Since the financial crisis of 2008, the business of employing staff has seen a seismic shift in the power balance – the candidates are now in the driving seat. The right employee benefits are now a priority for businesses looking to attract (and keep) high caliber candidates.
Employers are offering a host of benefits from coffee bars to craft beers, free fruit to a fun-filled playground. With employee perks revolutionizing the workplace, what are the benefits that matter to employees? Which of the benefits, whether financial or lifestyle, help employees to choose or stay with a company?
The Buzz About Benefits
Employee benefits are nothing new. In the mid-19th century Cadbury Brothers provided housing and sports facilities, arranged works outings and summer camps, and negotiated discounted train travel for employees. Similarly Lever Brothers developed Port Sunlight as a model village to accommodate workers in its soap factory. However, in recent years, employee benefits seem to have enjoyed a new lease of life.
One study found that 80% of employees want benefits or perks more than they want a pay rise – this is a cultural shift that places greater emphasis on work-life balance than money. Furthermore, 50% of people say they will turn down a job if the benefits are not good enough.
For employers competing in a candidate-driven marketplace, it is clear that just chucking money at staff is no longer a way to attract and retain staff (although financial benefits still play a significant part). Of course, for many businesses, it is not financially feasible to keep offering pay rises and bonuses. For employers to really get the staff they want or improve retention rates, they must better understand what motivates them – and it won’t be one size fits all
What Benefits Matter Most To Employees?
Recruitment company Monster conducted research in the UK into what employer provided benefits (“EPBs”) matter most to job seekers. The study found that a health care plan topped the list of EPBs followed by more holiday time and then a pay raise. The study is supported by a survey from employment website Glassdoor, which found that 40% of employees value health insurance more than a pay rise. Other studies have shown that historically a pension was also a significant employee benefit, however, the advent of the auto-enrolment has meant that pension provision is no longer a point of differentiation – however more attractive packages beyond what is legally required, will be seen as an attractive benefit by workers. Beyond healthcare and holiday time … there is no surprise to see work-life aspects such at family-friendly schedules, workplace flexibility, remote working and wellness programs also dominating the top ten in many benefit surveys
What is the right mix of EPBs? The only way to really find out is to ask. And this is important as businesses offering benefits that employees don’t want, are unlikely to get positive feedback or results.
The Best Employee Benefits From Companies?
- JibJab Media helps people to achieve an improved work-life balance with less stress by relieving chores thanks to a weekly laundry service.
- Basecamp pays for the hobbies for their employees and well as vacation travel expenses.
- Airbnb offers their employees $2,000 travel credit.
- Twitter offers three catered meals per day as well as holistic benefits such as on-site acupuncture treatments.
- TransferWise offers an all-expense paid holiday (although some may argue a holiday with your colleagues is the opposite of a perk!).
- Opus Professional Services owns a villa in Italy which staff can use for free.
- Allen & Overy have an onsite GP and dentist to ensure employees stay in tip-top health.
- Jagex offers free bicycle repairs to encourage employees to stay fit and active.
- CA Technologies offers an on-site childcare facility
- Visualsoft provides unlimited holiday time, and they do not monitor flexitime either.
The Benefits Disconnect
So 84% of respondents say benefits are essential in keeping their current job which rises to 93% for respondents aged 25-44. While benefits are now taking greater prominence in most workplaces, there is still a feeling that more could be done. The continued provision of EPBs is by no means guaranteed. There is an apparent disconnect – while workers are still hoping for more benefits from their employment, many firms have indicated that they will reduce benefits in the future or not make an attempt to increase the ‘perks’ they offer.
58% of people believe they will work for more than one employer in the future driven by the lure of flexibility. With the pull of the ‘gig economy’, organisations need to focus on offering those benefits that will engage staff, while staff may be looking for benefits with added ‘portability’.
Of course, benefits become another staff cost alongside salaries and pension contributions BUT organisations should aim to prove that effective EPBs are cost-neutral or even cost-positive. For example, businesses allowing flexible working may benefit from higher productivity. Furthermore, remote working increases worker satisfaction and provides the company with access to a global talent pool which allows employers to take advantage of more competitive salaries and more skilled workers which can help to grow the business. Often, employees will accept benefits instead of a higher salary. A recent study shows that 50% of millennials will take a 15% pay cut for a job where they could have a social or environmental impact.
In terms of health and wellness benefits, Wellness Councils of America reported a $24 return for every $1 spent on company wellness program. 81% of employees also say that health and wellness programs favorably impact productivity. Again, this shows a cost-positive return for businesses. Health benefits also have been proven to reduce absenteeism which can reduce costs for businesses – especially in the case of sick pay – and businesses may also receive tax advantages.
EPBs are not just for the big boys
Is there an EPB sweet spot? A group of companies big enough to have the financial wherewithal to actually provide meaningful benefits, but small enough to know exactly what their staff value and to have a more homogeneous workforce? While larger companies do provide more benefits, they tend to be more prescriptive or paternalistic when it comes to deciding what these should be.
For small businesses it may not only be the cost of implementing a scheme, but also the administrative burden which is putting some employers off. However, SMEs do have an advantage – many employees would rather work for smaller businesses (they typically offer a more relaxed, flexible and entrepreneurial environment) and the lines of communication are shorter (and more effective).
Furthermore, some of the favored benefits such as childcare vouchers, life assurance and income protection insurance all offer tax advantages and can be achieved at a relatively low cost. If this cost is still too high, then SMEs can consider salary sacrifice schemes. 65% of people believe more benefits should be made available through salary sacrifice, with popular choices being bicycles, pensions and mobile phones.
And while many big firms are able to offer more benefits because they have a dedicated HR team in place to run and manage the benefits … SMEs can embrace technology to help make the scheme more cost-effective. For example an insurance platform that makes it easy to add and remove the cover for different policies and staff members. Some platforms can even automatically enrol a new beneficiary with the introduction of a new starter onto the system.
For more personalized benefits that really matter to employees, companies such as ‘Bob’ can help. ‘Bob’ is a business management platform that allows you to get in-depth information about your staff to create a healthy workplace culture.
For a more diverse benefits offering, brands such as Perkbox allow you to select from a range of rewards so you can personalize rewards accordingly or staff can choose themselves. From luxuries to practicalities, employees can make the most of the benefits that matter to them. The administration and facilitating of benefits is minimal to the employer making it a cost-effective time-friendly way to increase perks and therefore improve staff morale and retention.
By embracing technology to lower HR costs, SMEs have the chance to become more competitive and offer a considerable advantage to employees over the big corporations.