Need to know:
- Large employers are likely to have more resources, time and expertise to dedicate to building impressive reward packages, but smaller organisations can lead in innovation and communication.
- Smaller employers are arguably able to gather and respond to feedback in a more effective manner, and can therefore make quicker progress when it comes to tailored benefits.
- The rising importance of non-financial incentives is levelling the playing field, and recognition of success is a key part of this.
When it comes to providing impressive benefits packages, large employers are naturally likely to have more resources, time and people power. This arguably creates a considerable gap for small to medium enterprises (SMEs), making the war for talent all the more difficult.
In fact, more than three-fifths (63%) of SME owners are concerned they face a benefits gap in comparison with larger competitors, according to a study commissioned by MetLife UK in October 2018.
Joy Waugh, principal consultant at Zest Benefits, cites one example: “The group risk market is much tougher for SMEs. SMEs do not have the group purchasing power or volume that these providers typically require; for example, the minimum number of employees for a flex life assurance or critical illness scheme is typically 250.
“Large organisations may offer a lot of benefits to appeal to their wider geographical and demographic profile and tick the boxes around diversity and inclusion, and do so at cheaper rates than SMEs."
However, this does not mean that smaller organisations are unable to provide a competitive, appealing employee experience. Indeed, because small business leaders can enjoy closer contact with the people they want to reward, and can move quickly to respond to employees’ desires, they can sometimes be in a better position than their larger counterparts.
Large advantages
According to Rachel Meadows, director of pensions and financial planning at Broadstone, a large employer is typically able to afford more specialism and knowledge around its reward strategy.
A dedicated HR and payroll team can provide the time and expertise required to streamline benefits while also reducing reliance on third party advisers and suppliers and ensuring money is spent as effectively as possible. “This enables their time to be focused on the most important areas of designing their benefit strategy and [boosting] employee engagement,” says Meadows. “Large organisations often have bigger in-house teams that can deal with lots of independently sourced benefits.”
Helen Payne, principal at Aon Employee Benefits, adds: “[Big employers] may have a larger HR team with specialists, maybe in benefits or employee communications, to fully support the entire process. They may have a potential for multinational pooling of benefit arrangements, too.”
That said, no matter how well researched and designed the proposed reward scheme, if there are a high number of stakeholders involved, progress can take time. Collective decision-making can also result in a more conservative set of rewards: “Benefit schemes in some large organisations can be seen as a bit too traditional,” Payne observes.
As Waugh points out, the size of an organisation also does not protect it from failure for a specific benefit to take off: “One large [employer] hasn’t been able to introduce a bike scheme for three years, as one of their sub-groups wouldn’t allow it,” she notes as an example. “Therefore, they would fail the HM Revenue and Customs requirement to be ‘generally available to all’ in order to attract the tax break.”
In theory, communication and change across a smaller business should be easier, with the result that rewards can be tailored faster and with a greater understanding of what is appreciated among employees.
Furthermore, instead of studying take-up data and canvassing feedback from a large workforce, an employer with a few hundred employees can go as far as to organise personal meetings with every individual, to promote and measure engagement with a reward strategy.
Responding to feedback
International technical recruitment organisation VHR started with one employee in 2003 and reached 80 workers last year. In the last two years alone, its employee base has grown by 20%, and VHR has opened additional offices in Czechia and Spain.
According to Emma Gaywood, HR adviser at VHR, the employee engagement programme now includes 21 initiatives, including flexible working, monthly social events, private healthcare, dinners for top performers and monthly awards for sales and support staff.
Employees are surveyed anonymously once a year, and are asked to rate the benefits on offer. The organisation welcomes individual feedback, as well as new ideas. Suggestions implemented in the last year include: group blood donation, daily fresh fruit, a charity bake off and knowledge-sharing lunches.
“Our employee rewards scheme and investment into learning and development have increased employee satisfaction and retention,” says Gaywood. “In the past few years, we have reduced our staff turnover to 25%; the average for the recruitment industry is 43%. We have also almost doubled our turnover in the past three years, proving that positive culture equals business success.”
Non-financial rewards
A survey commissioned by employment search engine Indeed, published in May 2018, found that only 12% of British employees value pay above any other element of their job, whereas enjoying their job (24%) and having strong relationships with colleagues (21%) are more likely to impact satisfaction.
In turn, a quarter (25%) of employees believe that there is no increase in salary that would make them forgo flexibility at work, according to research by workforce management software provider Quinyx published in October 2018.
Flexible working practices are naturally easier to implement and monitor when fewer employees are involved and communication and collaboration is simplified, and SMEs are also in a good position to take advantage of the move toward a less finance-focused approach to benefits.
The power of a pay rise, bonus, or other kind of financial incentive can cease having an impact after a while, and the chances are that smaller employers can find and deliver a new, innovative idea sooner rather than later.
For some employees, simply being part of a smaller organisation is appealing in itself. “Often, employees choose to work at a smaller organisation because they perceive it to be easier to make a bigger contribution and progress their career,” says Payne. “If this is the case, an organisation should celebrate and communicate their successes.”
Whereas there are many advantages for larger organisations, such as the ability to easily create and codify recognition strategies, provide high value incentives and invest in the technology to gamify reward, smaller businesses might make the most of the ability to communicate effectively and personally across the workforce, creating an authentic sense of collaboration and celebration with relative ease.
Ultimate objectives
The objective of a rewards scheme is, ultimately, identical for every business, no matter its size or sector. John Dean, chief commercial officer at Punter Southall Health and Protection, says: “Designing a contemporary benefits programme is a great opportunity for [employers] to build their brand and influence their culture and productivity.
“No matter what the size of the organisation, the process is simple. First, [an employer] must understand its employees. Are they all young media types or older professionals? Second, understand what makes them tick. For example, would wellbeing programmes appeal, or are they more likely to want support around flexible working and insured benefits?”
Armed with this knowledge, Dean concludes, it is possible to create a benefits programme that suits an organisation whether it has three, 300 or 3,000 staff: “Listen to staff and build bespoke solutions, as these will be valued and appreciated."
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