Rising overheads, tax increases, supply chain delays – today’s business owners are facing a long list of challenges as a result of the economic crisis. All at a time when the rise in cost of living means workers are looking to their employers for financial support.
Good employers are always sensitive to their workers’ woes. But, this is never more important than during an economic crisis. Hiring is an expensive process, and most SMEs literally can’t afford to lose their employees, particularly with the current talent shortage.
For businesses having to tighten their belts, raising wages isn’t always an option. Luckily, this isn’t the only way to improve staff satisfaction. There are plenty of benefits and perks that can take the place of a pay rise to provide tangible support for your team members during the difficult months ahead.
Below, we’ve laid out over 50 canny methods to compensate your staff without compromising cash flow. All of the options vary in cost, scale, and ease of application, but can help you to design a benefits policy that suits your operational style, company culture and budget.
This article will cover:
- Flexible Working
- In-Office Perks
- Subsidised Travel
- Holiday and Leave
- Social Events
- Parent and Carer Support
- Insurance Policies
- Pension Plans
- Monetised Incentives
- Training and Development
- Technology and Equipment
- Other perks and benefits
- How much do employee benefits cost?
- What benefits do employees value most in 2022?
Flexible Working
When businesses were forced to move online during lockdown, the rapid digital adoption of Zoom and Microsoft Teams turned us all into remote workers.
Now, post-COVID, demand for hybrid working (dividing working days between home and the office) has dramatically increased. Employees have seen the improved work-life balance that can be achieved using flexible working practices. Remote’s 2022 employee benefits report shows that 76% of employees now see it as the top work perk that organisations can offer.
The caveat to flexible working is that it relies almost entirely on trust in your staff to manage their own time and responsibilities, away from traditional oversight.
To make it work, employers, as well as employees, will need to be the flexible ones. Don’t start requesting detailed timesheets or tracking staff screens. Instead, trust that your workers will update you as needed and are able to manage their time effectively.
Work From Home
Perhaps the most well-known flexible policy is WFH or work from home. Providing they have the right home office equipment, your staff can swap their commute for a longer lie-in and work from their own base, instead of travelling into the office.
As well as saving time, WFH offers financial rewards. Those with carer responsibilities might not have to pay for childcare or other at-home help. Meanwhile, Startups research shows that, depending on your location, it will be cheaper to work from home than to commute this winter, amid rising energy bills.
And, just because your staff aren’t in the office, doesn’t mean they have to be working from home. Forward-thinking employers can offer a ‘work from anywhere’ policy. This allows staff to base themselves away from home, or even outside of the country for a set period of time.
Flexi-Hours
In the past, working overtime would earn you a badge of respect from employers. Thankfully, more progressive attitudes are now emerging, which have given rise to the idea of flexi-hours – being able to bank any extra hours worked to take from a future working day.
Simply ask your employees to record the extra hours they’ve worked and create a channel of communication for them to inform managers of when they intend to take the time off.
Also covered in this idea is the four-day working week, a reduced hours policy that gives workers three days off per week. Based on the 100:80:100 model, employees get 100% of pay for 80% of the time, in exchange for a commitment to maintain 100% productivity.
In-Office Perks
Office perks can start small, but quickly have a big impact. They’re designed to give workers a better quality of work-life by improving wellness, fostering an attractive company culture, and decreasing stress.
For those businesses that have been particularly hard-hit by the cost of living crisis, office perks also tend to be a lot cheaper than more complex benefit schemes.
Free breakfasts or lunches
As inflation sees the price of a sandwich shoot up, the average cost of breakfast or lunch has become a source of stress for many workers.
The fastest way to an employee’s heart is through their stomach. Buying bulk fruit pots or bagels means you can cover this cost and facilitate significant savings for staff. This doesn’t have to be for five days a week – even one day of free food can be enough to cheer up your team, help staff save a few pounds, plus foster a culture of community over a shared lunch break.
Modern office environments
Providing a comfortable location for staff to work in is an easy way to demonstrate care for employee wellbeing. Superior office spaces need to be well-lit, have comfortable furniture, and feature plenty of greenery around to boost oxygen levels. All of these factors will help to reduce stress and improve energy levels.
Post-COVID, there has also been a new focus on sanitation to prevent the spread of viruses. Workplace design can be altered to increase personal space and install physical divides, to help restore employees’ confidence in returning to the workplace.
Remember, a modern office design can also be an ace up your sleeve for attracting new talent to your business, catching their attention from that first in-person interview.
Sports and social clubs
Workplace sports and social clubs help to build up staff engagement and motivation. Clubs can help employers support employees' emotional and physical wellbeing, which means this is an investment with considerable payback.
These don’t have to have a significant cost overhead, either – setting up a running club can cost you nothing at all, and it won’t cost the earth to pay for a yoga instructor to run a weekly session out of a larger meeting room or breakout space.
Mental health ambassadors
Research by GRiD, the industry body for the group risk industry, shows that 82% of employers are currently offering support for staff mental health.
Mental health ambassadors work alongside your HR team to help create a positive mental health culture at their workplace. Self-nominated individuals are given training to develop the skills and knowledge to develop good mental health across multiple teams. For those staff members who are feeling stressed or overwhelmed with a task, ambassadors are available to listen and offer support in a non-judgemental and confidential capacity.
Obviously, such an ambassador won’t be able to resolve serious mental health issues. However, the process works well as a low-cost support network for companies that want to create a positive workplace environment, and encourage staff in need to seek appropriate help.
Subsidised travel
Claiming for fuel on business travel
By claiming HMRC mileage rates, firms can reimburse employees for travel costs if they use their vehicles for business. This can greatly improve staff satisfaction – particularly as fuel costs continue to rise.
Car and van drivers can claim back up to the ‘approved amount’ of 45p from HMRC for every mile travelled for business use, up to 10,000 miles. After 10,000 miles, the amount drops to 25p. For fully electric, or hybrid, vehicles the mileage allowance is the same as for a petrol or diesel car.
Cycle to work schemes
This scheme enables employers to lease a bicycle to employees, usually for an 18-month period. The business will buy a bike for the employee to ‘hire’ through salary sacrifice (this saves money as they won’t need to pay tax and National Insurance contributions on the monthly fees).
According to the Department for Transport, the initiative saves staff members at least 26-40% off the cost of a bike and cycling equipment.
Holiday and leave
Providing paid annual leave is, of course, a legal requirement for employers. Managers must offer all full-time staff members a minimum of 28 days' paid holiday a year, including bank holidays.
Nonetheless, many businesses choose to offer above this level to differentiate themselves from competitors. Linking holiday entitlement with length of service also provides staff with an incentive to stay in their role for longer.
Unlimited annual leave
Instead of a fixed number of paid vacation days each year, this policy grants workers an uncapped number of days, so long as they agree periods of leave with their boss. Also known as ‘open leave’, the idea aims to give workers more autonomy to manage both their workloads and personal lives, potentially leading to an uptick in wellbeing.
Susan Stick, SVP at Evernote, says taking longer holidays help workers to “really disconnect. The health benefits of taking holidays are becoming more well-documented and better understood.”
In-person retreats
Corporate retreats are events, typically lasting from a full day up to an entire week, put on by businesses. These are not taken as annual leave, and usually revolve around a particular project, objective or planning consideration.
However, because retreats take place away from the office, they do offer staff time away from the desk and usually a fun experience or activity, or opportunities for professional development.
For example, you might choose to take your employees to a spa hotel so they can fit some relaxation time around their work responsibilities.
Social events
Work socials are expected among employees, especially after that long period of lockdown isolation. These can be as simple as a subsidised trip to the pub, or as costly as a blowout Christmas party.
Whatever their scale, a work social event will contribute to an engaged and collaborative workforce. Social connections are the most important ingredient for effective team communication. Anyone who has ever witnessed or experienced a bad workplace relationship knows the damage it can cause to productivity.
Strong social connections also make people happier and physically healthier, which can translate into improvements in work performance, and build a sense of kinship among staff.
Parent and carer support
Caring duties can be incredibly demanding. Companies need to be empathetic to the pressures being placed on parents and carers so that they can provide support and flexibility when necessary. Doing so will remove any barriers preventing team members from getting their work done effectively.
Women are also more likely to leave work or accept lower pay because of caring responsibilities than men are. Contributing more support to carers will help to address the inequality between genders and ensure you are able to recruit from a wider pool of talent.
Identifying carers and understanding their circumstances is a helpful starting point for employers looking to support working carers.
You might seek to do this through creating a ‘carers’ register’, where employees who have indicated they’re carers are listed, enabling access to carers’ leave and other benefits. It’s important to regularly update this as circumstances change.
Parental Leave
Eligible mothers can take up to 52 weeks' Statutory Maternity Leave and Pay. The earliest that leave can be taken is 11 weeks before the expected week of childbirth, unless the baby is born early.
Maternity leave consists of:
- Ordinary Maternity Leave – first 26 weeks
- Additional Maternity Leave – last 26 weeks
Employees eligible for Statutory Paternity Leave and Pay can choose to take either one week or two consecutive weeks’ leave. Following legislative changes in 2015, couples can now choose to share up to 50 weeks of leave and up to 37 weeks of pay between them.
All of the policies outlined above are minimum requirements. To differentiate yourself from rivals, it’s a powerful incentive if you can extend the leave entitlement – particularly for paternal leave. Doing so will not only demonstrate your generosity as an employer, but it can also have a positive effect on employee retention. Studies show a woman's earnings rise about 6.7% for every month of paternity leave taken by the father.
Carer’s leave
In 2020, the UK government introduced carer's leave, a ‘day one right’ that allows employees to leave work to provide care and attention for a dependent alongside their paid work.
Whether or not a person qualifies as a carer is up to the employer’s discretion. However, this definition does tend to include:
- Spouses and civil partners
- Children (including adopted and step-children)
- Parents; anyone who lives in the same household as the employee (other than by reason of them being their employee, tenant, lodger, or boarder)
- Anyone who reasonably relies on the employee for care (including, for example, grandparents and siblings if they depend on the employee for care).
Employees can use a carer’s leave entitlement that is available to be taken flexibly, either in individual days or half days, up to a block of one week.
Insurance policies
Insurance policies, while providing plenty of value for the employee, are very complex to introduce and require a hefty amount of admin. Low take-up will also make policies more expensive.
Try to get an idea of interest and employee feedback on the idea before you progress so you can be certain that you’ll get a significant return on investment.
Private Medical Insurance (PMI)
PMI helps with the cost of private treatment and enables staff to jump hospital waiting lists. However, most policies do not cover pre-existing medical conditions, and PMI is perceived to be the most expensive healthcare benefit.
Generally speaking, the more employees you add to Private Medical Insurance the cheaper the cover becomes per worker. However, Tobin Coles, sales director of Jelf Corporate Healthcare, estimates that small businesses will pay about £700 per person per year.
Life Insurance (paid out if an employee dies) and Income Protection (paid out if an employee is unable to work)
These two policies are tax-free and offered typically because they are typically lower cost but high impact benefits. At least one is usually offered by a company. Not providing them creates financial and/or reputational risk if something happens to an employee. It also makes a company's comp package uncompetitive, resulting in difficulty in hiring/higher salaries.
Insurance policies are also better value the more people they cover, so these are often cheaper and more efficient than other benefits.
Most businesses offer group-term life insurance as an employee benefit, although individual terms can be offered. Group-term packages come with no cover limit, so a small business can protect its entire staff with one policy.
Also growing in popularity is life assurance. This policy differs from life insurance as it lasts for the subscriber’s entire life. You can sign up at any age. Naturally, this is a more expensive option than life insurance.
Income protection pays an ongoing monthly income to employees who become physically unable to work. The employee will be given around 50-60% from the provider, while employers should expect to pay somewhere between 1.25% and 1.5% of payroll.
Pension plans
Employees tend to be more aware of the benefits of having a healthy pension pot for retirement, meaning businesses offering exceptional pension schemes score highly in the recruitment and retention stakes. In fact, Remote’s 2022 employee benefits report highlighted that three out four respondents think a good retirement plan is the most important benefit a company can offer.
Understanding pensions can be tricky. To get a more detailed overview, read our guide to small business pension plans.
Defined benefit schemes
Also called a ‘final salary' pension, a defined benefit scheme is a type of workplace pension that pays staff a retirement income based on salary and years worked for the employer, rather than the amount of money contributed to the pension.
They offer a guaranteed pension income when you retire, incentivising staff to stay at a company for longer and providing members with certainty about their retirement income.
Companies also often choose defined-contribution plans instead because they are the most attractive type of scheme to employees. However, your business takes the financial risk and you will need to provide additional funding if a deficit occurs.
Stakeholder Pension (SHP)
If you employ five people or more and don't provide access to an occupational pension, you must provide a stakeholder scheme, and offer your staff basic advice on what it entails. You are not legally required to contribute to the fund and members take any financial risk.
Employees who join the scheme must be offered a payroll deduction facility to enable them to make contributions, and employers must maintain an accurate record of all employee payments and deductions.
Group Personal Pension Scheme (GPP)
GPPs are made up of a cluster of individual pensions. Companies must collect each staff member’s contributions through the payroll system and pass them onto the pension provider directly.
If you want to use the GPP instead of a stakeholder scheme, you must make minimum contributions of 3% per staff member.
The scheme provider is responsible for administering the programme, not the employer; however, the employer may face charges if employees stop making contributions. This sort of scheme is typically offered by newer businesses with no previous scheme history.
Monetised incentives
There has been a rise in the overall cost of living, which could be impacting your employees' financial wellbeing. If your employees are worried about their finances, it can cause stress and lack of sleep, which can affect their mental health.
Many of the benefits we’ve listed above serve as an indirect solution for improving staff financial wellbeing. However, there are also more direct routes you can take to help your team balance their personal banking sheets.
Staff discounts
An employee discount scheme is a way for you to help your teams save money on everyday purchases. They can take many forms, including a dedicated platform. Other discounts can be purchased as gift cards, vouchers and e-vouchers.
You can choose to create your own discount card to give out to employees. More simply, however, organisations can collaborate with a dedicated employee discount provider to take care of this aspect.
Staff discounts are an attractive perk for both employer and employee. They can offer large savings for staff, playing the role of a pay rise. But the money is being spent in the business, so the company gains as well. Plus, encouraging your employees to engage with your products or services will have an impact on organisational culture.
Commissions
Commissions are a form of variable-pay remuneration for services rendered or products sold. Rates range from 5% to as much as 50%, but most companies pay between 20-30%.
For obvious reasons, they are generally paid to salespeople. To ensure a more democratic reward system, offer a commission to any worker that enables a transaction. For example, rewarding a marketing manager if their campaign leads to a boost in sales.
Bonuses
Some employees will always be motivated by money, particularly those in strongly performance-driven environments, such as sales. Cash bonuses can be awarded as a one-off payment when staff motivation needs a boost or linked to performance targets and paid on a more regular basis.
Share schemes
Share schemes do exactly what their name suggests. Employees are given a certain number of shares in their contract, aligning their interests with those of shareholders and motivating staff to be more productive.
We recommend you think carefully before implementing this policy as there are some significant drawbacks to consider. Be aware that only rewarding your employees on the success of the business could mean employees expect a higher financial reward than they’ll receive.
Often, organisations also advertise a lower salary and factor in a share scheme as part of the remuneration package. However, this is a risky move as employees could feel cheated if the value of their shares drops.
Referral programs
In the current hiring crisis, it’s become exceptionally difficult for SMEs to onboard new talent. As a result, many have chosen to introduce referral programs to encourage existing employees to do the work for them.
Provided a new recruit passes probation, the worker who sourced them receives a lump sum (chosen by the business owner) as a reward. As well as filling a gap in your workforce, hiring staff who have an existing positive relationship is an easy way to promote good collaboration within a team.
Training and development
Entrepreneurs cannot expect their business to scale if their employees are not apportioned the same growth investment. After all, a wage packet is not the only motivating factor for doing a job. Staff want their time at a company to be beneficial for their overall career.
People are a fundamental asset for companies so make sure you continue to invest in their career development. Failure to do so will result in workers feeling undervalued and under stimulated, which can contribute to higher turnover.
Professional development workshops
These are an effective and appealing training initiative. They can also upskill staff, which can help to plug any gaps you have in your existing talent offering.
Types of workshops include:
- Technical skills (copywriting, social media management, data analysis, etc.)
- Soft skills (communication, presentation, team-working, etc.)
- Safety training (First Aid, construction safety, food service safety, etc.)
Lee Murphy, Founder of The Accountancy Partnership, said: “Hiring doesn’t end when the employee is onboarded. There is the ongoing role of ensuring these people are properly trained, managed and supported so that they are getting the most out of being an employee and in turn committed to and working hard for the business.”
Onboarding
When a new person is hired, the business often mistakenly believes that the hard work is done. But just because a candidate impressed during an interview, doesn’t mean they will just fall into place and start making you tons of money.
Part of the employee onboarding process, a good orientation program does wonders to retain new hires and make sure they feel like a member of the team. Usually conducted in your first week on the job, it educates staff on a number of topics like corporate culture, company mission, and available benefits.
Technology and equipment
It’s important to kit your teams’ workstations out with the necessary gadgets to ensure they don’t encounter any unnecessary obstacles when logging on.
This is particularly true if you want to operate a hybrid working policy. Home workers will need to be given all the gadgets necessary to carry out their job as well as they would in the office.
Our researchers found that cost is the biggest barrier for small businesses when purchasing new technology, with finance being cited as an obstacle for 50% of SMEs.
That said, we recommend following the rule of ‘less is more’ when it comes to equipment and really think about what you do (and don’t) need to buy to save on spend. Here’s a list of the must-have items:
- Laptop or PC computer monitor
- Keyboard
- Computer mouse
- Ergonomic office chair
Don’t let your team down with slow office internet either – see our guide to the best broadband providers for SMEs.
Other
Flexible Benefits
Flexible benefits, or Flex, programmes allow individual employers to create a tailored package of benefits for their business, including everything from additional holidays to company cars and free mobile phones.
Under the typical terms of a Flex scheme, employees must agree to surrender a portion of their salary in return for the benefits they choose, and most employers give their staff a self-service menu of options to choose from, deducting money for each benefit from their overall salary.
Third-party advice
To carve out even more of a recruitment niche, many firms are now choosing to provide financial or legal advice to their employees by collaborating with a third-party digital provider.
Granting this benefit can be costly for employers. The return on investment can be hugely gratifying, however, as it will work wonders for building employee trust and loyalty.
Staff can get access to legal guides and documents, as well as one-on-one time with a lawyer or accountant. As energy costs reach unsustainable heights and a recession looms, taking efforts to support your employees financially will be of particular value to staff.
How much do employee benefits cost?
Company benefit costs (especially core insurance benefits) vary hugely depending on a company’s size, demographics, claims history, and level of required coverage.
Because of this, it is difficult to provide a formulaic approach to costing a benefits package for newer businesses. However, Willis Towers Watson (a compensation data provider) suggested to us that your total benefit spend should be up to 15% of all payroll costs.
When designing a benefits package, it’s often tempting to go with the most popular policy amongst employees. Still, if you can’t afford to do this, prioritise the perks that come with a measurable uplift in productivity, as these are easier to build a commercial case for.
Benefit and perks budgets should be calculated at the beginning of the financial year. When working out the amount you have available to spend, take into account your projected headcount growth for the year to help you arrive at a potential spending forecast.
What benefits do employees value most in 2022?
All of the perks listed above are currently being offered by UK companies, which means your firm is competing with a lot of attractive offerings to attract talent. Free lunches could be the incentive that makes a qualified job seeker choose to apply to your company.
Here are the top four trends that modern employers should look for when deciding which of the above to instil as a policy:
1. Flexibility
After decades of office nine-to-fives, employees now want to be empowered to be able to fit their work around their lifestyle and responsibilities.
The key thing to remember with this trend is that it needs to be tailored to fit an individual’s unique circumstances. Employers should be prepared to maintain constant communication and understanding of staff needs for this to work.
2. Savings
Forking out for a weekly free lunch might seem like money poorly spent. But the combined total savings this can make for your staff can be huge.
Anything that contributes directly to a staff member’s piggy bank will be a popular policy to introduce. Pensions, discounts, and tax claims add up to a welcome safety net for employees braced for the upcoming recession.
3. Health and wellbeing
Even before the pandemic, the world was becoming more educated about the topic of health and wellbeing. Now, employees want to feel looked after at work, and like their mental health comes before the profits of the business.
Investing in employee wellbeing is also a direct investment in your business. It leads to better employee engagement, reduced sickness absence and higher productivity.
4. Career progression
We are currently living in the era of the ‘Great Resignation’. According to a survey of 6,000 workers by the recruitment firm Randstad UK, 24% were planning a change within three to six months.
In today’s jobs market, the power is in job seekers' hands. Retain your talent by keeping staff satisfied with their career development.
via https://www.AiUpNow.com
September 9, 2022 at 07:21AM by Helena Young, Khareem Sudlow
