How To Design A Competitive Employee Benefits Package in the UK

Advantages Of Creating A Competitive Employee Benefits Package

A well-crafted benefits package can provide as much value for your business as it does for your staff. It’s proven that happy employees perform better than those who are unhappy or disengaged. So, getting the most out of your employees can help to drive your business forward.

In fact, more companies are focusing on employee wellbeing to achieve their goals. The upfront cost of providing employee benefits pays off. This is because employers tend to yield a more loyal and productive team in the long run.

Advantages For Employers

Recruit & Retain Top Talent

As mentioned before, many businesses look to employee benefits to attract top talent. At the same time, competitive benefits can lead to loyalty among existing employees.

For employers, your staff are your most valuable asset. Providing an effective employee benefits package helps them feel appreciated. In turn, employees are less likely to look for work elsewhere. Effective benefits can mean the difference between losing or keeping a top performer.

Lower Recruitment Costs

Recruitment can be expensive for many businesses. And high turnover can significantly increase these costs. Keeping staff happy with valuable employee benefits means they’re less likely to leave. In turn, this decreases the amount you’ll spend on recruitment.

Improved Productivity

Your employees want to feel that they’re rewarded fairly for a job well done. When staff feel satisfied with the benefits they receive, they’re more likely to give it their all at work. This can make your workforce more productive.

On top of that, employee benefits packages can include reward schemes. These are a great way to incentivise high performance. Reward schemes create a positive cycle of hard work and recognition. This also drives positive business outcomes.

Advantages For Employees

Saving Money

Your staff can save significant amounts of money when you provide certain benefits. For instance, childcare is an expensive and necessary cost for many employees. Offering childcare vouchers or a workplace nursery benefit can save them hundreds of pounds.

There are many benefits that can allow your staff to cut costs on essential or luxury purchases. From employee discount schemes to medical insurance access, there are many options you can choose from.

Improved Wellbeing

Depending on the benefits you offer, your staff can improve their wellbeing in many ways. For instance, a gym membership can help them maintain their physical fitness. Access to counselling services can support their mental health. Discount schemes and financial education sessions can lead to better financial wellbeing. Healthier staff are less likely to take sick leave, which can save you even more money.

Many options also enable employees to opt in or out of certain employee benefits schemes. This empowers staff to access the support they value and need most.

Work Life Balance

Employee benefits can help staff maintain the balance between work and personal commitments. For instance, you might offer more annual leave than the statutory minimum. Or, you might offer flexible hours, or remote working. These can help your employees manage their time and responsibilities more sustainably. This also leads to a positive impact on their wellbeing.

What Benefits Should Employers Offer?

Apart from the mandatory benefits UK employers must offer, there are no hard and fast rules. But, you can choose the benefits you want to offer from four broad categories.

Each category targets a different area of employee wellbeing. So, offering a variety will strengthen how competitive your benefits package is. With that in mind, here are the types of benefits that many businesses will provide.

Health And Wellbeing Services

Employee benefits that support your staff’s health and wellbeing are a great way to show you care for them. They’re designed to protect your employees and their loved ones in the event of illness, injury or death.

Paid-for employee benefits are a popular choice among many employers. They include:

• Group Life Insurance
  Pays a lump sum to an employee’s next of kin in the event that they die
• Group Critical Illness Insurance
  Pays a lump sum to the employee following a critical diagnosis
• Group Income Protection
  Protects part of an employee’s income if they cannot work due to illness or injury
• Group Private Medical Insurance
  Provides cover for private medical treatment. Employees can add a partner and children onto the policy, too
• Company Health Cash Plan
  Reimburses everyday healthcare costs, such as prescriptions, optical and dental care

Many of these benefits are also desired by employees. In particular, Group Private Medical Insurance has been a recurring preference. It has topped our employee wellbeing surveys, in 2018/19, 2020/21, and 2022/23.

There are other health & wellbeing benefits you could offer, too, such as a gym membership. Employee Assistance Programs (EAPs) are another popular option. They provide access to legal advice, financial advice, and emotional support helplines.

As we’ve already seen, there is a strong link between employee wellbeing and work performance. Supporting staff’s physical, mental and emotional health can lead to better business outcomes.

Remember, in most cases, your employees will want to perform well at work and progress their careers. Supporting their health and wellbeing gives them a strong foundation to do that. This drives your wider business success.

Tom Conner
Director

Work Life Balance

The second category is perks that support your staff’s work life balance. These are not only desirable for employees, they’re also cost-effective for companies. There are range of benefits in this category, for example:

• Flexible Hours
• Remote or Hybrid Working
• Salary Sacrifice Benefits
• Employee Discount Schemes

Each comes with its own advantages, which you’ll need to consider.

Flexible Working

Working parents often appreciate the chance to set their own hours. They generally need to manage school runs and other childcare commitments. These are most likely to occur during typical work hours. Allowing staff to set their own working hours is a free solution that supports both areas of their life.

Remote or Hybrid Working

Similarly, hybrid and remote working arrangements can support a healthy work life balance. These models became commonplace during the C-19 lockdowns. Since then, many companies have kept them in place.

Flexible working can improve employee productivity and help people save money on commuting. This benefit works best when staff can choose their working location or office days.

Salary Sacrifice Benefits

Salary sacrifice (or salary exchange) benefits are another popular choice. They help employees save money on certain purchases.

The way they work is that employers pay for a particular benefit upfront. This could be a new bicycle, for instance. The employee will be able to use this benefit straight away.

Then, the employee enters into an agreement with their employer. They agree to pay for the benefit out of their gross (pre-tax) salary each month. Most of the time, salary sacrifice arrangements last for 12 months. After this time, the employee will have paid off their new benefit.

For instance, an Electric Vehicle scheme helps employees lease an electric car at an affordable cost. A holiday trading scheme allows staff to buy or sell extra annual leave. Other benefits could enable employees to buy new technology or pay childcare costs.

Employee Discount Schemes

This is another cost-effective benefit that supports your staff’s wellbeing. Employee discount schemes help your team save money on everyday purchases and luxuries. There are different kinds of discounts available:

• Discount codes
  Employees can use a code to reduce the cost of a purchase. This immediately saves them money on their shopping
• Cashback
  Staff can earn a certain amount of cashback when shopping at particular retailers. This often works through buying digital vouchers or reloadable cards. The cashback is held in the employee’s account until they either withdraw it or use it for more purchases
• Rewards
  Some discount platforms allow employees to gain rewards on their purchases. These rewards can then be turned into money-off vouchers or other discounts.

Many retailers sign up to discount schemes, such as Asda, Tesco and Sainsbury’s. This means your employees can save on essentials like their weekly or monthly shop. This helps the rest of their salary stretch further.

Learning & Development

The third category relates to your employees’ personal and professional development. For instance, staff may want to gain qualifications that help them in their role. Or, they may wish to take a course outside of work in an area of personal interest.

Supporting employees in these ways can increase their loyalty to your company. On top of that, they’ll be bringing new skills to the role and strengthening the company as a whole.

Other ways many companies look to help develop their staff is through financial education in the workplace. Health and money worries are two of the biggest stressors for staff and the more you can do to reduce these stressors the better focus your team will have.

Team Building Activities

The final category is team events. These could be any occasions that allow staff to socialise and collaborate. Such an event could involve:

• Team activities
• Days out
• Corporate retreats
• Staff parties
• Volunteer days.

These can all contribute to a happy and cohesive team. Colleagues have the opportunity to build trust with one another. They can also work with peers they may not see often.

Businesses who provide these rewards often enjoy a more positive company culture. They can also increase loyalty and staff retention.

How to Design Your Employee Benefits Package

Now that we’ve established what employee benefits are and how they work, it’s time to look at designing one. Remember, you want your choices to be effective and competitive.

Set Clear Goals

Your first step is to set your own goals. If you’re unsure where to start, it can help to link them back to your business model and values. These questions can help to kick start your approach:

• How much do you spend on recruitment each year?
• How long do employees typically stay with your business?
• Is your company’s turnover rate higher than 15%?
• Which objectives do you want to achieve?
• What kind of culture would you like to create?

When you’re setting your goals, try to identify any potential solutions, barriers, or costs. For instance, if you’re aiming to retain employees, you may want to introduce flexible working. However, you might need to provide home working equipment.

Ask Employees For Feedback

This is a vital, but often overlooked step. The truth is, employers cannot know everything their employees need or expect. And there’s little point in implementing benefits that your staff won’t use.

Asking employees about their priorities gives assurance that your efforts will pay off. It can help focus your direction, or even suggest ideas you may not have considered.

You could arrange meetings with staff, or gain feedback through surveys. This can help you prioritise the top benefits you want to provide. You can also avoid unnecessary spending.

Set A Budget

Speaking of spending, it’s vital to have a clear budget for your benefits and rewards. Smaller businesses may have more limited resources than larger corporate companies. But your employee benefits package can still be effective in achieving its goals.

Focusing on the most widely requested perks can be a great place to focus your budget. This helps to ensure you’re meeting most of your employees’ needs without going beyond your means.

If you’re new to managing employee benefits, working with a consultancy can be a great way to maximise your budget. Experts can help you avoid common pitfalls, negotiate better rates, and set everything up smoothly.

Communicate Benefits

Once you’ve selected the benefits you’ll be providing and set them up, it’s time to tell your employees. You may already have an internal communication strategy that you can use. This could involve:

• Company-wide emails
• Intranet bulletins
• Meetings or training seminars
• Cascading via your leadership teams
• Discussion during employee one-to-one meetings.

You need to make sure all new and existing employees are aware of the benefits and how they work. If they don’t know how to access their rewards, they won’t be able to enjoy any of the perks.

Remember, your benefits will need communicating more than once. Make sure to reinforce them at regular intervals.

Review Benefits

Once your employee benefits scheme is up and running, you need to review it often. This is because your staff’s priorities will shift over time. For instance, employees had very specific needs during the pandemic. But these needs changed a lot during the cost of living crisis.

Regularly reviewing your benefits helps to keep them effective in the long term as well as the short term. Your benefits providers can provide figures on levels of engagement with your rewards. This helps to give you an idea of where to focus your attention.

Surveying staff again can also help inform you of anything that may need changing. Doing so allows you to remain competitive and continue providing valued benefits.

Compare Employee Benefits Quotes And Get Expert Advice

Setting up a competitive employee benefits package can be complex and laborious. There’s a lot to consider, even for larger companies with greater resources.

Speaking with Drewberry about your employee benefits needs puts an expert in your corner. We can give specialised advice, review the whole of the market, and make a personalised recommendation.

Not only can we arrange comprehensive cover at an affordable cost, we’ll also do all the heavy lifting required to set your scheme. We can even help you launch your benefits with a staff presentation.

Why Speak to Us?

We started Drewberry™ because we were tired of being treated like a number.

We all deserve a first class service when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.

• We are award winning 🏆 independent insurance advisers who work with all the leading UK insurers
• You’ll speak to a dedicated expert from start to finish
• We are very proud of the 3900 and growing independent client reviews rating us at 4.92 / 5
• We are authorised and regulated by the Financial Conduct Authority. You can find us on the financial services register here 🧐
• Claims support when you need it most.

If you need to discuss your current employee benefits or to set up an employee benefits package email help@drewberry.co.uk or call us today on 02074425880 and speak to one of our friendly expert advisers.