The importance of benefits on employee retention

Your employees are the key to your business’ success.

A happy team with a healthy working environment will be motivated to help you scale your business to the next level. Having the right employee benefits can help incentivise your employees to stay with your company.

In an ideal world, your employees would grow with your business. They would scale the career ladder and be prompted as your business grows.

In the era of the ‘Great Resignation’, employee benefits have never been more important. Get it right, and your business can reap the rewards for years to come.

90% of HR leaders are making employee retention their number one priority.

Why are employee benefits important? They’re the key to employee retention.

If your company has a high turnover rate, you’ll be spending unnecessary money on exit packages and lowering your company’s productivity. We all know how long the recruitment process and onboarding can take.

We’re sharing the importance of benefits on employee retention, as well s the best employee benefits that your company should consider offering.

Employee retention and the ‘Great Resignation’

The pandemic saw several phenomena, none more impactful than the so-called Great Resignation. While it’s easy to think this phenomenon ended with lockdown restrictions, it changed the way employees think about their workplaces.

Reasons for employees to change their jobs can vary. It may be due to a lack of employee benefits, the work environment, or a desire for a better work-life balance.

Although inspired by a shift in priorities, a lack of employee benefits was another popular reason benefit the great resignation.

By investing in the right employee benefits, you can avoid employees feeling stressed or unappreciated. The importance of benefits on employee retention should feed into your HR strategy.

The shock of the ‘great resignation’ and struggles to rehire new employees is why almost 90% of HR leaders are making employee retention their number one priority.

If you want to keep your employees working for you, they need more than just their salary to keep them happy. Incentives like a workplace pension, mental health days, and remote working options will change your company for the better.

Why are employee benefits important?

Employee benefits are important as they’re incentives that create a healthy and productive workplace that inspire your employees to stay within your company.

While most of these employee benefits will come with a financial cost, it’s lower than the price of going through the recruitment process and putting projects on hold.

When an employee leaves your business, it costs you both time and money. Research by Employee Benefits News suggests the cost of an employee leaving is a third of their annual salary.

This cost includes:

• recruitment
• lost productivity
• onboarding training

If your employees don’t feel appreciated, they’re almost twice as likely to start looking for employment elsewhere.

A survey by Qualtrics found that employees are five times more likely to remain at a company where they feel acknowledged and rewarded. Employee benefits are an ideal way of doing this. 

The best employee benefits to boost retention

While each employee will have their own personal preferences, we've recently been hard at work to unearth the best employee benefits in today's working world.

Here are 4 employee benefits that every small or medium business should consider offering.

They’re benefits that address the most common reasons for employees exiting a company. Each is easy to implement for existing employees with low set-up costs and almost instant benefits.

1. Remote working

Another lesson we learnt from the pandemic is the value of remote working.

Even if your company is office-based, offering the option of remote working can boost employee retention. Companies who offer remote work have a 25% lower turnover rate as employees begin to expect remote and flexible working as standard.

This employee benefit doesn’t have to change your working environment. Giving employees the option to work from home once a week can boost their productivity and give them an extra incentive to stay with your company.

2. Mental health days

When employees feel like they don’t have a work-life balance, they start to doubt their current employment situation. Burnout is what fuelled the ‘great resignation’ of 2020/2021.

One way to avoid your company losing out on employee retention is by offering mental health days. Healthy employees are happy employees and more productive.

Offering mental health days will reduce employee turnover by preventing burnout and long-term absenteeism.

Employees are five times more likely to remain at a company where they feel acknowledged and rewarded.

3. Workplace pension contributions

With the retirement age continuing to rise, one employee benefit that people are looking for is company pension contributions. Your employees will be looking for the best UK workplace pension providers to start building their pension pot.

Making contributions to your employees’ pensions is a win-win. Pension contributions reduce tax for company directors, allowing you to invest more of your money back into your company.

Penfold's award-winning workplace pension for HR teams helps companies who want to empower their employees with their auto-enrolment scheme.

We take of the entire set-up and run the scheme for you - you'll never have to answer a pension question again. To find out more, get in touch to book a free demo today.

4. Cycle to work schemes

With the cost of living rising, our daily commutes are often our highest expense.

‘Cycle to Work’ schemes have been on the rise for years within major cities and are quickly becoming more mainstream. Promoting cycling to work can help improve your employee’s well-being and reduce their daily expenses.

It’s a relatively affordable employee benefit if you can provide facilities, like a secure bike rack. Promote the benefits of cycling to your employees, and they’ll arrive at work calmer, happier, and ready to win the day.

Final thoughts: Choosing the right employee benefits

With the National Insurance tax hike and the cost of living rising, the importance of benefits on employee retention is clear to see. Employees expect more than just their salary to earn their loyalty to your company.

Benefits – particularly those that won’t affect your employee’s tax rate – will boost your employee retention and increase productivity.

If there’s one employee benefit every business should offer, it’s a workplace pension that makes retirement a more realistic prospect.

Discover Penfold's award-winning workplace pension for forward-thinking businesses who want an unbeatable employee experience.

Request more information today to learn more about how Penfold can help improve your business' benefits package.