Micro businesses don’t promote employee benefits to staff

Companies with fewer than 10 staff members fail to promote benefits and perks to their employees, a new study reveals.

Micro businesses are failing to promote employee benefits to staff despite recognising the value of benefits in retaining and motivating their workforce, new research from Pure Benefits shows.

The study among businesses employing 11 or fewer staff finds that more than half who offer benefits to staff don’t actively promote their benefits as they do not have the time or budget available.

Government data shows there are around 1.07 million micro businesses with fewer than 10 staff across the UK, and Pure Benefits believes they struggle to source employee benefits such as life insurance, income protection and private medical insurance for staff.

The research reveals that keeping and motivating staff are the two biggest reasons for having employee benefits, as the biggest challenges faced by micro businesses are employee retention and engagement and managing profitability.

Recruitment and training costs make staff turnover expensive, plus it is normal to have a period of decreased productivity when someone leaves, making it vital to ensure existing employees are happy and engaged at work.

Employee satisfaction should be a main priority for any business owner, articularly micro businesses, where high staff turnover is common and difficult to combat.

There are many alternative ways of providing employee benefits, such as offering flexible working hours, subsidising travel and fitness packages and giving small gits to employees to show appreciation.

‘The research shows that the majority of these micro businesses do their employee benefits research online,’ says Stuart Gray, founder of Pure Benefits. ‘It makes sense that all the info they need should be readily accessible online, with options to quote on the spot and the freedom to look at different coverage options without having to go through a complex process.’

‘Given that small businesses have regularly changing business needs as they grow, flexibility and simplicity are key.

Related: Why cash is no longer key to retaining employees

Two example employee benefit schemes

Remuneration alone won’t be enough to keep your staff motivated and cleverly thought out employee benefits are useful tools for ensuring staff loyalty. SmallBusiness.co.uk spoke to two businesses about their approach to benefits.

Responding to staff needs

Carolyn Lee, diversity and inclusion manager at global law firm Herbert Smith, believes the key to providing useful employee benefits is to respond directly to your staff’s needs.

She implemented an emergency care benefit scheme following a survey that highlighted the issue as a problem for staff. The scheme provided child or elderly person care at short notice if a member of staff was unexpectedly detained at the office.

Says Lee: ‘We found that a lot of our staff fell into that sandwiched generation that were providing care to an elderly relative and had young children. This was a perk that would really benefit them so we decided to absorb all of the costs. It meant that our employees didn’t have to worry about leaving an elderly relative or being late to pick up a child from school.’

Flexible benefits

Another approach is to offer a flexible range of staff allowances. This could include such benefits as childcare vouchers, which are free from both tax and national insurance for the first £55 a week for employers.

Virtual network operator Vanco, which has won two awards for its working benefits, took the flexible benefit route as human resources manager, Stephen Mansfield, explains: ‘Each member of staff was given a benefit allowance with which they could buy into the most appealing schemes. These included additional holiday, private medical cover, tax-free bikes and dental cover among others. Staff could also use part of their salary if they wanted to receive additional perks.’

The programme was invaluable in terms of recruitment, says Mansfield. It improves the company’s image as an employer and means that staff are more likely to stay, saving money on recruitment and training.

A flexible benefits package can help you recognise the diverse needs and values of your workforce by providing a range of options for staff to tailor their own package.

He continues: ‘As with all new schemes, there was a mixed reaction, but the key is to explain clearly that employees are just as well off as before and point out the additional plus points. Open communication is vital to any new initiative like this.’

Owen Gough, SmallBusiness UK

Owen Gough

Owen was a reporter for Bonhill Group plc writing across the Smallbusiness.co.uk and Growthbusiness.co.uk titles before moving on to be a Digital Technology reporter for the Express.co.uk.

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Employee Benefits