Invest in technology and digitize benefits administration

Use of technology has been on the rise among small businesses with roughly 3 in 4 firms reporting that they had already digitized some aspect of human resource management in 2018.1 COVID-19 expanded the use of these platforms as employers managed remote workforces and relied on tools for collaboration and communication. Nearly 8 in 10 small firms said that the pandemic accelerated their use of technology. More than half (57%) of small businesses say that they’ve increased their spending on benefits administration technologies in the past four years.

Benefits administration platforms make enrollment smoother for employees and reduce the workload for human resources-related tasks, improving efficiency for both the employer and the employee. Eight in 10 small firms reported that they outsource at least one HR or benefits-related function.

Digital decision-making tools help employees better understand their benefits offerings and can help them in electing those options that are best for their unique needs. Having a more seamless, integrated approach with fewer platforms is also on the rise. Nearly 4 in 10 (38%) of small businesses describe themselves as fully integrated, compared to 3 in 10 (33%) in 2020. 


Outsource HR through PEOs

Becoming a member of a professional employer organization (PEO) can enable small firms to expand their benefits offerings while gaining additional support with benefits management, payroll, and other human resources administration. Membership in a PEO allows employers to offer a wider range of benefits and services at rates that are less than they would normally be able to access.

PEO use is on the rise: 11% of all businesses with 10-99 employers use a PEO, up from 7.85% in 2008.2 Notably, among all firms that offer a PEO, two-thirds are small businesses with 10 to 49 employees.3 Guardian’s report The PEO advantage: How PEO us is driving better business results and employee well-being, found that PEO use can help small firms compete with larger businesses through competitive benefits that are attractive to today’s workforce. Nearly 75% of employers that use a PEO report that they prioritize fostering a workplace culture that promotes well-being.4 These employers are also more likely to focus on supporting workforce mental health (69% of employers who use a PEO versus 48% of employers who don’t).5

Expand paid leave, telecommuting, and flexible work arrangements

Offerings around leave and flexibility are becoming imperatives for businesses today. COVID-19 created a rapid need for leave offerings as employees either experienced illness or needed time to care for a sick family member. Eighty percent of small employers report that COVID-19 raised leadership’s awareness around the key role of leave management.

The percentage of small businesses that offer telecommuting has more than doubled since 2018 and nearly 6 in 10 small businesses report that they plan to continue remote work in some form in the future. While the urgent need for remote work and flexibility that was experienced during the pandemic will wane, the demand for work arrangements that meet employees’ needs remains.

Flexible work arrangements and telecommuting also support employee well-being: 43%of employees who work for businesses with remote work rate themselves highly at taking care of their mental health versus 37%of employees that do not have remote work as an option.

Use benefits that prioritize employee well-being

Robust benefits offerings are becoming more and more important as small businesses seek to attract and retain talent. Seven in 10 small firms say that they are aiming to offer a better benefits package than their industry peers. To do this, small businesses are increasing the number of and variety of benefits they offer, particularly offering more voluntary benefits. Since 2017, small businesses show an increase of 13%in offering accident insurance and an increase 17%in offering critical illness insurance.

Additionally, small businesses are placing an emphasis on improving the benefits experience and supporting employee health and wellness. Both objectives saw a 13 percent increase in being rated highly important for small firms since 2018. To support their benefits priorities, most (71%) small firms are working with benefits brokers or agents.


The pandemic had hard-hitting effects on small businesses. The small firms that did make it through this period highlight the tools and strategies that can help businesses weather future crises and build a culture of well-being that attracts and retains a supported workforce.

Learn more about the state of small businesses today by exploring our report New era, new values: Workers seek empathy and flexibility in a post-pandemic work world.

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1 Unless otherwise mentioned, all figures are from Guardian’s 10th Annual Workplace Benefits Study.

2 The PEO Industry Footprint, NAPEO 2021

3 PEO Clients: An analysis. NAPEO 2022

4 The PEO Advantage: How PEO use is driving better business results and employee well-being, Guardian Life, 2022

5 Ibid.

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