By Cheryl Clements, head of business development, Tusker,

Employee benefits may seem like an expensive add-on to senior leaders. Something that costs a lot and takes up time, but employees expect it, so they have to be implemented well. Yet, when done right, they are a strategic lever of success - reducing operational costs, increasing retention and strengthening productivity. And the best part is, the ROI should more than balance out spend. So, employee benefits can be one of your most important strategies - for your workforce, your boardroom and your organisational results.

Creating a strong benefits package doesn’t have to require extortionate spend. But it does require smart planning and listening to your employees’ needs.

Let’s break down how modern benefits can actually save your company a lot of money.

So, what’s a good benefit?

What employees expect from their benefits has drastically shifted in recent years. While traditionally talent may have sought out certain salary expectations and expected basic benefits like pensions, health insurance or discounts, differentiating benefits beyond these has become a necessity for attraction and retention. Now, employees want perks that reflect the reality of how people live and work today. In fact, some studies suggest that 80% of employees would even choose additional benefits over a pay raise, while 69% of talent would be more inclined to choose one job over another if it had better benefits. But what are these better benefits?

While what a ‘great’ benefit is depends on the individual needs of your workforce, high-performing strategies tend to focus on:

  • Mental, physical, social and financial wellbeing
  • Flexible working opportunities
  • Inclusive and accessible support
  • Sustainability and ethical considerations
  • Digital, accessible portals

Simultaneously, HR teams are still dealing with inflation making optimisation more important than ever.

Step one - Build benefits your people will actually use

Irrelevant or confusing benefits drain money. But popular benefits with other organisations will too if they’re not what your employees really want. Your unique workforce has differing individual needs and lived experiences. To get the best return, ensure you combine business needs with an understanding of what employees want. Then use a multi-communication strategy that can achieve greatest reach, ensuring all employees are aware of their benefits and understand them.

The companies seeing the greatest impact are the ones who:

  • Regularly ask employees what they want, instead of guessing
  • Use simple, intuitive platforms that make benefits easy to understand
  • Provide short, engaging education sessions so staff feel confident choosing

High utilisation is when the original payback begins. If employees are aware of what’s available, use it, and it improves their workplace experience, your investment will work a lot harder.

The most tangible savings - salary sacrifice

The most powerful benefits help employees with numerous means and at the same time, provide the best cost reductions. A great example of this are salary sacrifice schemes, which provide significant savings for both employees and employers, also often offering companies greater sustainability options.

Examples of salary sacrifice programmes include electric car and cycle-to-work schemes. Through these programmes, employees agree to give up a portion of their pre-tax salary for a reward, over a monthly set period (in these examples, an electric car or bicycle of your choice). This reduces the employee’s taxable income, while saving both employees and employers National Insurance Contributions (NICs), which helps employers pay back setup and admin costs.

As a result, ROI is delivered through significant savings. It also improves employee productivity and satisfaction by supporting their financial health and mobility and, in many cases, personal and company-wide environmental goals.

But salary sacrifice isn’t the only place savings appear.

Wellbeing benefits that reduce sick leave (and hidden costs)

While in recent years benefits have been leveraged more to support employee finances beyond their paycheque, employee wellbeing and health issues never left the picture. Mental health (which more employers are now recognising can often be a direct result of finances) and physical health, like chronic pain issues, are major drivers of productivity losses and absences.

For example, 60% of highly stressed employees admit that stress has a negative impact on their productivity. Simultaneously, sickness-absence in the UK has hit a 15-year high, with 41% of employers reporting stress-related absences among employees.

However, the right benefits can proactively target wellbeing issues before they become a major problem. Plenty of benefits can promote wellbeing and reduce company costs by providing ROI in increased productivity and reduced absence. For example:

  • Mental health support such as counselling, therapy access and digital resilience tools
  • Preventative healthcare including screenings, virtual GP services and physio pathways
  • Fitness benefits like gym discounts and exercise clubs
  • Menopause support
  • Nutrition and sleep tools that help prevent fatigue and stress-related illness
  • Financial wellbeing support including coaching or budgeting tools
  • EAPs offering confidential, multi-issue guidance
  • Income protection with early intervention to aid quicker, safer returns to work

In fact, research from McKinsey indicates that investing in holistic employee health could generate up to $12 trillion in global economic value as a result of reduced attrition, absenteeism and presenteeism. This makes one thing clear - preventing poor wellbeing saves a whole lot more than having to handle it, and benefits are a foundation for this.

Retention - Where the biggest savings often hide

Replacing employees is a lot more expensive than most employers realise. According to research from Culture Amp, replacing an employee costs between £11,200 and £74,000, depending on the seniority of the role. And considering 73% of employees would be encouraged to stay with their current employer for longer if they offered access to more benefits - a great package is dynamite for business success.

But it’s not only retention. Strong benefits help create a stronger employer branding. As a result, this:

  • Attracts more, and better candidates
  • Reduces the number of offers turned down
  • Create loyalty through long-term benefit agreements (for example, salary sacrifice schemes)

Even a small improvement in retention can greatly improve annual operational costs.

Designing cost-saving benefits

To get the best value from your benefit spend, focus on building an offering that:

  • Supports what your employees actually want and need
  • Offers low-cost, highly effective wellbeing solutions
  • Includes salary sacrifice options that deliver clear savings
  • Reflects your culture, values and sustainability objectives
  • Strengthens your employer brand, helping increase attraction and retention

When benefits are aligned with both business and employee priorities, the result is a healthier workforce, and a healthier balance sheet.

 

 

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