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November 27, 2001
Small Business Owners Usually Listen to HR
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ll business owners take human resources counsel seriously when making employee benefit decisions, even though they don't always agree on what's important, a study finds.

According to the study, conducted recently by Nationwide Financial, a distributor of retirement planning products, only 16 percent of small business owners report they make employee benefits decisions on their own, suggesting a reliance on their HR staffers.

For nearly every type of employee benefit listed in the survey from health insurance to a retirement plan, HR counsel was much more likely than the owner to say that the benefit was very important to employees.

The Nationwide Financial Small Business Retirement Study, conducted by Greenwald & Associates, an independent Washington D.C.-based public opinion polling firm, surveyed 730 business owners and benefits representatives about employee benefits, particularly retirement plans. Respondents included businesses with 25 to 200 employees.

When it comes to retirement plans, the study shows that owners are more likely to be motivated to offer a plan for tax-deferred savings for themselves and key executives than HR representatives (48 percent vs. 39 percent).

HR representatives are more motivated by employee expectations (31 percent vs. 23 percent) and tax-deferred savings for employees (63 percent vs. 55 percent.)

Business owners are also much less likely to understand the importance of investment options, tax-advantaged investing, online access to account information, participant loan availability and brand name funds than their HR counsel.

"Many times the HR counsel is an expert in retirement plans and other benefit options," said Steve Rose, a Nationwide Financial vice president. "Their ability to appreciate the benefits of one retirement plan design over another should be invaluable to small business owners when choosing a plan provider."

When it comes to liabilities, bureaucratic red tape is more likely to be a major concern in offering a retirement plan for small business owners than it is to their HR counsel. However, HR counsel tend to be much more concerned with gaining sufficient employee participation than their business owners.

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