Happy staff with access to employee benefits and perks can reduce workplace stress and boost employee morale. The result: increased productivity, fewer working days lost and reduced staff turnover.
Yet many small businesses struggle to offer costly staff benefits packages and employee perks such as company cars and income protection.
However, there are plenty of other ways to bolster morale, keep staff happy and motivated without spending a fortune.
With some clever planning, it’s possible to adopt a good balance of benefits that generates a vibrant working culture where staff feel understood, rewarded and engaged.
Starting a business doesn’t come with a set of instructions.
We know that understanding the many different types of financial product in the marketplace can be difficult.
Our Making business finance work for you guide is designed to help you make an informed choice about accessing the right type of finance for you and your business.
Why offer employee benefits and perks?
Staff hugely value perks – both big and small – and employee benefits have become a key recruitment tool in attracting the best talent.
Existing staff benefit too, with perks and benefits a key reason for employees staying in their roles longer and working harder.
According to research by published by Reba in The Rewards Report, 82% of employees who felt motivated had received some form of reward, perk or appreciation of their work.
This compares to 69% of employees feeling demotivated who claim they had not received any form of perk or benefit.
High staff turnover costs businesses significant sums as they scramble to recruit talent and struggle with lost productivity while new employees are on boarded and trained.
High turnover can fuel staff disgruntlement and lower morale for remaining staff. Perks can help attract and retain good staff.
According to a survey of 3,000 UK employees, benefits are the second-biggest reason to join a business – 38.3% rated this second behind salary, and above promotion opportunities (22%) and company reputation (18%).
What employee benefits should you offer?
Benefits work best when tailored your employees’ needs. Older workers, for example, may find private medical insurance and death-in-service benefits an attractive incentive to work for a company.
Younger workers may value the ability to buy additional holiday or enjoy ‘free beer Fridays’ at work.
The good news is that employee benefits needn’t cost a fortune. According to research by financial advisor Drewberry, taking a more flexible approach to working can have the biggest impact.
It found that staff most value flexible working hours, private medical insurance and working from home.
A quarter of staff were happy with free snacks.
A 2017 employee benefit survey by Payment Sense found that finishing early on a Friday topped the wish list of employee perks.
Other popular perks include duvet days and time off to move home, flexible working hours, unlimited holidays, gym membership and free fruit.
Health and wellbeing employee benefits
Health benefits such as life insurance and private medical insurance top many employee’s wish lists, closely followed by income protection and occupational health schemes.
According to the Department of Digital, Culture, Media and Sport, 1.3 million workers suffered from work-related ill-health in 2016/17, equal to 25.7 million working days lost.
This has been estimated to cost £522 per employee, and up to £32 billion per year for UK business.
Private medical insurance – One of the most popular employee benefits, private medical insurance costs around £45 per employee per month according to Payment Sense. An SME with ten staff would pay around £5,400 for annual private medical insurance. A key benefit of private medical insurance for small businesses is it helps unwell employees return to work more quickly. Look for private medical insurance that can be extended to cheaply cover family members of employees.
Gym membership – According to research by Capita, around a quarter of employees want to be offered gym membership (although only around 3% actually use the benefit). Expect to pay between £10 to £100 per employee per month for gym membership, depending whether you opt for a no-frills gym up to a high-tech gym with a major brand.
Private dental insurance – An extension of private medical insurance, private dental insurance rates second behind private medical insurance according to Payment Sense. Costs typically range from £5 per employee per month for £40, with family cover an additional £10 per month.
Low-cost activities – Encourage staff to take part in sports events, such as five-a-side football or jogging. Costs are low, such as paying to hire a football pitch for an hour, and it can improve worker health and foster an employee community. Similarly, make sure staff take regular breaks and avoid creating a work-through-lunch culture by promoting lunchtime walks or activities.
Fresh fruit – Baskets of fruit and free water, tea, coffee and health drinks are a cheap and effective way to keep employees healthy, hydrated and motivated. Boost vitamin C intake by spending around £200 each month on weekly fruit deliveries, with tea and coffee costing around £100 according to Payment Sense.
Flexible working perks
Flexible working hours and work-from-home options regularly top the most-valued benefits from employers, especially for staff with young children or caring for relatives.
With laptops and fast broadband making flexible working possible, it means staff can work effectively while better balancing their work and home life.
Flexible working hours – Despite the admin costs to the business in co-ordinating diaries and managing staff, flexible working hours are a great employee perk with little cost to the bottom line. Be prepared to offer flexible working such as starting work in the office earlier or later but be wary of employees who want to skip lunch in exchange for a shorter working day. Taking a break from work during the day is important to maintain productivity and employee wellbeing.
Remote working – Equipping workers with laptops and using cloud-based software services for email, documents and administration means that many employees should be able to work anywhere there’s a good broadband connection. Working from home – especially when an employee is unwell – can halt the spread of office illness and provide the occasional respite from the daily commute, all with minimal cost.
Holiday and time off employee perks
Employees value free time over money.
Given the choice, many employees would rather have an hour extra off work than the equivalent of an extra hour’s pay in their pocket.
From the occasional freebie to more official benefits, there are plenty of time-off perks you can try.
Duvet days – Most us need a day off at some time or another. Whether it’s to tackle a family emergency or simply feeling stressed and needing some time out. While you can deduct these from staff holiday allowances, consider offering the occasional duvet day where staff get a free day off for a morale boost.
Holiday trading – Consider allowing staff to buy additional holiday days or sell back unused days. This flexible approach can work out with zero cost – staff work harder and you’ll spend marginally less in salary costs. Most schemes operate by allowing a staff member to buy extra holiday days at a cost of 1/260th of their annual salary. It’s worth limiting how many days employees can buy to prevent abuse.
Free food and employee treats
While there is a laundry list of employee benefits your business should offer as a minimum – from enhanced sick pay to workplace pensions – inexpensive perks like free food can be powerful staff motivators.
Free food treats – from snacks and pizza to cakes and ice-creams – are highly valued and cost little. Free food and drink treats are always popular with employees.
Cheap to implement, they are a good benefit for startups.
Coffee and water machines are fairly typical in most workplaces, but you can add other perks such as breakfast through to ordering takeaways when working late.
Free tea and coffee – A staple of most businesses, though water coolers and soft drinks are also useful for staff who don’t enjoy a hot drink. Solutions range from costly automatic vending machines to the humble kettle and tea bag. Expect to pay around £10 per month for per employee.
Surprise and delight – Food perks aren’t just about sating the appetites of hungry staff. They can be a statement about the culture of your business. Consider delighting staff with ice-cream on a hot summer’s day. Other ideas include lunches, pizza nights, free pastries and toast for breakfast, or leaving sweet treats such as chocolate bars or cookies on desks for staff to discover.
Host regular staff events – from trips out to theme parks, cinemas or pantomimes to holding a company summer BBQ in the park.
Christmas parties are a popular perk with employees regardless of the business size, and you can either give an amount to each employee to self-organise or plan an event yourself.
Thinking of starting a business? Check out our free online courses in partnership with the Open University on being an entrepreneur.
Our free Learn with Start Up Loans courses opens in new window include:
- Entrepreneurship – from ideas to reality
- First steps in innovation and entrepreneurship opens in new window
- Entrepreneurial behaviour opens in new window
Plus free courses on finance and accounting, project management, and leadership.
Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.