Guide to employee benefits
What are employee benefits?
Employee benefits complement an employee's pay. They can range from private health insurance and critical life insurance to mobile phone or gadget insurance and high street coupons. Some benefits will be subject to taxation.
Benefits could be, but are not limited to:
- Pensions
- Eye care vouchers
- Private dental
- Gym membership
- Health screening
- Childcare vouchers
- Retirement benefits
- Profit sharing
- Company cars
- Hotel stays
- Free refreshments at work
- Lunch allowances
- Financial advice
- Unlimited holiday allowance
- Pet-friendly provisions
Why are employee benefits important?
In the short term, not providing benefits helps with reducing expenses for your company, but in the long run, you may be impeding rather than facilitating progress. By providing adequate employee benefits, you will recruit talented employees and help retain those you already have. You will also develop an appealing employer brand and the image of a powerful, caring, and invested employer.
Without employee benefits, you risk increased staff turnover, higher recruiting expenses, and a narrower talent pool to choose from when you do recruit. It may be expensive to replace an employee, not just in terms of recruiting, but also in terms of training and bringing new staff up to full production, and the expenses can add up quickly. Do you really want to limit your alternatives and pay those extra expenditures as a small business attempting to develop because you don't provide gym membership or health insurance?
Recruiting talent
It can be difficult to recruit the right employees for your company in the first place, and if you're a small business, providing a large salary may not be an option. While salary is still an essential factor, employees place benefits as one of the top three factors when looking for a job.
Employees also value flexible working hours, a decent work/life balance, and prospects for promotion.
Retention of employees
Staff recruiting and retention are two of the most expensive aspects of any organisation. Every employee who leaves your company is estimated to cost more than £30,000 in terms of both finding a replacement and lost productivity. If you have a low retention rate or are having difficulty attracting great employees to your company, employee benefits might be the solution.
Employee engagement
Recruiting competent personnel is one thing; keeping them motivated and satisfied is another. Even after they have signed their job contract, you must work hard to keep them. Attractive employee benefits, such as flexible working, free refreshments, reward and recognition, business away days, and volunteering days, may all motivate employees to stay.
Align the requirements of the company and its personnel.
Managing employee performance and creating goals allows you to track their success in your company. Greater employee performance will feed into your business plan, as will employee benefits. For example, rewarding and recognising hard work or assisting an employee with their own professional aspirations benefits productivity and, eventually, organisational success.
Strategic tool
Employee benefits are an important tool for recruitment and retention and should form part of your business or strategic plan, especially as companies are now competing with their rivals for the top 10% of skilled workers to fill their roles. By creating a strategic plan for the benefits you offer, you will be able to articulate how those benefits will support the goals of your business plan and how they will supplement your recruitment strategy and plans for growth.
Employee benefits aren’t merely add-ons to a worker’s salary – they can add real value to your employer brand and how staff perceive you, improving recruitment and retention, affording you greater staff engagement and helping to make your business a happier place for staff to work.
Implementing employee benefits
By developing a benefits plan or scheme, you may have a significant influence on your employees' health, well-being, and job happiness. However, you must approach it strategically, determining the benefits you are willing to deliver, under what terms, and when. Adopting a piecemeal or ad hoc approach may result in employees not taking full use of the advantages available, or in adding in benefits that have little value to your employees, which can have a bad influence on your employer brand.
What to consider
Begin with a clear picture of why you require a benefits programme. Is it because you're already seeing growth and need to attract talent rapidly to keep up? Or is it to assist retaining employees in whom you have already committed time and money? Perhaps it's a matter of matching what your rivals offer and then going above and above so you get the best employees, not them.
Once you've determined why you want to provide specific benefits to your employees, you must decide what those benefits will be and what the financial implications will be for the organisation. You should also monitor the success or failure of the advantages because it might be difficult to remove them once they are in place.
Furthermore, keep in mind that not all perks will motivate all employees, and you should assess your workforce to determine which benefits would be most effective. For example, Millennials who are just starting out in their careers and don't have children or families to worry about would be more interested in flexible working hours or gym memberships than childcare vouchers or retirement plans. Generation X, individuals born between the 1960s and 1980s, may be more receptive of pension provision or private health care.
Bringing your dog to work, away days, perk boxes, and other non-traditional incentives are increasingly being offered in addition to more standard benefits. Employees are also more interested in what a position may provide them in terms of personal career development and progress. Long-term employee growth should include training and progression, as well as rewards.
Types of employee benefits
There are several types of benefits you may consider providing to your employees. You are not required to provide any of these, but if you do not, you should consider the long-term impact on employee recruitment and retention.
You must also analyse your company's financial implications and whether the costs of the advantages you wish to implement are ultimately cost efficient and useful.
Pension
Increased life expectancy, falling stock markets and low inflation have all made these kinds of scheme very costly to administer.
Private pension provision remains an appealing perk, particularly for older workers who are more conscious of their retirement plans. Typically, this will be a defined contribution pension system in which both the company and the employee contribute a specified sum. When the employee retires, they will get a lump sum of money. The amount they get will be determined by how much was paid in, how well investments performed, and how they want to receive it - as a big sum or in tiny, monthly instalments.
Share schemes
Share programmes are an excellent approach to increase employee loyalty and provide them with an interest in the company outside of their employment. They are more productive since they have invested in the business.
You could give the employee free shares in your firm or match any shares they purchase.
Travel loans
Some employers will provide interest-free travel loans to their employees in order for them to purchase yearly tickets, which are normally less expensive than weekly or monthly tickets.
It assists your staff in lowering and spreading the expense of their daily journey.
Maternity/paternity pay
You will be required to pay the statutory minimum. Women are entitled to a year of maternity leave, with 39 weeks of statutory maternity pay (six weeks at 90% of full wages, 33 weeks at statutory maternity pay, and 13 weeks unpaid) if they are eligible.
Although you are not legally required to provide more, you may opt to do so in order to recruit and keep competent women. For example, maintaining full pay for the whole term or giving half pay when it falls below the statutory minimum.
You might include stipulations in the employment contract requiring employees to repay the extra money if they do not return to work or depart within a specified length of time after their maternity leave expires.
Similarly to paternity leave, dads are entitled to two weeks of leave once their child is born. You have the option of providing more.
Bonuses
Bonuses are an excellent approach to motivate staff. They are often based on productivity or profitability and are triggered when staff meet particular goals. Attendance, customer service, quality, and team or individual performance can all be factors.
A profit bonus is one in which all employees are rewarded for good performance, even if the percentages they earn vary. High achievers, on the other hand, may feel as though they are carrying low contributors.
All employee bonus systems may be effective in generating a sense of community and that everyone is in it together. This may not be appropriate if your company has highly specialised responsibilities, and it might actually demotivate important people who feel like they are bearing the weight.
Health and wellbeing
Private medical insurance as an employee benefit has been around for a while and is intended to help an employee if they fall ill or are harmed. However, as businesses recognise the importance of having a healthy and happy staff, the variety of benefits available has expanded.
Private medical insurance
This enables your workers to private medical treatment if they become ill or injured on the job. It is no longer only about employee well-being; health insurance may also assist minimise absenteeism. Workers that are ill will not be able to work productively.
Offering health insurance shows your employees that you care about them, and it reduces the number of days lost due to illness.
Dental insurance
Dental and optical insurance, like medical insurance, may help your employees stay healthy. And happy, healthy employees are productive employees who can help your bottom line.
Sick pay
Employees will be entitled to statutory sick pay, which you are required by law to give. You may, however, choose to provide occupational sick pay in which you pay more than the statutory limit or to allow employees to claim sick leave for a longer period of time.
Duvet days
Everyone has days when they aren't unwell but just don't feel motivated to go to work. Some employees may call in sick when they are not truly sick, but as an employer, you may give a duvet day instead. These are included into the yearly holiday allotment and allow a worker to take a day off without taking sick leave or annual leave. The benefit of this is that you minimise actual sick days and employees feel respected.
Flexible working
Employees are increasingly demanding flexible hours, whether it's beginning late, finishing early, job sharing, working part-time, or even setting their own. Flexible working arrangements enable employees to balance work and other obligations. It also allows employees to pick where they work, which can assist improve work/life balance. From the standpoint of an employer, flexible work may empower your workers, increase loyalty, minimise staff turnover, and improve your reputation as a good place to work.
Gym membership
Some employers provide free gym membership, while others provide a subsidised membership with a specific chain or a local gym. Giving your employees a subsidised gym membership can improve their health and well-being while also reducing sickness absence. However, choosing the proper gym provider is critical to increasing employee usage, and you must ensure that your offering caters to employees of all ages and fitness levels.
Day off on birthday
This is fantastic for morale and psychological wellness. Allowing workers to take the day off allows them to celebrate while also demonstrating that you care about them beyond their job performance.
Dedicated development days
Setting out regular time for growth might result in beneficial transformation inside your organisation. It fosters a culture of self-learning, and when one person becomes enthusiastic about something new, it may quickly spread throughout your company.
Rewards
Everyone enjoys being rewarded and recognised for their efforts.
You can choose how to reward your staff; for example, you might have an employee of the month or multiple awards for different elements of company. It might be as simple as a bottle of champagne for completing an assignment or a bouquet of flowers for meeting a goal. The goal is to provide items that are relevant to your employees and to encourage involvement.
