Why small businesses have the happiest employees

Making employees feel happy and healthy at work is the holy grail for many businesses. If you can achieve it, the benefits are great: It can help a company attract the best job candidates, hold on to the staff it already has, and boost productivity. But keeping employee engagement up — and happiness high — isn't always easy. Staffers have a tendency to get into a work slump, mindlessly going through the motions without reaping much reward or satisfaction. Gallup research suggests that, overall, just 33 percent of U.S. employees consider themselves fully engaged at work, while 16 percent are actively disengaged, and 51 percent are just showing up.

But there is an exception: When it comes to employee engagement, it seems small businesses are kicking butt. According to the same Gallup research, the largest U.S. companies have the lowest levels of engagement, while businesses with fewer than 25 employees have the highest. And in one recent report, 75 percent of small business workers surveyed said they were "very" or "extremely" satisfied in their role with a small employer.

What are small businesses getting right? Unlike big companies, they often don't have a large HR team dedicated to creating specific engagement initiatives like flexible working schemes, rewards for good performance, and subsidized services for employees. So you'd think they'd be at a disadvantage. But what small businesses lack in resources they make up for in creativity. Indeed, smaller businesses are being pushed to compete for employees by providing innovative and flexible perks. And their size makes them perfectly positioned to do this: They know their staff intimately and really understand their day-to-day needs, which means they can tailor what benefits are on offer.

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"Employees of these companies are more likely to receive free beverages and meals, the option to bring their pets to work, and paid time to work independently on a project of their choosing," says the Gallup report.

But of course, there's far more to employee happiness than free food.

One of the top draws of working for a bootstrapping small business, according to one survey, is flexible scheduling. Another is being able to really see the fruits of one's labor, and feel one's input matters. And sure, "fun activities such as dodgeball or shuffleboard" don't hurt, the Gallup report found.

Another big draw for small businesses? Non-cash incentives. This could be something seemingly small that reflects and allows for employees' interests and lifestyles. For example, Boston's Common Ground Bar and Grill recently gave waitstaff the go-ahead to watch big sporting events, like the Super Bowl, with customers. "Trying to eliminate sports talk or forbidding staffers to watch games is demoralizing," writes Joyce Rosenberg for The Associated Press. Local discounts and community service opportunities are also great non-cash incentives small businesses can put on offer.

But just because startups can be flexible doesn't mean employees don't also want a formal benefits package — quite the opposite. One report found that 50 percent of small business employees say having a benefits package is either extremely or very important to their happiness at work; 72 percent say that an improvement in what benefits are offered would make them even happier.

Good health insurance and a 401(k) package is a start. But small businesses can — and should — go even further. Helping employees to manage their finances, for example, is both useful to staff and shows a culture of support for the individual, yet 91 percent of small business do not offer financial workshops. Another way to get ahead is by offering paid parental leave, especially as the demand for it grows nationwide. Recent research from Pew found that 82 percent of workers think women should be entitled to paid maternity leave upon the birth or adoption of a child, and most believe it is the company's responsibility to pay for this time off. By not offering paid maternity leave, small businesses are missing out on a powerful chunk of the talent pool: In a recent poll of women in the tech industry, 61 percent said they would outright refuse a job with a small company if it didn't offer maternity leave.

While a comprehensive parental leave package might challenge a scrappy startup's finances, this is where that small business flexibility comes back into play. "It may be unfeasible for a five-person team to be reduced to four for six months," writes Camilla Velasquez, the head of product at HR and payroll management platform Justworks. "But it could be manageable to allow new parents to take on reduced-hours in a work-from-home environment." Some small businesses try to fill the gap by providing on-site childcare, or accommodating employees' personal priorities, whether that's picking the kids up from school or waiting for a delivery at home.

Small businesses offer employees "the flexibility, autonomy, and development they want and ... work environments that feel less like traditional, inflexible corporate cultures," says Gallup. Embracing that flexibility to meet employees' needs — even when they include more corporate or traditional elements — will only boost worker satisfaction and give startups a competitive edge. Hopefully the big companies will follow suit, and America's workforce will be all the better for it.