More than half of small businesses (56%) plan to spend more compensating their employees in 2021 than last year, according to a new report from Clutch, the leading B2B research and reviews firm.

Clutch surveyed small business owners and managers in 2019 and 2021 to learn about what compensation and benefits they offer employees. The data reveals increased demand for health benefits, paid time off, and flexible work schedules.

Experts say that having benefits and a compensation plan is essential for any business.

"I think it's just standardized practice," said Matthew Burr, founder and president of Burr Consulting, an HR consulting firm. "Vacation, PTO … all that stuff is expected in our society now. You're not going to be able to recruit and retain people if [you don't offer basic benefits]. It's not going to work out in your favor."

To decide which specific benefits to provide and how to offer them, companies evaluate their own workforce and business needs.

Health Benefits Important in 2021

Forty-five percent of small businesses (45%) provide their employees health benefits. Health benefits are the most frequently offered benefit.

Ted Liu, founder and CEO of Just SEO, a search engine optimization firm, says that there are 2 reasons why offering health benefits is a popular compensation strategy:

1. Health benefits demonstrate commitment to an employee
2. Health benefits reassure employees and improve worker productivity

Experts say that committing to employees and providing them with the structure and stability to be productive is especially important right now.

"Health benefits have never been more critical than during the midst of a pandemic," said Courtney Quigley, a business reputation consultant for Rize Reviews, an online reputation management company. "This pandemic brought fears and anxiety that changed the way people work, eat, buy, and live."

Providing health benefits is a compensation strategy that can help employees feel secure financially and personally, which will remain a priority even after COVID-19.

Family Leave and Flexible Work Schedules Important During Remote Work

The two benefits that companies are most likely to offer for the first time are family leave (14%) and flexible work schedules (13%).

The COVID-19 pandemic has challenged employees' work-life balance and made it difficult to avoid burnout.

"[Companies] need to ensure that people are disconnecting from technology and not burning out by working 24 hours a day," said Matthew Burr, founder and president of Burr Consulting, an HR consulting firm.

With family leave, a new parent knows that they can keep their job while still taking time to care for a newborn. A flexible work schedule allows an employee with childcare responsibilities to schedule their remote work around virtual school hours.

Read the full report here: https://clutch.co/hr/recruiting/resources/small-business-employee-benefits

For questions about the survey or comments on the finding, contact Seamus Roddy at [email protected].