What are employee benefits?
Employee benefits are perks or incentives which employers provide in addition to an employee’s salary, for example paid holiday, health insurance, cycle to work scheme or shopping vouchers.
They are an integral part of a company’s employee value proposition, designed to attract and retain talent, promote employee engagement, and contribute towards improving wellbeing.
There are four types of employee benefits:
- Core funded benefits – These benefits are paid for by the employer and employees cannot opt out.
- Flexible benefits – These benefits are paid for by the employer and employees can opt in and out when they choose.
- Voluntary benefits – These benefits are discounted from the supplier and paid for by employee’s net salary.
- Salary sacrifice – These benefits are paid for directly through the employee’s salary and achieve tax and national insurance savings.
What impact has COVID had on employee benefits?
The pandemic has shifted the type of benefits and support required by employees and the way they are delivered. As a result, the industry saw a disconnect between what employee’s need versus what employers are offering.
There is a greater demand for financial wellbeing programmes, mental health support and health related benefits. While paid holiday, gym memberships and pensions have decreased in utilisation since the first lockdown.
Employee benefits enabled employers to support employee wellbeing during these uncertain times. Many had to rethink their benefits design to accommodate remote working.
This has implications both for communications about employee benefits and for the access of those benefits.
What benefits are most important to employees?
There is no exact answer. Your employee benefits should reflect the unique individuals that make up your workforce.
A key way to do this is to listen to your employees and avoid copying your competitor or being swayed by the most trendy benefits.
Employees want benefits that are highly flexible and relevant to their needs – needs that are constantly changing.
Our research revealed that only 54% of employees are utilising their benefits. If your benefits scheme is not relevant to or valued by your employees, it will be costing your organisation rather than delivering ROI.
An employee benefits scheme that’s right for your workforce will deliver employee satisfaction and enable you to better retain your top talent.
As a result, you will maximise the value from your benefits on your payroll costs, reinforce your employee value proposition and reduce recruitment and HR costs.
Why are employee benefits important to employees?
Salary is not always the main consideration for employees when job hunting. Almost 2 in 3 employees admit that benefits are an important factor when applying for a new job.
Your employee benefits scheme also gives future employees an insight into your organisation. They can reflect your brand values, shows that your organisation genuinely cares about workplace culture, happiness and the wellbeing of your workforce.
Benefits are important to employees because they provide tax savings, access to services at a reduced rate and other free perks.
Glassdoor found that nearly 80% of employees would choose an enhanced benefit package over a pay rise which demonstrates the impact that benefits could have on recruitment and engagement strategies.
How to design an employee benefits scheme
An effective employee benefits scheme begins with your employees. Try to avoid simply offering a catalogue of benefits for them to choose from. Listen to them, understand their needs, and use these insights to tailor your benefits design.
Worryingly, employee benefit consultants Aon revealed that a third of employers do not use initiatives to understand the needs of their workforce.
It’s key that you regularly review your benefits design and encourage staff feedback to keep in touch with employees’ evolving needs, and ultimately ensure your benefits remain relevant and utilised.
It’s not the number of benefits that you offer that’s important, but the quality of your overall scheme.
Providing a holistic, all-encompassing employee benefits scheme will increase your ability to support every aspect of employee’s lives, including their social, mental, physical, and financial needs.
Your scheme should also reflect your diversity and inclusion strategy. Employee benefits should be inclusive and available to all, rather than appealing only to certain parts of the workforce.
The easier you make accessing and navigating your benefits, the better engagement you’ll see. Consider where you can coordinate or connect benefits to ensure a quick and seamless experience.
How to attract employees with benefits
Employees are looking for holistic benefit schemes which meet their needs and reflect their lifestyle. They need to be easy to access and well communicated.
While your benefits must satisfy your current workforce, they must also appeal to the diverse talent that you will need in the future.
Review if your benefits scheme is relevant and competitive when accessing nontraditional talent pools or targeting a different skill set.
Where talent is in high demand, the importance of employee benefits is greater. Without an enticing and competitive benefits offering, how can you attract top talent?
Modernise your employee value proposition and offer a progressive employee benefits scheme to demonstrate that you listen and understand what your current and future workforce needs.
How can you improve your employee benefits?
Employee benefits should evolve with employee demand. Recognise when external factors have impacted your workforce and assess you can support them by adapting your benefits design.
Identify if you have gaps in benefits that support their home and work life stages, for example this might be their first job, they might be expecting a baby, they may seek a promotion or be planning to retire.
Before you can measure the level of engagement among your benefits, you need to determine if your workforce is aware of the benefits you offer.
Simply enhancing communications can drive improvements. Consider the frequency and diversity of your initiatives – what might work for some won’t work for others.
If your organisation has a long menu of benefits for employees to choose from, helping them to select the rights ones based on their needs will boost engagement.
Employee benefits schemes should be regularly reviewed and updated to ensure they remain relevant to and valued by employees.
If your employees understand their benefits, value them and are proactive at using them, you will achieve greater return from on your benefits spend.
How can employee benefits schemes support employee wellbeing?
Employee benefits schemes can help change behaviours and incentivise employees to improve their health and wellbeing.
By reducing staff burnout and sickness absence, you will have a happier, more engaged workforce.
An integrated approach is key to success. Feed your wellbeing strategy into your benefits design and vice versa – use a particular a benefit to encourage a wellbeing initiative.
We have found whole-life balance, family-friendly, lifestyle oriented and prevention-focused benefits are increasingly desirable among today’s workforce, such as: fertility funding, menopause support or a life coach.
We are living a more digital lifestyle and employees expect this reflected in the way they access and experience their benefits. Technology has become undeniably popular as a way to manage health and wellbeing in one place.
How can Reframe help with employee benefits?
Our digital health solutions help organisations develop a more resilient workforce, improve their talent proposition and build business advantage.
We work with employee benefit consultants, insurance providers and healthcare providers to deliver a hyperpersonal and connected solution.
Our experts understand how the demands of the workforce are changing – both through individual preference and trends, and through more significant influences such as the pandemic and the use of technology in creating tailored personal experiences.
We equip individuals with the skills, confidence and knowledge to self-manage their wellbeing.
By helping them overcome the difficulties of living with a health condition, we understand their unique challenges and are able to provide a personal and nuanced response.
