Member Article

6million UK SME workers don’t receive employee benefits

SMEs need to improve benefits provision to stop staff defecting to larger employers, finds new survey

Workers in smaller businesses are far less likely to receive employee benefits, with an estimated 6 million* missing out entirely, according to new research from Grass Roots Employee Solutions. This figure represents 39% of small business workers compared to 24% in larger enterprises receiving no benefits, and is despite 82% of smaller business employees saying that benefits would encourage them to stay in their jobs.

On average, the smaller the company you work for, the less likely you are to receive benefits:

• In businesses with up to 10 employees 53% received no benefits
• In businesses with 11 to 50 employees 37% received no benefits
• In businesses with 50 to 250 employees 27% received no benefits
• In businesses with over 250 employees 24% received no benefits

Almost half (47%) of smaller business’ employees aren’t being offered any benefits that aid their wellbeing, compared to 81% of large companies offering things like cycle to work schemes and stress counselling, thwarting SMEs from retaining valuable staff members who may be tempted to move to a bigger organisation.

The introduction of a range of cost-effective and even cost-neutral benefits such as salary sacrifice could therefore be the key to competing with bigger competitors when attracting and keeping hold of staff instead of giving higher salaries and bonuses.

In the survey of both employees and individuals that manage HR, 54% of small companies and SMEs said that they rely mostly on financial rewards like high salaries and bonuses to attract talent. However, 50% of SME employees surveyed claim that they would turn down a job because the benefits package isn’t up to scratch, showing that many SMEs may need to consider wider benefits to attract top candidates and are instead opting for an expensive alternative.

It’s a similar story for employee retention too, as a third of small businesses said that they don’t have a strategy to retain staff. Those that do are having to rely heavily on financial remuneration to keep hold of staff (used by 38%), and the same amount rely on learning and development too.

So what should smaller businesses be offering? In order of popularity, the perfect future non-statutory benefits package for smaller companies, as rated by staff, is:

1. Flexitime

2. Cash bonuses

3. Working from home

4. Extra days off for long service

5. Tea and biscuits in the office

6. Compulsory holiday on your birthday

7. Healthcare

8. Fresh fruit in the office

9. Funding for advanced learning

10. Team building experiences

Other benefits that employees would like to be offered include a free lift to work and a free subscription to Netflix or a different streaming service. However, employees of smaller businesses are less likely to receive these, as over a quarter (29%) of HR managers for businesses of this size don’t think it’s important to offer these benefits, compared to 18% of larger business HR managers holding this view.

However, in one respect micro and small businesses are ahead of the game as one in five already offer flexible working to staff compared to one in ten larger companies offering it. However they could still step up their flexible working offer, as 42% of SME employees say that it is an essential benefit for them.

Stephen Holt, commercial director at Grass Roots said: “It’s a common misconception that employee benefits are expensive to deploy and laborious to manage. There are alternatives that businesses of all sizes can consider that offer benefits to staff at little or no cost and with no associated admin. Take salary sacrifice schemes, such as Grass Roots’ Phonescheme and Computingscheme, which offer staff a discounted route to luxury items like tablets or smartphones as an example. They’re free for companies to sign up to and are managed almost entirely by the benefits provider.

“Our research finds that smaller businesses could go a lot further in meeting employee demand for benefits. As an SME it can be tricky to compete with bigger competitors when attracting and keeping hold of staff, but introducing or improving on an employee benefits package is one way of giving employees a reason to stay. Many SMEs simply can’t afford to up the wage bill or offer high bonuses, and so introducing a range of cost-effective benefits is an alternative. Opening up a dialogue between employees and managers is the best place to start in introducing a benefits scheme that staff will want.”

However, John Arnold, professor of organisational behaviour at Loughborough University, suggests that employers should look at factors in addition to what employees want when devising a benefits package: “Should benefits packages be driven entirely by what employees say they want? Young employees tend to say pension is less important than older employees do, but perhaps responsible employers should insist they need it even if they don’t particularly want it.”

The research was carried out in August 2016 and surveyed 220 HR managers and those responsible for HR and 1000 employees.

This was posted in Bdaily's Members' News section by katherine wilding .