For many owners of small businesses, the issue of employee benefits is one reserved for larger corporates that can afford HR departments to administer costly programmes of perks and incentives. However, there are many ways in which smaller firms can offer genuinely valuable employee benefits that neither involve huge expense or hours of admin.
But the message has yet to get through. A recent report showed that one in five (22%) of all employees said their employer provides no benefits, rising to one in three (34%) for employees of SMEs.
A recent report showed that financial bonuses and incentives are the most popular benefit, valued by 30% of respondents. Other benefits that are popular with SME employees include pension contributions that go above minimum statutory requirements (27%), flexible or remote working (26%), a four-day working week (24%), and performance-based leave (10%). Around 15% view life insurance or critical illness insurance as an important benefit, while 9% value holiday trading schemes, and 8% want free or subsidised travel.
The single most commonly–provided benefit, according to employees of SMEs, is flexible and/or remote working, provided by 28% of small and medium-sized firms. Beyond that, the overall picture of the benefits landscape shows that one in five (21%) SME employees say they are provided with pension contributions over the minimum legal requirement, and 20% say they receive financial bonuses or incentives.
Other financial benefits provided included discounts on leisure and shopping such as gym membership or restaurants (9%); free or subsidised travel such as the Cycle to Work scheme or a company car (9%); life and/or critical illness insurance (8%); and childcare vouchers (7%).
Benefits revolving around socialising are also relatively prevalent in SMEs, with 22% of SME employees reporting their employer organises team social events or functions, and 10% saying they have socialising space within the work environment, such as a games room or a chill-out area.
Most popular benefits among SMEs
- Financial bonuses / incentives 30%
- Flexible and/or remote working 26% Professional development and training 20%
- Performance-based leave 10%
- Pension contributions over the minimum legal requirement 27%
- Four-day working week 24%
- Life insurance and/or critical illness insurance 15%
- Performance-based leave 10%
- Holiday buy, sell, and trade schemes 9%
- Free or subsidised travel (e.g. Cycle to Work scheme, company car, etc) 8%
- Team social events / functions 7%
So what can SMEs, with perhaps more constrained resources and less immediate access to specialist HR support, do to make employees feel valued and make their reward and benefits packages fit for purpose, flexible, personalised, and effective?
What’s important in deciding on what benefits to offer employees (as well as prospective hires) is to understand the mismatch between the needs of those who work in SME’s (to feel valued, to get recognition, etc) and the sometimes misplaced confidence with which the leaders of many SMEs claim they are meeting these same needs.
While this disconnect is by no means a new phenomenon, the existence of this ‘perception gap’ is worrying if SMEs are going to avoid losing out in the ongoing war for talent as the squeeze on labour supply tightens further. So ask, what do your people want? How much do they value what you offer, and what’s the best way to deliver that?
Whatever benefits you decide to offer your people, there will inevitably be a tax and legal aspect to consider. That’s why it’s important to talk to your accountant to find out the comparative cost of each benefit and how they fit in with the business’s overall strategy. If you’re in need of advice or support in this or any other area, Paul Beare Ltd is right here for all your needs. You can contact us for help from tax and payroll to accounting and banking.