We all like being rewarded for a job well done. It’s also no secret that a company’s rewards and benefits schemes go a long way towards attracting talent and retaining their staff in the long run.
Pay forms a key cornerstone of any organisation’s rewards structure and is probably one of the most dominant requirements of employees when it comes to prioritising how they want to be rewarded for their hard work.
At Advanced, we believe your benefits and rewards structures represent one of your biggest assets in helping your organisation stand out from the pack when it comes to attracting talent.
We wanted to take a deep dive into the benefit of benefits and examine how businesses are reshaping their rewards structures to meet the requirements of the new working world.
What are employee benefits?
Essentially, employee benefits are any form of non-wage-based compensation. These benefits are designed as a supplement to an employee’s salary and can range from dental cover and health care insurance to perks on travel, such as company cars.
Research by Willis Towers Watson found that 75% of employees are more likely to stay with their employer due to the benefits package, with another study finding that 69% of those surveyed would choose one job over another, based on the benefits offered.
Clearly, comprehensive benefits packages are foremost in people’s minds when choosing which organisation is the right fit for them.
There’s increasing evidence of the growing importance of having a clear structure around employee benefits and rewards in place within your organisation – a survey by Aviva found that 48% of people stated a desire for some form of wellness benefit when assessing an organisation. This suggests that people’s priorities have shifted to place a greater emphasis on work-life balance and well-being.
Your employee benefits structure is the perfect opportunity to demonstrate your oganisation’s commitment to meeting these ideals.
What are the four major types of employee benefits?
Traditionally, employee benefits have fallen into four main categories:
Medical – most commonly medical insurance and dental care packages. Mental well-being is also becoming a priority, with accommodations being made for workplace counselors and rewards, such as days off being offered, to encourage employees to unwind
Life – life insurance policies and time off. Many organisations have begun to fold other benefits into this category, such as gym memberships or access to on site leisure facilities.
Retirement – pension schemes and retirement funds
Disability – disability insurance, as well as transport allowances, such as on-site parking and access to disability-appropriate company cars.
These traditional benefits remain foremost in many employees’ considerations: Aviva found that annual leave still matters the most, with 44% of those surveyed identifying it as one of the workplace benefits of greatest interest to them. Other traditional benefits, such as childcare, parental leave, and flexible hours, also rank highly.
How to make the most of employee benefits
Although it’s a given that almost every organisation will provide some form of benefit or reward scheme for their workforce, there still remains the question of how effective management in each organisation is at communicating benefits, and what steps can be taken to drive this process forwards.
One in five employees feels there are no benefits on offer to them, with 19% of people surveyed expressing a lack of interest in benefits that were offered, as they felt they weren’t relevant to them. Learn about the importance of employee engagement and staff turnover.
The next most common reason for not taking advantage of benefits is a lack of information provided regarding what’s available to employees within their workplace.
This seems to suggest there are two major areas in which organisations need to place their focus if they wish to ensure employees are taking advantage of the benefits offered.
Firstly, the importance surrounding relevancy. The research would suggest that many feel that, outside of paycheques and annual leave, they’re receiving no additional benefits.
While their employers may feel differently regarding what reward structures are in place, this still highlights a disconnect between employer and employee regarding priorities. This also appears to support the research which suggests a preference for schemes structured around financial or emotional support.
To ensure their benefits are as effective as possible, companies should focus on having a smaller pool of rewards focused around those areas, rather than spreading themselves thin with numerous initiatives.
The role of payroll in rewarding your people
With the cost-of-living crisis now a very real threat for so many, the need to have a benefits and reward scheme which works for your people is more important than ever. Many businesses won’t have the scope to reward their people in the more traditional ways, such as through salary increases or bonuses, so how can they ensure their reward schemes remain relevant and sympathetic to the needs of their people?
Taking stock of the biggest challenges facing your people will offer the best foundation for restructuring your rewards programmes to support your people, with many businesses actively paying energy bills on behalf of their employees or offering a substantial stipend to alleviate rising costs.
One of the chief responsibilities for businesses when focusing their rewards schemes will be to ensure they’re communicating the support and opportunities available to their people effectively. Your human resource and payroll teams will have a huge role to play in ensuring effective communication is pushed out to your employees, as well as acting as more personal touchstones for employees who may be feeling self-conscious about financial struggles.
A cornerstone of emerging reward schemes, particularly considering freezes on wages, will be the ability to offer flexibility in how you pay your people.
Pay on demand is a form of employee payment method which allows people to receive wages as they earn them. Rather than being tied to the traditional model of weekly, fortnightly, or monthly pay, pay on demand allows employees the ability to have their wages ‘streamed’ to them as and when they work shifts. This means avoiding long stretches of time between pay periods, where money might be tight.
Another element of pay on demand is allowing workers the possibility to have their wages still tied into a rigid cycle but to also offer them the flexibility to draw down a portion of their salary early, to help cover emergency expenses, or simply to cover a period of unusual spend (such as Christmas time).
One of the key challenges currently facing businesses is that of talent attraction and retention. How an organisation rewards their people is now a key metric by which prospective employees will measure them. Considering the emerging cost-of living crisis, pay has cemented itself as a core element of rewards and benefits structures.
Payroll forms a key component of, not only your employee rewards structure, but also how your organisation is perceived by your employees. Payroll professionals work tirelessly to ensure accuracy with each pay cycle. It’s also now clear they have a much greater role to play in helping to create policy and procedure to educate employees around financial best practice but also to support their ongoing financial well-being.
This article was originally featured in the CIPP “Professional in Payroll, Pensions and Rewards” magazine, published on November 2022