How important are employee benefits when recruiting?

The employment landscape has changed, with job seekers increasingly seeking work that aligns with their values. Finding an employer with a positive company culture is significant to Gen Z but is relevant to job seekers in other age groups. Your benefits package demonstrates your values and willingness to invest in employees' well-being, career progression and job satisfaction.

Research shows that employee benefits can be a deciding factor in whether potential recruits accept or reject a new role. Various studies demonstrated that 78% of employees consider the benefits a potential employer offers when deciding whether to accept an offer. Meanwhile, 69% of employees will favour a job with better benefits if choosing between two offers. Furthermore, 75% of existing employees are more likely to stay with their current employer to keep their existing benefits rather than seek a new role.

Well-being benefits are also becoming increasingly important. A recent survey reported that 83% of businesses in the UK have seen increased requests for wellness benefits.

Offering good benefits could increase your prospects of attracting top talent.

Employee benefits packages can play a vital role in helping you attract new employees, but they also offer various other business benefits.

The advantages good benefits packages provide also influence the types of employee perks worth including. Here are just a few of the advantages your employee benefits can bring.

​Stand out from your competitors

We've already seen that many job hunters will choose between two job offers by considering which role offers better benefits.

It is a good idea to be open about the benefits packages your company offers from the outset. Providing information on recruitment pages helps prospective candidates assess whether your business is a good fit. Consider talking about employee benefits on social media.

Waiting until later in the recruitment process, for example, at the interview stage or when making an offer, could mean a missed opportunity. Great candidates may choose not to apply because they aren't aware of the benefits employees receive, which may mean they end up working for one of your competitors.

Being upfront about your investment in your staff members increases your chances of attracting top talent.

Improve employee retention

Staff retention is a crucial factor for business success. If you can recruit and retain employees long-term, you'll reduce the time, effort and cost you put into recruiting and training new staff. When you retain employees, you can help them develop positive relationships with their colleagues and customers.

Benefits that show your employees you value them positively impact employee retention. For example, pension contributions and death-in-service benefits demonstrate your investment in caring for employees and their loved ones when they're no longer employees. Well-being benefits support their physical and mental health. If you invest in health insurance, your policy can include well-being support for your team and help you develop workplace wellness initiatives. These initiatives can include group activities that promote positive workplace relationships and teamwork.

Flexible work arrangements can also help your team achieve a good work-life balance. Showing you recognise they have other commitments outside work and can consider their needs means they're much more likely to stay with you.

​Reduce absenteeism

Research shows that sickness absence represents a significant challenge for UK businesses, with absence rates at their highest levels in over a decade.

Presenteeism is also an issue. A culture where staff work when ill can lead to problems later on, whether they pass a virus on to their colleagues or experience burnout. Flexible work arrangements that allow employees to work from home have many benefits. However, they can blur the lines between their work and personal lives, making it harder to switch off.

Private health insurance can help by providing fast access to private treatment, shortening the time an employee's away from work. It often includes health assessments, which help staff identify areas for improvement and support to reach their well-being goals. Most health insurance policies also offer discounted gym memberships and mental health support.

​Improve employee engagement

Your benefits package can increase team engagement and bring various benefits, including better employee retention and improved customer service.

Team engagement improves when your staff feel valued, meaning a positive company culture is vital. Your benefits package can support this in several ways. Generous pension contributions and death-in-service benefits show you're willing to support your employees and their families when they're no longer employees. Extended sick pay, supported by income protection insurance, can provide financial security if one of your staff is away from work due to illness.

Research suggests that workplace wellness initiatives increase engagement by improving morale and enabling staff to build relationships with their colleagues and managers. If you include employee health insurance as an employee benefit, your insurer can offer data and support to help you create appropriate programs.

Increase productivity

We've mentioned how employee benefits can reduce absenteeism, improve engagement and increase your ability to retain staff. These factors can combine to increase productivity, leading to business growth. Employees who feel supported through their benefits can focus on their work more effectively. Increased productivity can come from the ability to work efficiently, creative thinking and problem-solving.

Mental well-being support is a crucial factor here. Productivity is important, but not when it carries a risk of burnout. Flexible work arrangements allow staff to manage their commitments outside work and create a better work-life balance. An Employee Support Program (EAP) can provide confidential, third-party support for staff to discuss worries. You can set up a standalone EAP, but most insurers offer this service via business medical insurance policies. Depending on your chosen policy, private medical insurance also provides access to counselling and self-help resources online.

Boost your brand

Being open about the benefits you provide to your staff can improve your reputation in the business community, among potential recruits, and among the general public. Good-quality benefits will help you attract recruits, but they'll also boost your brand reputation among customers. Working with brands whose culture aligns with their values isn't just important to employees; it helps customers decide who to buy from.

Enhancing your reputation involves talking about benefits on your recruitment pages, on social media and with your staff. However, your employees may become ambassadors in their own right. High-quality benefits mean they're more likely to recommend you as an employer or speak favourably about you in work-related conversations.

​Reduce your tax bill

Saving money is vital to both individuals and businesses. Investing in benefits can help you reduce your tax bill. For example, medical insurance premiums are an allowable expense for corporation tax purposes. Salary sacrifice schemes allow employees to pay their pension contribution and childcare costs out of their pre-tax income, which reduces your employers' National Insurance. These schemes also reduce the income tax and National Insurance your employees pay.

However, an employee's benefits can also increase their income tax bill. Clear communication is vital to ensure they fully understand their tax position. HMRC treats health coverage as a P11D benefit in kind, meaning each employee must pay income tax on the value of the benefit. HMRC calculates the value based on the premium per head.

We've mentioned the benefits of health coverage, employee life insurance, pension benefits and flexible working. However, there is a wide range of perks that your employees may value. Individual employees have different needs based on their circumstances and life stages, so it's wise to offer various benefits and check what your employees value. Studies have found that there's often a gap between what employers think their employees want and the benefits they prefer.

Some benefits offer incentives. For example, insurance policies often include reward schemes to save employees money. A company scheme that rewards staff for good performance or at the end of a project can also help your team feel valued.

Annual leave

Annual leave lets your team take time off to relax, recharge and spend quality time with their loved ones. The minimum annual leave entitlement in the UK is 5.6 weeks (or 28 days) for full-time employees. However, you can offer more or let employees earn additional leave as a reward for long service. Some employers provide unlimited leave, which requires careful monitoring to prevent abuse. Some companies have discontinued their unlimited leave policy as it created uncertainty around how much leave is acceptable. Staff took less holiday overall and experienced increased stress as a result.

You could also consider giving employees the day off for their birthday or closing the office for a longer period at Christmas.

Support for families

27.6% of women don't work so they can focus on their family commitments. Supporting parents with childcare costs and caring responsibilities can bring parents and their valuable skills back to the workplace. The childcare voucher scheme is now closed to new applicants. Still, the workplace nursery scheme lets you partner with a childcare provider so employees can pay their childcare costs via salary sacrifice. You pay a monthly fee but also reduce your National Insurance bill, which is typically sufficient to cover the cost.

Paid parental and adoption leave can also support new families and prevent them from rushing back to work for financial reasons.

Career development opportunities

Some employees might be happy to stay in the same role throughout their working life, but many won't. Providing a clear path for professional development opportunities and practical support increases your likelihood of retaining talent. You can offer workplace training, work shadowing and mentoring or pay for academic courses or skills training.

We hope this guide has helped you consider the benefits of offering high-quality employee benefits. At Globacare, we help businesses across the UK find the right insurance to include in their employee benefits package. Contact us today for a comparison quote and tailored advice.