When a small business in North Dakota or Minnesota loses a key employee to a competitor, the reasons given at the exit interview are often vague — "better opportunity," "time for a change," "new challenge." What the data shows is more specific: when employees leave for better compensation or a better opportunity, benefits are frequently a significant component of what made the other offer better. Salary alone doesn't tell the whole story of what people earn, and increasingly, prospective and current employees know that.
Understanding the concrete relationship between benefits and hiring and retention — with actual numbers, not intuition — changes how owners think about benefits spending.
The Cost of Employee Turnover
Before discussing what benefits do for retention, it's worth establishing what turnover actually costs your business.
The most commonly cited figure in HR research is 1.5 to 2 times an employee's annual salary to replace them. That calculation includes:
- Recruiting costs: Job board advertising, recruiter fees (typically 15–25% of first-year salary for professional roles), time spent by managers reviewing resumes and conducting interviews.
- Onboarding costs: Training time, reduced productivity during the learning curve (estimated at 3–6 months to full productivity for most roles), materials, and manager attention diverted to the new hire.
- Separation costs: Unemployment insurance impact on your experience rate, any severance, remaining PTO payout.
- Vacancy costs: The work that doesn't get done, the customers who aren't served at full capacity, the pressure on remaining employees who absorb the departing employee's workload.
For a $55,000/year employee — a common wage range for admin, skilled trade, or operations staff in the Fargo market — replacement cost runs $82,500–$110,000. If your business loses two or three employees per year to competitors with better benefits packages, you're spending $165,000–$330,000 annually on avoidable turnover — while simultaneously offering no group health coverage that costs a fraction of that.
What Employees Prioritize
The Bureau of Labor Statistics' National Compensation Survey and independent HR surveys consistently show health insurance ranking as the most valued employee benefit — above retirement plans, paid leave, disability coverage, and other benefits. Specifically:
- 88% of employees surveyed by SHRM (Society for Human Resource Management) listed health benefits as important in deciding whether to take or stay in a job.
- 56% of respondents in a Glassdoor survey said benefits and perks are among the top factors they consider when evaluating a job offer — with health, dental, and vision leading the list.
- In surveys of employees who left their jobs, inadequate benefits appear as a contributing factor in 40–50% of voluntary departures.
In North Dakota and Minnesota specifically, where the economy is tight and skilled labor is in genuine short supply across manufacturing, healthcare support, construction, professional services, and agriculture-adjacent industries, the competition for reliable employees is real. An employer offering competitive health, dental, vision, and life coverage has a tangible advantage in both recruiting speed and retention duration.
How Benefits Affect Hiring Speed
The impact of benefits on time-to-fill is often underestimated by employers who focus only on retention metrics. But speed of hiring matters because vacancies have direct operational costs.
Job postings that include health insurance attract more applicants than those that don't — by a significant margin. Analysis of job posting performance data shows that roles advertising health insurance receive 20–40% more applications than similar roles that don't mention benefits. More applicants means more qualified candidates, faster screening, and faster fill.
For businesses posting roles on Indeed, ZipRecruiter, or LinkedIn in the Fargo-Moorhead area or across ND and MN, the benefits package is increasingly a search filter that candidates apply before even seeing your posting. If you're not offering health insurance, you're invisible to a segment of candidates who filter specifically for that benefit.
What Competing Businesses in ND and MN Typically Offer
This is the context that matters most when benchmarking your own package. It's not about matching national corporations — it's about knowing what your regional and industry competitors offer to the same pool of candidates you're trying to attract.
In North Dakota and Minnesota, small businesses with 10–50 employees in competitive labor markets (construction, healthcare support services, professional services, manufacturing) generally offer:
- Health insurance with 70–100% employer-paid single coverage
- Dental coverage (employer-paid or voluntary)
- Vision coverage (voluntary or employer-paid)
- Life insurance (1x salary, employer-paid)
- Some form of retirement contribution (SIMPLE IRA or 401(k) with 3–4% match)
Businesses offering all of the above have a complete package that doesn't disadvantage them in recruiting. Businesses offering only health (or nothing at all) are competing with one hand behind their back for the same candidates.
The Link Between Benefits Quality and Employee Trust and Loyalty
Benefits communicate something about the employer-employee relationship that salary alone doesn't. When a business invests in an employee's health and their family's health, it signals a longer-term relationship — not just a transactional paycheck exchange.
This perception matters for retention in ways that are difficult to measure precisely but appear consistently in employee engagement surveys. Employees who feel their employer invests in their wellbeing tend to reciprocate with higher engagement, lower absenteeism, and longer tenure. The loyalty dynamic is particularly pronounced in smaller businesses where relationships are direct and the benefits decision is clearly a choice the owner made, not a corporate policy handed down from above.
Positioning a Benefits Package Competitively Without Fortune 500 Spending
You don't need to match Amazon's benefits to be competitive. You need to match what the employer down the street is offering for the same type of employee — and then communicate your package clearly.
Three tactics that help small businesses punch above their weight in benefits:
Start with health and add voluntarily: If full employer-paid dental and vision aren't in the budget, offer them as voluntary benefits through payroll deduction. Employees get group rates and pre-tax deductions; you pay nothing. It's still a benefit.
Communicate the dollar value: Most employees don't know what their benefits cost their employer. A business paying $600/month for an employee's health insurance is paying $7,200/year in additional compensation. Make that visible — in offer letters, in open enrollment meetings, in total compensation statements. The numbers change how employees perceive their package.
Be consistent and reliable: Changing plans frequently, cutting contributions at renewal, or communicating poorly about benefit changes erodes trust faster than having a modest package to begin with. A small but consistent and well-communicated benefits program outperforms a richer program managed poorly.
To explore how to build and communicate a benefits package that makes your business competitive for the talent you need, visit /employee-benefits or /who-i-help to see how Kain works with businesses like yours. Schedule a conversation to talk through your current situation.
Kain Carlson is an independent insurance advisor based in Fargo, ND, licensed in North Dakota and Minnesota. He works with owner-operated businesses across all three coverage pillars — commercial, benefits, and personal — under one advisory relationship. Schedule a review to see where your coverage stands.