How can benefit schemes improve employee retention?

One of the challenges regularly faced by UK employers is employee retention. Whilst overall labour market pressures have eased, skills shortages persist. Employers have therefore shifted their focus to keeping employees engaged, motivated and committed in their roles in order to retain top talent. A significant part of retention strategies has always been getting the salary right and, while this remains an important factor, companies have started to think about other ways to keep their employees engaged and happy in their roles. This has led to companies focusing on the overall employee experience and creating employee benefit schemes to integrate into their overall retention strategy. Having the right benefits package can help to improve job satisfaction, strengthen employee loyalty and reduce costly staff turnover. But only offering benefits to keep talent isn’t enough. Employers need to make sure that their benefits package is relevant, meets the changing expectations of employees and stands out in a competitive jobs market. This is where pay and benefits benchmarking comes into play, providing businesses with an invaluable insight into their current pay and benefits packages to improve employee retention.

Why employee benefits matter more than ever

Employees now look for more than just a competitive salary in a job. They also want a place that offers elements such as flexible working opportunities, wellbeing initiatives, enhanced pension contributions and career development opportunities. These all make up how employees perceive the company and whether there is value for their hard work. Research shows that there is a strong link between employee benefits and retention rates. When employees feel appropriately supported and rewarded, they are more likely to stay with their employer. Supported employees are generally more productive employees. They are also more likely to recommend the organisation to others. If employers don’t recognise employee needs and expectations, they run the risk of losing valuable talent to competitors offering more attractive reward packages.

How benefits affect employee retention

Understanding how benefits affect employee retention starts with recognising that benefits show an employer’s commitment and care for their staff. Even though pay is a key reason that candidates accept a role, the benefits packages play a pivotal role in engaging individuals in the long term. If a business has a well-designed benefits package, it can:

• Boost employee satisfaction and engagement.
• Encourage a better work-life balance.
• Help employees feel valued for their hard work.
• Improve financial wellbeing and reduce employee stress.
• Influence a positive workplace culture.
• Provide better physical and mental health.

Overall, offering enticing benefit schemes for employees can make them feel valued. Employees who feel valued are less likely to look for opportunities with other companies, which reduces labour turnover costs.

Examples of employee benefits that are valuable

When it comes to creating a reward strategy for a business, there is no one-size-fits-all solution. Each employee may value different benefits. As well as differing across industries and organisational culture, the benefits that are valuable are often dependent on demographics. Some of the most popular examples of employee benefits include:

• Additional holiday entitlement
• Private health insurance
• Training and development
• Flexible and hybrid working
• Life assurance
• Bonus and incentive schemes
• Family-friendly leave policies
• Paid volunteering days
• Pensions

To create successful benefit schemes for employees, businesses ideally need to offer a combination of rewards, incorporating financial rewards, wellbeing perks, flexibility and career development opportunities.

Cost-effective employee benefits for significant results

It is often thought that improving benefits schemes means a business has to make a substantial investment. However, this doesn’t have to be the case. There are many cost-effective employee benefits that can give employees real value in their roles and create significant results for a business. Affordable benefits that companies can use in their reward strategies include flexible working arrangements, volunteering days, career progression opportunities, learning and development initiatives, employee wellbeing benefits and recognition programmes. These cost-effective employee benefits can significantly improve engagement and productivity, without increasing payroll costs. For organisations with restricted budgets, this allows them to still offer enticing benefits that current and prospective employees are looking for.

Why benchmarking your benefits is essential

A company that designs a benefits package without understanding how they compare to their competitors and the wider job market can instantly put themselves at a disadvantage. Employers risk investing heavily in benefits that their employees don’t even value and/or match market expectations. Benchmarking benefits against the market and listening to what employees want and need is essential. When an organisation benchmarks their benefits package, they gain the evidence they need to make more informed reward decisions. By listening to employees and benchmarking benefits schemes, organisations can understand:

• If their benefits package is competitive in their sector.
• If they are investing in the right areas that create value for their employees.
• Which benefits are most valued by their employees.
• How the organisation compares with their competitors (who are searching for the same talent).
• Where is best to invest in for the future.

How Paydata's benefits benchmarking service supports better retention

Designing attractive benefit schemes for employees in a reward package begins with gaining an insight into the current market through reliable data. Paydata offers a pay and benefits benchmarking service to give organisations strong and independent market intelligence. This allows HR to compare both the salaries and benefits the business offers against competitors and the wider market. Rather than assuming which rewards will be most attractive to retain talent, alongside employee feedback, organisations can use our benchmarking data to inform a strong reward strategy that’s based on actual evidence. We help organisations to benchmark pay and benefits against the relevant markets, review the terms and conditions alongside competitor organisations, make more informed investment decisions, create reward packages that remain competitive in the future and identify the gaps in their current reward offerings. These valuable insights allow organisations to build reward packages that attract top talent, while also encouraging existing employees to stay in their roles.

How to improve employee retention through better reward strategies

Many organisations wonder how to improve employee retention, as they can find it difficult to retain and attract talent. This difficulty can stem from solely relying on salary, which whilst important, needs to be part of an overall salary and benefits package which recognises and rewards employee contribution. A successful retention strategy should include competitive salaries that are informed by market benchmarking, clear career progression opportunities, employee recognition initiatives, a transparent pay structure, relevant employee benefits that reflect employee needs, investment in employee wellbeing and regular reviews of reward packages. Organisations with effective retention strategies regularly review both their pay and benefits, rather than waiting until turnover becomes high. Doing this not only helps to keep turnover rates low, but it also demonstrates an ongoing commitment to employees.

Improve employee retention with data-driven decisions

If your organisation is looking to improve employee retention, then your benefits package needs to meet employee expectations and current market trends. Incorporating pay and benefits benchmarks removes the guesswork and gives HR professionals the confidence to build packages that attract, engage and retain talented employees. Paydata is here to help organisations create competitive reward strategies that support their long-term business success with our pay and benefits benchmarking service. We use expert insights and comprehensive market data to help you understand where your organisation is positioned against your competitors and the current job market. This helps ensure that your employee benefit schemes remain relevant, attractive and well-positioned to retain your staff.