It is easy to think that employee benefits just benefit your staff: that it’s a budget you have to set aside each year to give them something more – on top of their salary.
The amount spent (or invested, which may be the more accurate term), could typically be 1.3 times the base salary, with wide variance depending on your business. Some of this you have no choice on, such as employer pension contributions. But where you spend your discretionary budget will have a major effect on how beneficial the benefits are to you.
Let’s take a look at where employee benefits can become “employer benefits” too.
Recruitment and retention – the desirability of employee benefits
Desirable employee benefits can help you stand out in the job market, making it easier to find good employees, and then keep them once they are in the door.
Therefore, a good metric of how much value you get from an employee benefit spend is the relative amount you spend on recruitment and base salary.
For example, a CIPD report found the average cost to fill a vacancy was about £6,000, and for a manager it was £19,000. Saving yourself the need to go through this expenditure as often is a major endorsement of investing in employee benefits which draw people; although they are, of course, only part of the picture. Salary, job roles, culture and progression opportunities among other things must all be considered.
What’s hot and what’s not when it comes to employee benefits then?
HOT – Most things medical related, like health cash plans and private medical insurance.
NOT – Discounts for shops which no one purchases from anyway.
HOT – Flexible benefits like a little extra time off or flexitime.
NOT – Unlimited holiday: while attractive on paper, in real life employees tend to take fewer days off without the guidance of upper limits, leading to pressure and risk of stress or burnout.
HOT – Self-development – paying for employees to better themselves.
NOT – The trendy pool or football tables in communal areas. They look good but too often become an underused gimmick.
Reducing absenteeism, increasing productivity
Some benefits, the desirable medical-related ones, can make a tangible difference to the health of your employees, both preventatively and when treatment is required. This is great for them for sure, but also good for business as they require fewer days off sick.
Health cash plans reimburse staff for year-to-year treatments like opticians and dental appointments, as well as private physio treatment etc. These are those all-to-easy-to-miss check-ups that seem fine to skip when you are healthy, but you regret when, for instance, you suddenly get toothache and need time off for emergency dental treatment. Knowing they are paid for makes it more likely employees will use them and keep themselves in good health. For you they are low-cost, making them a valuable thing to offer.
Private medical insurance is more costly, but comes with more comprehensive cover, especially when something more serious strikes: offer it to your employees and they jump the NHS queue, getter faster diagnosis and treatment, and often better outcomes. This means they can get on with their lives more quickly, including bringing their full selves to work.
Private mental health support services are growing in popularity in this space. Employee Assistance Programmes (EAPs) are a great way to offer this, and cost little per employee per month.
Controlling salary inflation
Ultimately, to be competitive in the jobs market, you still have to pay competitive salaries. But you can relieve a little pressure on the business by being savvy and adding value to total remuneration through employee benefits rather than straight cash.
For example, explore salary sacrifice where by giving up salary, employees can pay for certain things tax free, and you save the employer NI too – a hot topic. Employee pension contributions and the Cycle-to-Work scheme are two big examples of this.
Separately, using bulk buying power to negotiate meaningful discounts for employees in the local area or via a platform – to be effective, just make sure they are things which are genuinely useful to employees, making their money go further.
Employee benefits advice
Employee benefits are one of our areas of specialism and we help companies across the country review current plans and put in place new ones which add value to both you and your employees. As well as being the start of the tax year, 6th April was National Employee Benefits Day – so why not take a moment to book in a review?
