As an employer, you may have wondered whether providing job benefits are important or whether just providing a basic salary is enough. Here’s the answer.
As any employer knows, attracting and hiring the very best staff – and keeping hold of them – is not always easy.
For this reason, more and more businesses are now looking at what they offer their staff and the candidates that apply for their job vacancies. And a question we’re often asked at Anne Corder Recruitment is whether just providing a basic salary is still enough to attract and retain the staff a business needs.
In this article, we’ll outline the factors you need to consider when asking this question.
How does the basic salary compare?
The first thing to understand is how the basic salary you’re proposing for a vacancy – or are already paying – compares with that offered by your competitors.
Is it more or less? Or is it similar to what your competitors are offering? This is important to understand, however, as will be covered below, the salary can be only a small part of why someone stays with you or decides to join your company.
But if the basic salary is significantly higher than that offered by your competitors, and offsets other benefits and advantages, it may be enough on its own to attract and keep the staff you need.
What renumeration package are your competitors offering?
Increasingly employers are offering what has become known as a renumeration package which covers the basic salary as well as other financial and non-monetary incentives that the employee will receive in exchange for their work.
These incentives could include bonuses, commission payments, or a company car, amongst other things.
So it’s important to understand whether your competitors are offering a renumeration package to their candidates – as well as their existing staff – and if so, what this comprises.
You may not be able to directly compete with the package offered by a competitor, however, the financial rewards someone receives for their work is not always the most important factor for them.
Some candidates may want to work with you, and stay with you, because of your positive culture and sense of inclusivity. Others may be attracted by the type of work they’ll be doing or the clients and sectors you work with. And some may get a greater sense of satisfaction working for you than with any of your competitors or even working in a different sector or industry.
How important are benefits to your staff and candidates?
As touched upon above, the financial rewards someone receives for their work aren’t always a key factor in deciding to work and stay with a company.
But in an increasingly competitive employment market where employers are finding it harder and harder to find staff, it would be wrong to believe that job benefits aren’t important to many.
In fact, a recent survey by the Engage Health Group found that 80% of staff felt that job benefits were a very important factor when deciding to join a new company.
And research published by international staff hiring agency Boundless revealed that 55% of staff would consider moving elsewhere for a more competitive benefits package.
What’s more, as far back as 2015, Glassdoor research found that 79% of employees would prefer new job benefits or perks over a pay rise.
Against this backdrop, it’s little wonder why so many companies are looking seriously at what they offer their staff.
What type of benefits could I offer?
As an employer, there are a wide range of job benefits that you could offer staff and job candidates, including those listed below:
- Increased pension contributions
- Bonuses or commission payments
- Profit share
- Holiday purchase scheme
- Candidate referral schemes
- Fewer working hours per week
- Childcare schemes
- Longer paid holiday leave
- Company car or transport allowance
- Useful company perks such as free tickets or discounts
- Paid health insurance or well-being packages
- Free training to increase skills
- Flexible working hours
- Free or subsidised meals and refreshments whilst at work
In addition to the above, some companies are also offering more unusual benefits such as an unlimited holiday allowance or even access to a ‘nap room’ where staff can take a short sleep during the day.
But 2022 research by the Chartered Institute of Personnel and Development (CIPD) found that the most popular benefit offered to staff (supported by 85% of those surveyed) was flexible working.
This is in line with numerous other surveys that have found that staff are more interested in achieving a work-life balance than ever before, particularly after working from home during the global Covid-19 pandemic.
The costs of providing staff benefits
Of course, providing job benefits to staff often has a financial cost to a business. Staff working fewer hours, free meals, childcare schemes, travel allowances, and other benefits all add up.
Research conducted with 200 HR leaders in 2022 by Boundless found that 26% of companies allocated a monthly benefits budget of between £101 and £150 per employee, 25% allocated between £151 and £200 per employee, and 23% allocated over £201 per month per employee.
But it’s important to note that some benefits provided by employers can be offset against tax or are subject to preferential tax rates, for example for initiatives supported by the government, such as the cycle-to-work scheme.
However, other benefits that a company may offer – such as allowing staff to wear what they want at work or allowing them to create working patterns that include some time working from home or to start or finish earlier or later to fit around school hours, or even to take time out of the working day to attend a class that they then make up for later (flexible working) – usually don’t have a direct cost to a business.
The value of benefits
As well as attracting job seekers to apply for a position with your company, job benefits lead to other important advantages for your business. These include the following:
- Staff loyalty and retention – staff are more likely to be positive about working for you – and stay with you – if they feel that they are being well rewarded by you, over and above the salary they receive.
- Reputational benefits – as well as your staff saying good things about you, having attractive staff benefits leads to your company becoming known as a great place to work and a responsible and ethical organisation to do business with.
- Sense that the company cares – providing benefits that make your employees’ lives easier or better – such as wellness programmes or flexible working initiatives – shows them that you care.
- It saves your employees money – benefits such as free or discounted health insurance, free meals, or childcare schemes save your staff money, reducing their financial concerns and worries.
- Increased productivity – a happy workforce is a more productive workforce and recent studies – including a 2022 national trial run by Oxford and Cambridge Universities, Boston College, 4 Day Week Global, the 4 Day Week UK Campaign, and the think tank Autonomy – have revealed that even when staff work four days a week instead of five (for the same salary), productivity increases. In fact, the UK trial proved so successful that 86% of the 70 companies that took part said they were extremely likely or likely to keep the four day week policy after the trial ended.
Whilst providing job benefits is not always essential to attract and retain the staff you want for your business, if competition for the employees you need is high, then offering financial and non-monetary advantages and incentives may be essential.
However, whilst many of these will have a cost, they ultimately will lead to a happier, more productive workforce and significant social, economic, and reputational benefits for your business.