Company Benefits For Employee Recruitment and Retention

There’s a fair amount of confusion about which company employee benefits to offer, including the misplaced belief that it’s only expected of large enterprises. There’s also a widely-held assumption that the private sector is more likely to offer work perks than the public sector, but the truth is more complicated than that.

It’s true that small businesses have less capacity to offer wellbeing solutions to staff during the early stages of growth, especially those startup owners who haven’t yet turned enough profit to pay their own salary. But owners of all business sizes need to understand that benefits given by companies to employees are incredibly important. 

In an age of rising employee turnover, the financial and ethical case of looking after employees and helping support a positive work life is more vital than ever. So, let’s dig into what company benefits are, and why they’re so valuable.

What are Employee Benefits?

Employee benefits are all the perks and compensations offered to staff members beyond their salary or pay packet. Some are mandatory, such as statutory sick pay and maternity leave, but they also encompass optional services and extras that employers can choose to enhance their employees’ experience. Popular perks include cycle-to-work schemes, wellbeing solutions, pension funds, financial support, and others.

Additional benefits like these help to attract and retain people within an organisation, as staff who feel healthier, validated for their work, and have their status as individuals recognised are more likely to derive value from their job and their time in the workplace.

Employee perks therefore serve both an ethical purpose and a business one: happier teams for a more prosperous business. The question of which benefits are best for each company is a different story, however.

Types of Employee Benefits

Financial

Monetary rewards like pension funds, life insurance, and company credit cards are often paid for by employers, usually through corporate arrangements with policy providers or through salary sacrifice, where employees give up a portion of pre-tax salary in exchange for a work benefit. 

For example, Vivup’s Home and Electronics scheme* lets employees sacrifice their salary on thousands of items fulfilled by a range of brands, including: Currys, Decathlon, John Lewis & Partners, Cambridge Audio. This allows staff to spread the cost of appliances, tools and furniture. 

Physical

Although the UK offers free universal healthcare at the point of use, those countries which do not have this do frequently offer private medical cover or access to GP services as part of their employee benefits packages. Other smaller perks that promote physical wellbeing for staff include in-work exercise classes, gym discounts and vouchers, or cycle-to-work schemes.

These initiatives let employees feel supported staying fit and healthy at work, which also benefits employers as it reduces absenteeism from sick days. It also takes the pressure off them balancing work with exercise, and is known to have a positive impact on mental health. 

Plus, having a bike provided out of salary sacrifice can significantly reduce the stress of a busy work commute—while also helping team members save some much needed extra cash!

Mental health support

It’s taken longer than it should have for mental health to be recognised as an important driver of people’s performance and enjoyment at work. However, there’s been a noticeable shift in recent years, and more employers have become aware of why they need to give more equitable treatment to mental and physical wellbeing.

The rise of the Employee Assistance Programme (EAP) is a testament to this. More and more employers are offering employees access to a confidential service that lets them have difficult conversations they may not feel they are able to have with their line manager. Some EAPs, like Vivup’s, offer 24/7 telephone helplines and access to face to face, virtual or telephone counselling.

Other options include offering staff meditation, yoga, and mindfulness sessions, as these can have similar mental health benefits for employees in a company. Vivup’s Your Care is designed to help employees build good mental health by offering a management platform that encourages them to actively look after their mental wellbeing.

Holidays and flexible working

One of the most frequently talked about perks is the amount of annual leave employees receive on top of statutory paid leave (more on this later). However, flexible working patterns have become just as desirable to potential recruits.

The surge in remote-working to accommodate lockdowns during the COVID-19 pandemic showed us the power of hybrid working hours. Working some days remotely and some days in the office supports people’s work-life balance and gives them greater control over their schedules, which itself can have wondrous effects on physical and mental wellbeing.

Some companies also offer a four-day work week, or a compressed hours equivalent, where an employee works the same contracted hours over four days—giving them space to explore more hobbies and enrich their home and family lives.

Other benefits

There are a range of further perks that companies of different sizes can offer employees. Benefits that are quick for employers to introduce include corporate volunteer days or additional voluntary days along with paid leave are also an option. Read about further benefits you can offer employees.

Mandatory Employee Benefits in the UK

There are several benefits already provided under UK law, but rather than seeing this as something the government has taken care of already, these should be considered the baseline for providing a competitive benefits package

National Insurance

• National Insurance Contributions (NICs) are taken from employee payslips every month.
• These pay for state programs that give financial support to jobseekers, people with illnesses, retirees, maternity allowance, and others

Pension

• U.K. employers must contribute to a workplace pension scheme. 
• Employers enrol all eligible employees in the pension, which includes employees aged 22 and older who work in the U.K. and earn at least £10,000 per year
• The average UK employer contribution is 3% — but some offer more, and employers can choose to enhance pension contributions with time, i.e. based on years of service

Sick pay

• Employees in the UK receive statutory sick pay (SSP) at £109.40 per week
• To qualify for these, workers need to earn at least £123 a week. An employee is considered on sick leave once they have been ill for four consecutive days
• Sick pay entitlements usually increase with time employed by an organisation

Maternity and paternity leave

• In the UK, pregnant employees receive 39 weeks statutory paid maternity leave at 90% of their average weekly earnings for the first six weeks
• After that, they receive £172.48 per week, or 90% of average weekly earnings (whichever is lowest)
• Around ⅓ of organisations provide statutory paid maternity leave, while nearly ⅕ (18%) offer between 4 and 13 weeks of enhanced maternity pay at, or near, the full rate of pay (CIPD)
• More than ⅕ (21%) offer 26 weeks of enhanced maternity pay at or near the full rate of pay followed by 13 weeks at the statutory minimum rate or 90% of the employee’s average weekly earnings

Annual leave

• UK regulations give employees a statutory paid leave of 28 days per year, equivalent to 5.6 working weeks
• The top 5% of employers offer an average of 33 days annual leave or more

The Importance of Employee Benefits

HR managers have many tasks to juggle and want to ensure their employee benefits package is really making a difference for their organisation.

Recruitment

Salary, work-life balance and benefits packages are the most decisive factors in successful recruitment, as a recent survey from People Management shows. Between 2022 and 2023, nearly half (44%) of respondents said they ‘struggled to compete with competitors’ pay and benefits packages’.

In particular, younger generations entering the workforce have a range of salary expectations but want to know during the hiring process what they expect to receive in more than just waged compensation. A study by HR review suggests only 10% of employees are properly demonstrating the value of these benefits during the hiring process, which means that those who do can truly stand out as an employer of choice. 

Since smaller businesses struggle to offer the competitive salaries and CPD opportunities as large organisations, this makes providing competitive benefits more vital in standing out and attracting the best talent to your organisation and keeping them on board.

Retention

On that topic, holding on to the skilled team members you’ve hired is highly important for businesses, since replacing a member of staff is costly for an organisation of any size. Employee retention is also influenced by what employee benefits packages are on offer. Since the cost of living has increased, studies show more than half (56%) of SME employers around the world have offered financial compensation to lower staff turnover levels.

In the UK, mental health support was the second most significant benefit in aiding retention rates, with 79% of employees found to be likely to stay at a company that provides high-quality mental health resources.

Culture

When employees feel validated, rewarded, and recognised not just for their hard work but simply as people with rich lives outside the workplace, they are more likely to feel happier on the job and form connections with the other people in their organisation. 

Not only does this help enhance employee engagement and performance, it makes the business itself a more open, inclusive, and enjoyable place to be involved in. 

Many organisations of different sizes are now more careful in paying attention not only to employee performance, but motivations, asking:

• What do they want out of their role? 
• Do they know about all the possible opportunities available to them?
• How can the business’s talent pool help them to progress?
• Are we effectively supporting employees so they can be present and happy at work?

Ensuring these questions are answered makes for a positive business culture that reinforces employees’ strong performance, while driving value for the organisation at the same time.

How to Choose Your Company Benefits Package

As a world class health and wellbeing benefits provider, at Vivup we know what keeping people happy involves. And we practise what we preach. Every decision from recruitment to engagement is based on five core principles: 

• Passionate 
• Focused 
• Innovative 
• Supportive 
• Fast Moving 

Here’s how we’d advise you to decide on your employee benefits package: 

Identify or review your core values

Start by thinking about what kind of company you want to be, including how you’d like employees to perceive their work environment. This is crucial not just for employee wellbeing, but by osmosis, the public’s view of your company (unhappy staff tend not to leave the best impression on customers). 

At Vivup, we recommend that companies implement a Recognition and Reward program, such as highfive, that reinforces these core values. From there, you can prioritise the types of company benefits you want to offer. 

Do your research

It’s important to know not just what you and existing employees view as valuable benefits, but also which are the most desirable for potential new recruits. Research published last year suggests that the five current most important work perks are:

• Flexible working

• Cost-of-living support

• Reduced commuting costs

• Health and wellbeing 

• Career progression opportunities

Get employee feedback

Engagement surveys are a win-win for employers and employees. So long as open and honest feedback is encouraged (i.e., anonymous responses) staff get to voice what they like and don’t like about their current work life, and employers can act on these concerns.

If certain issues come up repeatedly, or there is a strong demand from across the business for specific perks that are priorities for them, a company-wide feedback opportunity has served as a strong litmus test for levels of satisfaction—a powerful tool for retention and recruitment.

Find out more about how Vivup can support you to deliver company benefits to employees.

*Home & Electronics is provided via a salary sacrifice arrangement. Terms & Conditions apply.