Employee benefits – getting them right and moving with the times
Running a business is a tricky balancing act for employers - they have to consider employee wellbeing against keeping costs under control as well as the outlay of recruitment against staff retention. Since the recession, employers are more focused on keeping costs under control than perhaps retaining staff, which was their number one priority before the economic downturn. Of course, benefits are equally valuable to employers and employees, but each party has its own objectives when considering these.
Nowadays, the salary on offer is not always the sole motivation for candidates looking for a new role. Many surveys found online suggest that a comprehensive benefits package is often more enticing than the end-of-month take home pay. As we know, employee benefits are the non-cash elements within the overall reward package, although they have a financial value and cost for employers. Examples include paid holidays, company car and pension schemes. Indeed, employee benefits generally form a very significant part of overall remuneration, with estimates suggesting that their value can account for up to around 40% of the costs to organisations of employing staff. Since the recession, employees look to their workplace benefits to help them establish financial security, both now and for the future.
Companies offer benefits for a variety of reasons - indeed, few get away without offering something alongside the salary - they may be there to help motivate employees to achieve business objectives as well as more holistic reasons such as the desire to look after employees' wellbeing. Naturally, the social, legal and financial background of an employer plays a role in helping to shape the benefits package. Many employees consider health insurance their most important benefit. Yet with healthcare costs continuing to rise, and rates for employer-sponsored coverage taking a huge bite out of employer budgets, health benefits are often one of the first budget items to be targeted when cuts are under consideration.
Indeed, the financial products that help employees protect their families including health and other insurance products as well as savings plans - for retirement and otherwise - are often seen by workers as a useful safety net. Added to this, the tax provisions linked to company pension schemes means they are attractive to employees, not least because of the 'free' money available to them via employer contributions.
Of course not everyone gets all these benefits - it depends where you work and some organisations have a tiered benefits system dependent on employee seniority. It seems that if an organisation provides a generous benefits package, it gains staff loyalty, leading to less churn and a more cohesive workforce.
Naturally, with our smarter ways of working and the rise of tech companies and other 'cool' start-ups, benefits have evolved and changed almost beyond recognition. Established companies would do well to keep on top of these new perks, since they are catching the eyes of the cream of the talent. Once upon a time, 25 days annual paid leave and an early finish on a Friday would have been coveted, but now it's all about free house cleaning and unlimited leave. Candidates want the flexibility to work from home and even put something back into the community, so many employers now offer paid time off for volunteering.
Millennials particularly are keen to establish a work-life balance. For these up-and-coming generations, pension plans are less attractive than say a chance to earn a stint in an office in another country. Indeed, one company we came across sent their employees off to an office on a beach for a few weeks if they managed to exceed their targets for three consecutive months. Naturally, this sort of benefit is not going to work for every company, but it shows that employers have to be more creative in what they offer to attract this new work crowd.
However, you don't need to go that far to inject a social aspect to benefits. Many companies, including John Lewis, offer funds to study something outside of work - be it fly fishing or hen keeping, acting classes or art - anything goes. Many of the larger agencies within the creative industry have subsidised bars and cafes and one famous ad agency even has its own pub.
The more serious side of employee benefits includes share options and even partnerships from a small to a grand scale - again, John Lewis is an example. Its workers own the company, so they are motivated to go the extra mile, reaping the rewards in an annual bonus or 'dividend'. Likewise, retail consortiums like The White Company, Sainsbury's and Morrisson's offer staff a substantial discount on goods alongside more traditional benefits.
Introducing secondary benefits might seem like a daunting and costly option, but employers who have implemented them notice the positive effects they have on their workforce and sight them as the main way to attract and retain talent. Even a small outlay can make for happier, more loyal employees who are likely to stay and work their way up the career ladder rather than taking their skills elsewhere.
Through the benefits they offer, employers send a strong message about what they believe is important. Health and other insurance and retirement benefits as well as other secondary benefits communicate a desire to invest in employees' total well being, helping them achieve a better work/life balance.
Fortunately, it's a message that benefits both employers and employees - which is why many employers already view benefits as an investment rather than a cost. Employees too understand benefits as an investment in their personal financial security. By investing in employees through a benefits package that meets their real needs, employers can dramatically affect the lives of their staff.