More than half of all Canadian workers are employed by small and mid-size enterprises with less than 500 employees. Doug Bruce, director of research with the Canadian Federation of Independent Business (CFIB), estimates that just one in four small to mid-size enterprises has a retirement savings plan. Slightly more may have a health plan, but a large number of employees remain uncovered.

When the CFIB surveyed 4,403 of its Ontario members in the fall of 2007, it found that the main barriers to offering a retirement savings plan were the cost (49%), the complexity (29%) and a lack of interest among employees (24%). One in five said there simply wasn’t a suitable plan available for their business.

But despite these challenges, many small businesses are finding ways to make benefits work for them. Far from settling for old-style, off-the-shelf solutions, they’re demanding—and getting—the flexibility they need. And instead of abandoning new initiatives in a tough economic environment, they’re improving their packages or implementing new ones.

Getting creative
Mariner Partners Inc. in Saint John, N.B., is a good example. In the midst of 2009’s financial turmoil, this IT firm added more frills to its benefits package.

Mariner has 79 full-time employees and about 30 full-time consultants, many of whom are highly specialized IT professionals. An employee survey found that the staff didn’t give high marks to the existing benefits package.

Suzanne Tucker, chief financial officer of Mariner, quickly organized employee-driven focus groups (no managers invited) to find out what they wanted. Many didn’t like the one-size-fits-all solution they were offered and asked to be able to choose a level of coverage that met their needs. With the support of Todd Stephen, a partner at OMG Benefits Consulting Inc., Mariner introduced a modular plan with several different levels of coverage.

“It was important to us because we look really hard at compensation for our people,” Tucker explains. “It’s not just about salary….We need to be able to provide them with support—for their families, for their work/life balance—and benefits packages are very important these days.”

Stephen has found that many of his clients have been taking time to reflect on what they’re offering, with the objective of either containing costs or boosting competitiveness. Greater awareness, he suggests, is leading some smaller companies to take the plunge and either enhance what they currently offer, as Mariner did, or introduce new plans.

“They are getting much more creative,” he adds. “We’re having more discussions with clients about modular or flexible benefits plans in a form or structure that isn’t overwhelming…simpler versions of what you might see in a large organization.”

Tucker emphasizes that the cost of tailoring the program to employees’ wishes was not prohibitive. Including the modular plan and a program that matches contributions to individual employees’ RRSPs (up to 5% of salary with a cap of $4,500 per year), Mariner is paying about 5% of the total salary line in its budget toward benefits.

“From a cost perspective, if it means the difference between hiring really good employees and having turnover because this is an issue in your organization, I think 5% is a pretty low price to pay,” she says.

HCSAs go small
Offsetters is a small Vancouver-based company that won a big contract to be the official carbon offsetter of the Vancouver 2010 Olympic and Paralympic Winter Games. With 21 employees, it doesn’t have the employee numbers to introduce a modular plan but has found another way to offer choice to its employees.

Despite having just four or five people on the payroll when the benefits plan was implemented on Jan. 1, 2008, Offsetters was able to include a healthcare spending account (HCSA) as well as more standard benefits such as extended healthcare, dental care, life insurance, and accidental death and dismemberment. Offsetters’ manager of operations, Colleen Hamilton, believes the relatively modest cost of the plan is worth it to find and keep good employees. “It says that the company cares about [its employees] and is willing to invest in them. We’re trying to cut costs, but we haven’t thought about cutting back on benefits.”

Rachel von Sturmer, insurance advisor and founder of True Benefits in Vancouver, helped Offsetters to set up its benefits plan. She says one advantage of the HCSA model for a small business is that the company knows at the beginning of the year exactly how much it will cost. Some of her clients—especially those that are very small and haven’t had a benefits plan before—are even opting for a stand-alone health trust that isn’t linked to a traditional insured plan.

For those like Offsetters that also want insured benefits, von Sturmer says there are an increasing number of options on the market. “HCSAs are being rolled out by several carriers for the small market, whereas before, they didn’t offer them,” she explains. Overall, she finds that insurance companies are becoming more flexible with the plan structures they offer to smaller companies. Beyond HCSAs, she’s seen them bundle employee assistance programs and offer orthodontics and critical illness insurance for smaller plans—all of which were previously unavailable to this segment of the market.