well as maintain ESAC accreditation and are credentialed by the Certification Institute (CI) for Workers’ Compensation and Risk Management.
Contact us today to learn how our people-first approach and suite of HR services can help you and your clients succeed.