5th June 2018
Historically, the implementation of employee benefits has been primarily regarded as a retention tool for employers. However, the ideal behind these incentives has progressed considerably throughout the years, and employers have begun to embrace a more individualistic approach to how they reward their staff. Such perks are no longer thought of as just a tool used to retain staff, but also to attract and reward them.
What are Employee Benefits?
Employee benefits are non-cash provisions that are of financial value and cost to the company, which are offered in addition to an employee’s normal wage or salary.
There is an extremely vast variety of employee benefits for employers to choose from, which allows companies to draw up a benefits package that best suits their corporate needs, including:
- Company Car
- Education Funding
- Bereavement Leave
- Discount Schemes
- Gym/Fitness Privileges
- Commuter Assistance
- Dress Down Days
- Sick Pay
- Health Care Insurance
- Pension Schemes
- Pension Plans
- Student Loan Reimbursements
- Mental Health Days
- Optical/Dental Care
- Sabbatical Leave
- Casual Dress
- Flexible Working
While they are offered by employers worldwide, the take on employee benefits can differ from country to country.
In the United Kingdom, benefits are divided into three separate categories:
- Core Benefits: These are benefits that are made available to all staff; including holiday entitlement (legal entitlement is 5.6 weeks per annum for a full-time worker), pensions (required by law) and life insurance.
- Flexible Benefits: Also known as ‘Flex Schemes’, flexible benefits offer employees a budget to spend on the benefits that they want to take advantage of. This is done through payroll, and the benefits are dependent on what the company decides to offer.
- Voluntary Benefits: These are products and services that are not funded by the employer but can be purchased through payroll by the employee through an ‘opt-in’ scheme. They are usually government backed and can include childcare vouchers, cycle to work programmes or pension contributions.
Whereas, in the United States, employee benefits are not categorised. Federal law does not require employers to provide their staff with paid time off (PTO – holiday and sick leave) or retirement plans; although, a clear majority of companies do offer these as part of their staff benefits package at a generous rate.
Why Providing Benefits to Employees works to the Employer’s Advantage
Think about a time when you have had to replace an employee who has handed you their resignation. Maybe they haven’t given you any notice at all. How much time and money has it cost you and your company? According to ACAS, it costs £30,000 to replace a single member of staff on average.
A high staff turnover will cost a company a lot of money that is unaffordable to lose. Reasons that staff turnover might be higher than desired could be down to a many number of things. Here are just a few examples:
- No growth opportunities.
- Feeling undervalued.
- Workload imbalance.
- Insufficient training.
- Poor management or leadership.
This is where offering staff an appropriate benefits package and rewarding employees becomes invaluable. Not only are employers helping them to save money or plan for the future and unexpected events; but they are made to feel valued, which ultimately lends itself to building the strong foundations of loyal and hardworking employees, decreasing staff turnover considerably.
The advantages of providing employee benefits does not stop at simply retaining staff. Quality candidates will be attracted to a company by the right incentives, and whether that be a large, multinational organisation or a small start-up that is just beginning to grow, the people a company employs are absolutely vital!
Top 10 Employee Benefits
The list of available employee benefit options is extensive, but we decided to narrow our final selection down to just ten.
As employee benefits directly affect staff, we decided to put a list of benefits to the test via a poll within a small business. The results are as follows:
With 79.8% of parents in the UK in full-time employment, many working parents face the dilemma of how best to manage the cost of care for their children.
1 in 5 families feel that they have an insufficient balance between time and money, with more than one third admitting that they don’t have enough of it. 41% of parents have even suggested that they are worried about discussing family/work related issues with their employers, and have lied or bent the truth to bosses about family and work life conflictions.
An employee’s life outside of the office will, no doubt, greatly impact their performance at work. In some cases, these issues may also influence the career decisions a person makes. This is what makes aiding childcare costs a valuable tool to carry in your employer’s arsenal. By having some outside stressors of family life alleviated, staff are given the opportunity to come into work with a clear and focused head on their shoulders.
9. Private Pension Scheme
Fundamentally, a pension is a pot of cash that you, your employer and sometimes the Government pays into as a way of saving for your retirement.
Workplace pensions are a core benefit for employees as all employers are now required by law to offer you a pension scheme and contribute towards it. However, this is an auto-enrolment process which employees can choose to ‘opt-out’ of.
If you intend for your company to thrive, you need to attract and retain able, experienced and hardworking staff. But in today’s tough economy, this is not always easy.
We have established that employee benefits are useful by way of boosting staff morale; but the most effective way of making employees feel valued is to actively invest in their future. Providing a solid pension scheme to staff is possibly the best way of going about this as it allows them to put their minds at ease, and shows them that you are dedicated to them – leaving them dedicated to you.
8. Annual Bonuses
There can be a lot of controversy surrounding bonuses, particularly where fairness is concerned. On the one hand, hardworking employees are rewarded, while on the other hand, lower performing staff members are reaping the benefits without putting in the same amount of leg work. It is for this reason that bonuses need to be structured effectively, to ensure that the distribution stays fair. Bonuses can be structured via:
- Percentage of salary
- A flat rate payment (i.e. a full month’s salary)
- Percentage of new sales
- Percentage of company profit
Having said this, if done right, end of year bonuses are another great way of holding onto staff as it makes them feel valued and appreciated. Furthermore, it is a good way to thank and reward employees for the hard work they have contributed throughout the year. It is a gesture that will demonstrate to employees how you recognise and applaud their efforts. Offering annual bonuses doesn’t just lift the spirits of employees, but gives them a reason to stay.
7. Stocked Kitchen
Keeping your staff kitchen well-stocked with tea, coffee and healthy snacks might seem fairly inconsequential, but it is a very effective way to motivate staff. Supplying free food and drink to staff is a relatively low-cost to employers which has a big impact on morale, offering a more ‘home-away-from-home’ kind of feel.
Aside from the effect this benefit has on the way employees feel at work, by providing free healthy snacks to your workforce, you are actively encouraging an increase in focus, energy and productivity. Equally, by encouraging employees to eat more healthily, the chances are that they will become healthier, meaning that you may even see a decrease in the amount of sick days being taken.
A stocked kitchen can also seem attractive to potential candidates looking to join the team!
6. Christmas Closure
Unless your company has a specific reason for not being able to close over the festive period, you will find that there are a fair few advantages to shutting up shop for a week, including improving your relationship with staff. First and foremost, it acts as a great tool for employee engagement and also works well as a recruitment tool.
You will save money as a lot of offices will close over the Christmas period; therefore, your employees will not have a significant workload to share between them, and you will still have to pay them a full wage away from their holiday entitlement. If you allow staff to take holiday over this period, you will save on not only the wages you would be ordinarily paying, but you will also be saving on overheads as you will not be paying to light and heat your offices, or to power your electronic equipment.
You will notice that productivity will increase, as if staff are required to work over a holiday period when they would much rather be at home enjoying the festivities with their loved ones, the chances are that they will not be as focused or motivated as usual. By allowing staff to have this time off, you will more than likely gain gratitude from your employees and in return, receive more efficiency.
5. Performance Bonuses
As with annual bonuses , there is a fine line between what is fair and what is not; however, performance bonuses certainly have their uses when managed strategically. They act as compensation for work performed to a level that is above and beyond the expected duties of an employee.
Bonuses are particularly useful tools for start-up companies as they are usually only paid out if the business makes a considerable profit, and are consequently often used as an incentive to increase the productivity of an individual or team.
Having the knowledge that working hard and showing initiative will not only be recognised and appreciated, but appropriately rewarded too, will ultimately motivate employees to strive to be their best selves at work. Where performance bonuses are adopted as part of an employee benefit package, it is imperative to follow predetermined criteria. SMART guidelines are very helpful to follow when agreeing on such objectives.
4. Flexible Working
Flexible working is designed to allow staff the option of altering their work day around outside responsibilities, whether that be by amending the hours that they are present in the office, or arranging a fixed pattern of working from home on certain days.
By UK law, all employees are entitled to requesting flexible working, and these requests are left to the discretion of the employer. Some employers decide to actively offer flexible working to all employees, with the intention of promoting a happier, loyal and more productive workforce. Flexible working is an inevitable perk that could attract talented job-seekers to apply for vacancies, and could also help to prevent an increased turnover. Offering flexible working holds the potential to save companies money by reducing lateness and absenteeism.
Modern technology makes remote working far more achievable now than ever before, meaning that work can still be completed while employees are unable to physically make it into the office. This makes flexible working another benefit that is advantageous to working parents, as it gives them more freedom when arranging childcare .
3. Casual Dress
As an employer, you want to think that your staff feel comfortable and relaxed in their workplace, which is where offering a casual dress code is a definite advantage, so long as there are clear guidelines as to what clothing is and isn’t acceptable. This should be down to the employer’s discretion.
41% of staff asked about their preference of employee benefits said that being allowed to wear casual clothes to work makes them feel cheerful and that they have the ability to express their individuality while still conforming to set guidelines. By allowing staff to feel comfortable at work, morale can be boosted, which in turn will aid productivity and creativity.
2. Health Care Insurance
According to UK Healthcare, 6.3 days were taken off due to sickness or injury per employee on average in 2016. With healthcare insurance covering the cost of an individual’s private medical and surgical expenses, as well as providing shorter waiting times, better facilities and faster diagnosis, it is no surprise that healthcare insurance comes in at a close second next to sick pay. Over 50% of staff expressed that employers providing healthcare insurance in their benefits package is of high importance to them.
The advantage of offering this benefit to staff is simply that it works to keep staff healthy and feeling valued, which in turn keeps them focused and hardworking. Also, knowing that their healthcare is covered by the employer is likely to keep staff wanting to remain in employment with their company.
1. Sick Pay
Seemingly, and somewhat unsurprisingly, the most valued employee benefit is paid sick leave, with 75% of employees polled choosing sick pay as their preferred benefit.
By law, the Government requires all employers to provide Statutory Sick Pay (SSP) to their staff. Providing that you qualify, you will receive £89.35 per week for up to 28 weeks of sickness; although, the premise of SSP will differ if you are self-employed.
SSP details the minimum amount that an employer must pay to their staff, but some companies may decide to provide more than this basic requirement. Occupational Sick Pay (OSP) is the contractual sick pay agreed on by the company and is often far more generous than SSP. Examples of this include SSP plus a contractual top up or even full salary.
Sick leave is necessary to ensure that the overall running of a business is efficient for the following reasons:
- Employees recover faster at home, where they are able to rest up and care for themselves properly.
- Those without paid sick leave may be more likely to work through their illness, leaving them open to becoming more sick and, as a result, taking more time off work to recover in the long run.
- Staff may not work to their potential and could make mistakes if they are not feeling 100%.
- By being present at work while sick, staff run the risk of spreading their germs, which could result in more staff taking time off work (especially where food handling is required – customers then become at risk too!).
That concludes the rundown of our ‘Top 10 Employee Benefits’, with each one holding its own unique advantage; although, there is one universal selling point to providing these ‘perks’. Loyalty. If you treat your staff in a way that makes them feel valued, they will undoubtedly pay you back ten-fold with hard work, contribution and a low staff turnover.
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