Employee Benefits - Why are they important?
As the war for talent continues, attracting and retaining talent remains a challenge for many organisations.
One of the most effective ways to tackle this is to offer a stand-out employee benefits package. Check out our summary of benefits in the UK here.
So, why are employee benefits so important? And why are the most forward-thinking businesses offering them?
To keep it simple, we’ve gathered all the key facts and put them together in one place.
Let’s take a closer look at the benefits of employee benefits (sorry, couldn’t resist!)…
What are employee benefits?
Employee benefits are continually proving themselves to be a great way to reward, motivate and retain talent! But what are they?
Put simply, employee benefits are perks or rewards that are offered to teams by their employers in addition to their salary. Employee benefits are a type of non-wage related compensation.
Employee benefits come in many shapes and forms and can be credited to increased employee motivation, job satisfaction, and increased productivity.
Types of Employee Benefits
- Health benefits (e.g., health insurance, dental care, gym memberships)
- Workplace benefits (e.g., flexible working, learning & development)
- Financial benefits (e.g., pension plans, financial guidance)
- Lifestyle benefits (e.g., childcare, increased vacation days)
- Salary sacrifice (e.g., workplace nursery, flexible allowances)
- Flexible benefits (e.g., wellbeing budgets and allowances)
Why are Employee Benefits important?
With employee benefits making up around 32% of total compensation in the US, modern businesses know they should be offering a competitive benefits package.
According to MMB research, increased investments in benefits in the UK means that more than six in ten employers are now spending between 16% and 25% of base salary per employee!
So, what’s so great about employee benefits?
Employee Benefits Stats
- 60% say benefits are a deciding factor in accepting a job offer.
- 32% say benefits are as important as salary.
- 1/3 cited benefits as a top reason to look for a new job.
- 79% would prefer additional benefits to a pay rise.
- It costs £30k to lose an employee.
- 92% say benefits are important to job satisfaction.
- 60% of SME’s found benefits improved productivity.
1. Attract great talent with great benefits.
Companies that offer incredible benefits packages attract top talent.
A study conducted by Glassdoor showed that about 60% of people report that benefits and perks are a major factor in considering whether to accept a job offer.
Similarly, the Covid-19 pandemic showed the importance of prioritising our health. It only makes sense for this to carry over into the workplace. As of 2020, 32% of employees said that employee benefits were as important to them as salary when looking for a new role.
So, if you’re wanting to attract top talent to your company, it makes sense for you to offer a stellar benefits package that will get them excited!
<div class="facts-div"> <span class="facts-scribble" >60%</span> <span class="facts-fact">of people report that benefits and perks are a major factor in considering whether to accept a job offer</span></div>
2. Improve your employee retention.
Nearly one third of respondents in a study conducted by the Society for Human Resources Management (SHRM) cited their current benefits package as a top reason to look for a new position with a different employer in the next 12 months. This means that if you don’t offer incredible benefits then you could face losing great employees!
To add emphasis to this, according to Glassdoor’s Employment Confidence Survey, nearly four in five (79%) employees would prefer new or additional benefits to a pay increase!
<div class="facts-div"> <span class="facts-scribble" >4/5</span> <span class="facts-fact">would prefer new or additional benefits to a pay increase!</span></div>
3. It costs to lose employees!
This is sometimes overlooked by HR managers, but the financial cost of losing employees can be significant to a business, too.
According to a study published by Oxford Economics, the cost of losing an employee who earns 25k can be up to £30,000! This means that losing and replacing employees can leave you significantly out of pocket! So, not only can you face losing great employees due to poor benefits packages, but it can be a super costly process for your business too!
<div class="facts-div"> <span class="facts-scribble" >£30,000</span> <span class="facts-fact">the cost of loosing an employee earning over 25k</span></div>
4. Motivate your employees
The Society for Human Resources Management (SHRM) 2018 employee benefits survey found that 92% of employees said that benefits are important to their overall job satisfaction.
It’s simple: great benefits = happy and motivated employees!
<div class="facts-div"> <span class="facts-scribble" >92%</span> <span class="facts-fact">of employees said that benefits are important to their overall job satisfaction</span></div>
5. Boost productivity
A study conducted by ABI found that health and wellbeing employee benefits were incredibly effective at boosting employee productivity.
This study revealed that 60% of SMEs and 69% of mid-sized businesses said that health and wellbeing benefits had a significant impact on the productivity of their business.
<div class="facts-div"> <span class="facts-scribble" >69%</span> <span class="facts-fact">of mid-sized businesses said that health and wellbeing benefits had a significant impact on the productivity of their business</span></div>
6. Invest in your employer brand
Offering incredible employee benefits helps to improve the reputation of your brand both internally and externally. Your employees will thank you for it, and you’ll position yourself as a more authentic and attractive employer brand from the outside too!
So there you have it, some of the top reasons why employee benefits are important!
To summarise, employee benefits are a great way to attract and retain top talent, boost productivity, motivate your employees, and promote you employer brand. It's why the most forward-thinking brands are upping their benefits game!