HR & Finance Unite! Defining A Stellar Employee Benefits Strategy
Having a great compensation and rewards plan in place is one thing, but it’s only a single piece of the puzzle. In an increasingly competitive employment landscape, businesses are losing their best people to the perceived greener grass with greater frequency, and attracting the right candidates is becoming more difficult by the day.
Companies that recognise the importance of employee benefits and go above and beyond when offering these will give themselves an edge over competitors in terms of effective recruitment and retention. And we’re not just talking about a quantitative concept here, but more so the qualitative nature of the perks on offer.
For example, offering subsidised gym memberships may represent less monetary value to an employee than, say, allowing them to expense home working equipment, but the payback in terms of health and happiness could be immeasurable. In short, it’s about getting creative with your employee benefits schemes.
Our third HR & Finance Unite! piece examines how the two departments should be working together to define and create a stellar package of benefits for employees. That is to say, somewhat separated from things like salary, statutory leave, training and development, albeit closely related to them.
What impact do employee benefits have?
The importance of employee benefits can’t really be overstated. Put simply, employees want to feel appreciated and recognised for their hard work. On top of this, they want these efforts to be met with additional support they can use towards their health, finances and caring for their family. One option, of course, is to offer increased pay to cover this, but this often isn’t the most effective or appropriate way to meet this type of employee need.
Remember: compensation can take many forms - recall our example about the gym membership? And this is where a stellar employee benefits package can come in clutch. And the stats support this. According to the research by EBRI, 78% of employees said that benefits were very’ or ‘extremely’ important to their decision of accepting or rejecting a job offer.
So what’s the ‘benefit’ of having great employee benefits? Turns out there are quite a few for organisations - here’s the lowdown, a stellar employee benefits package can help you:
Attract the best talent
It’s a bit of a no-brainer, but offer the best, and you’ll attract the best. Still, you don’t have to spend like a Fortune 500 company to provide a stellar benefits package for your employees. If you're a small or medium-sized business, then the best benefits you can provide are the ones tailored to your particular workforce and its unique needs. Hire a lot of millennials and Gen Zs? Then, you might want to focus on more health or convenience-related benefits. Is your workforce made up predominantly of parents? Then you might want to offer a fantastic Maternity or Shared Parental policy as well as a stipend to cover daycare costs.
Support your employees well beyond the 9 to 5
Recognising that your team has a life beyond the four walls (whether literal or digital) of your office is important to your employee benefits package. Whether it’s through extra vacation days, a discount on eating out, a flexible working policy or mental health support, offering care and support to your employees when they’re ‘off duty’ is just as important as when they’re ‘on duty’.
Have a positive impact on health & wellbeing
In the modern business era, employees are increasingly becoming aware of the negative impacts of their compromising health and well-being. It’s no longer acceptable to go ‘above and beyond’ at the cost of physical and mental health. As such, benefits that support health and wellbeing have quickly moved to the top of the list of most valuable and sought-after benefits. So it’s no surprise that companies that provide comprehensive health coverage and encourage self-care through more supportive ‘perks’ are outperforming other organisations; after all, healthy employees mean top-notch results for businesses.
Help your team boost their productivity
If your employees are healthy and happy, then they’ll naturally have more energy they can devote to driving your organisation forward. In other words, a talented, healthy workforce is a productive one. When your crew feel cared for, they’ll want to pay that care back by putting more time, energy and focus into their work.
Improve your brand reputation
As we’ve been exploring, what goes around, comes around, which is good news for your business as modern consumers dig businesses that share their values. Treat your employees right, and your company becomes a magnet not just for great hires but also for ethos-conscious customers. All this makes your benefits package an important part of your front-line defence against bad-mouthing from disgruntled staff and subsequent PR disasters.
What’s the difference between a ‘reward’ strategy and a ‘benefits’ strategy?
You can think of a reward strategy as one that compensates employees for the time and effort that they give you. It’s more closely aligned with what an employee (or prospective employee) expects from an employer - think salary, statutory leave, sales-based commission etc. And then consider an employee benefits strategy as the ‘icing on the cake’, as it were; the added ‘perks’ that workers might not necessarily expect from an employer, but that (when administered smartly) can help keep your best people onboard, and draw those talented prospects towards your door.
So to be clear, when we refer to employee benefits or ‘perks’, we’re talking about non-wage compensation, extra rewards or added incentives. The list of possibilities when it comes to offering particular benefits for employees is pretty extensive, and we’ll go into some of them in the next section.
What’s typically included in employee benefits packages?
Whilst the specifics of employee benefits schemes or packages vary from employer to employer, they can be grouped into broadly similar categories. But simply throwing as much of the proverbial at the wall as possible in the hope that some of it will stick isn’t a winning strategy. After all, not all employee benefits were created equal, and naturally there are some that will grab the attention of candidates, as well as keep your existing talent onside, more than others.
It’s all about aligning your employee benefits packages with the culture that you want your business to embody, and the types of individuals that you want to be a part of the journey. There are so many tools at your disposal, and with a clearly defined strategic business case from HR, plus the appropriate budget allocation from Finance, you can come up with an employee benefits strategy that will win hearts and minds from all walks of life, and across all disciplines.
Health & Wellness
One of the most common categories in the employee benefits world, health & wellness initiatives are immensely popular with both HR and Finance teams. This is because healthier employees are happier (a core HR KPI), and more productive (a Finance one).
Common examples of health & wellness benefits include:
Private health insurance - including contributions towards eye, dental and mental health care, plus physiotherapy;
life insurance or critical illness cover;
subsidised gym memberships;
fruit & veg box home deliveries - and / or the equivalent at the workplace.
In the hybrid world of work, the most successful companies are the ones that respect employee’s rights to work from home, at the same time as creating good incentives to come into the workplace for regular face to face collaboration. Companies who facilitate a harmonious hybrid working environment can lay claim to more engaged, energetic and productive employees.
A newer example of a benefit for employees, more and more companies are incentivising some workplace attendance by subsidising commuting costs. This is particularly useful for city-based businesses who are looking to attract a wider talent pool from other parts of the country, and with the high cost of commuting in the UK, could be the thing that encourages a prospect to choose you over a competitor.
And for London companies, a great selling point is the fact that you can offer a London wage to staff who might not necessarily live within the boundaries of the M25, at the same time as helping them feel more connected to the business with train travel that can be eligible for reimbursement.
Supporting employees with the cost of getting a great home working environment established can reassure them that they are in the perfect place to do their best work from home. Another increasingly popular post-pandemic employee benefits strategy, it can also help contribute towards physical and mental wellbeing (think standup desks and laptop stands for posture, and decent sized high definition monitors for productivity).
Providing a monthly budget for food, drink and team building activities is an employee benefit that succeeds in a few different ways. It can help to alleviate one of the biggest costs of living; it encourages teams to come together and bond outside of the workplace; and it is absolutely something that job seekers - especially younger ones - will look for when deciding where they’d like to work.
And if you’re able to promote the fact that you enjoy regular summer or Christmas parties on job ads, that’s another way to lure prospective employees to your door by way of employee benefits. Some multinational companies even bring all of their different teams together each year for an employee ‘Summit’, another great way to appeal to those who want to work for a company with staff in different countries, and to get the opportunity for international travel.
All employees are entitled to a certain amount of annual leave each year by law, but there are ways for employers to get more creative with leave in such a way as it becomes an additional employee benefit. There are a few different ways of doing this:
Additional holiday on top of the statutory allowance - either immediately, or with each passing year of service (an additional day for each year worked);
birthdays off - all employees automatically have their birthday added to their paid holiday allowance, without sacrificing a day of leave;
extended parental leave - in addition to the legally required minimum;
unlimited time off - yes, it’s a thing! Where you don’t have a huge budget for salary and other perks, offering unlimited time off would likely lure (or keep) those who may have been offered more money elsewhere.
Many businesses, startups in particular, give employees the chance to own a piece of the company by investing in shares. It’s a great way of achieving literal buy-in for your strategic vision as senior HR or Finance leaders. Employees will be engaged and motivated to do their best, most productive work for your business, as they are able to benefit from any successes it enjoys.
What role does HR play in creating a benefits strategy?
Whilst Finance will be the facilitator of any plan from a budgetary perspective, it is HR who plays the integral role in the formulation of a company-wide employee benefits strategy. This is because the success of any strategy will be measured in terms of employee wellbeing, performance, retention and recruitment. It is up to HR teams and leaders to put forward proposals and to make the business case for the budget required to achieve their aims.
And these should always be aligned to creating a happy and productive workforce that is committed to performing at its best for you.
How can Finance support and enable HR in the creation of employee benefits schemes?
A Finance team that is open and listens to the business case coming from HR, that is able to be somewhat flexible on budgetary requirements, will more likely see payback in terms of productivity and increased revenue from engaged and motivated employees.
But in tough economic climates, with budgets constrained to within an inch of their lives, this isn’t always feasible. So Finance should work together with HR to align on ‘best case scenario’ aims and outcomes, and then get creative with initiatives that won’t put a heavy burden on other areas of the business.
Either way, the two functions should absolutely be working together in order to create the best possible employee benefits strategy, one that will get as close to their shared objectives as possible.
How to create and hone your benefits strategy for your employees, collaboratively
The first part of creating a collaborative benefits strategy is assessing the roles you’re looking to fill over the next 12 months, and aligning your thinking to those types of individuals and requirements. Workforce planning is always something that should be done collaboratively between Finance and HR, so this is a great way to combine the two initiatives.
Be sure to do your market research. You’ll want to know what the competition is willing to offer for similar roles, and what their wider benefits strategy might look like. It’s important also to consult your company values and culture, as it’s crucial that these are being lived throughout the business (including when it comes to employee benefits).
And of course, you’ll need to check the budget, and be sure to sit down together to allocate this appropriately across various different employee benefit schemes. It may make sense to put less into a greater number of different benefit options, rather than to place all your eggs into one basket.
And once you’ve got to the stage where you’re ready to hit ‘go’ on your plans, you’ll want to document and communicate everything. For existing employees, communication through internal channels will help build excitement and buy-in, ensuring that the benefits of any new added extras can be enjoyed by all.
Having clear external documentation in place means that you can bring a level of consistency to job postings, to build awareness around your employee benefits offerings and put you front and centre of any job seekers’ minds as they browse various opportunities.
Finally, be sure that your plans are flexible enough to be regularly evaluated and tweaked. Your strategy will need to be in line with the competition - and this can change. Plan in annual reviews (at least), and ensure that HR is taking the pulse of employees regularly to ensure that your schemes are being used (and enjoyed).
Find out how PayFit allows teams to understand exactly how benefits schemes are impacting financial and employee wellbeing (and how it fosters better collaboration between teams) by booking a demo with one of our product specialists below.