When you consider it now costs approximately $24,000 to hire a new employee1, it makes sense that organisations across all sectors are focused on retention. Particularly in a competitive employment market with increasingly eye-watering salary offers from competitors.
With many organisations unable or unwilling to compete within typical remuneration frameworks, employee benefits provide an opportunity to stay ahead without raising salaries.
With 32% of employees citing benefits as a reason to stay with their organization and 29% citing them as a reason to leave, benefits play an important role in retention.2
In this article we discuss which benefits are valuable to employees and how to develop a winning benefits strategy that helps gives your organisation a competitive edge.
Employees are demanding more from their employers
With the pandemic and subsequent social convergence, where work and home life is blending has put employee wellbeing front and centre for employers.
Employees are seeking meaningful support as they navigate working from home, online meetings and a return to the office for some. Employees expect a broader array of flexible benefits suited to their specific situation.
Benefits achieve real cut through when they are relevant, meet employees need to balance work and home life, and are well communicated. We’ve seen three key areas where benefits are making a difference for employees.
Flexible work arrangements, increased paid time off and work from home policies are the top three programs employees would like their employers to provide.3 In a post pandemic world where flexible working has become much more prevalent, organisations that are looking to compete for talent must look at differentiated leave practices. The general market has experienced increased instances of organisations offering parental leave above the legislated minimums, with a trend to offer extended secondary caregiver leave or scrap the ‘primary/secondary’ caregiver designations all together.
Mental health and burnout rank in the top five employee wellbeing issues facing organisations, with the remnants of the anxiety caused by the pandemic still felt by employees.4 Organisations that offer programs that help employees build and maintain resilience will see at least a 40% decrease in employer turnover and 40% increased productivity.5
Whilst mental health apps have seen an increase in popularity over the last 2 years, organisations must consider the value on investment that these provide. Offering mental health first aid training, an engaging Employee Assistance Program and targeted psychological safety programs are more likely to build this resilience.
Some organisations are offering more niche benefits for their employees. As an example, we’ve seen an increasing trend in offering assisted fertility and gender affirmation treatment benefits.6 We’ve also seen an increase in financial wellbeing initiatives, offering various programs dependent on employee life stage (home buying vs family planning vs retirement).
Nearly a third of employees state they are very concerned about their financial wellbeing.7 And employees dealing with high amounts of financial stress are less likely to be satisfied at work, which leads to low retention rates.
Insured benefits, such as death, disability and private health insurance offer employees greater financial security. You may also wish to consider financial coaching and education sessions.
Organisations need to start strategising their benefits
Each year HR and People functions spend many weeks reviewing their remuneration strategy ensuring their people are fairly rewarded for their time, in line with market. What is often missing is the benefits element as part of the overall reward and Employee Value Proposition strategy.
Combining the individual wellbeing initiatives, insurance benefits, superannuation payments, leave costs and perks, organisations can be spending a pretty penny on their benefit packages for staff, but many may not know the true cost or value.
Although 82% of companies consider employee wellbeing a priority, many firms lack a wellbeing strategy in their culture, talent attraction and performance objectives. Of the 87% who have wellbeing initiatives in place, only 55% have a strategy.8
The clearer the benefits goals are for the company, the clearer the journey becomes for the employee. A well thought out strategy can positively influence key decision makers who may not be across the value of benefits in delivering a competitive remuneration package.
Three steps to building a winning benefits strategy
- Wellbeing has moved from a ‘nice to have’ to a business essential. In fact, 82% of organisations globally believe wellbeing is important within their company.9 Ensure you cater to all 5 pillars of wellbeing with your benefits offer, including:
- financial; and
- work life.
Astute employees can identify box ticking programs, and will specifically seek out holistic, meaningful wellbeing initiatives that add value to their work and home lives.
- Pay close attention to your communications strategy. Employers typically offer twice as many initiatives than employees feel are available to them.10 Engagement is often used as a measure for assessing the success benefits within a workplace, however organisations often rely too heavily on employee curiosity to seek out information about benefits, or only communicate once during onboarding. Frequent advertising and ease of access will determine the success of your benefits programs.
- Get into the data. By analysing your benefit spend, you may find areas in which you can either pull back or redirect spending. As an example, many offices offer fresh fruit in the office as a ‘healthy eating’ initiative. With less employees visiting offices, this sort of benefit is not as valuable as it once was. Another more costly example is high levels of insurance claims. Finding the underlying claims causes and mitigating with proactive wellbeing solutions could improve claims experience, therefore premiums.
Sustainability is key to ongoing success
Sustainability must be a key consideration when building out your benefits offer. A constantly changing benefits program is difficult for employees to understand and use, which may cause lack of engagement or dissatisfaction. A sustainable benefit program will consider the following:
- Cost vs value – it is important to remember that the current cost will inflate due to people growth, utilisation, market movements, tax and claims experience. Building a benefit strategy that aligns with the growth targets of the company will help you better plan for future cost increases.
- Premium increases vs employee experience – while not the ideal scenario, rising premium costs have led organisations to review their insured benefits to understand the feasibility of maintaining the benefit going forward. Employers may be tempted to achieve cost savings by making drastic changes to their policies without understanding the repercussions to employee experience. Alternatives must be considered before making changes that will negatively impact employee financial wellbeing, especially when the number one financial concern for Australian employees is worrying whether they will have enough money to pay bills if someone in their household is no longer able to work.11
- Benchmarking and reviews – as your organisation grows, your industry shifts and markets change, so too will your benefits. It is good practice to benchmark your benefit program to understand your position against your peers and the market, so to understand how better to compete for talent.
Attracting and retaining talent is among the top 5 risks facing Australian employers.12 For other risks, such as business and liability insurance, companies have robust, frequently reviewed strategies to ensure the ability to continue to operate through times of change or disruption. The same approach must be taken for people risk, maintaining clear, executable strategies that provide value and build resilience within your workforce.
1The cost to hire an employee might be higher than you think
2 Strategize with benefits
3 Employee Benefits Trends Study 2020
4 Aon 2021 Global wellbeing survey
5 Aon 2020 Rising Resilient report
6 Aon Benefit survey 2022
7 Employee Benefits Trends Study 2020
8 Aon 2021 Global Wellbeing Survey
9 Aon 2021 Global wellbeing survey
10 Aon Rising Resilient Report 2021
11 Five reasons to support employees’ financial wellbeing
12 Aon 2021 Global Risk Management Survey