Employees have always been an organisation’s biggest asset. Even with recent discussions around AI, acquiring and retaining a strong workforce will always be a business’s top priority.
This is why it’s concerning to discover that more than a quarter of UK employees chose to leave their jobs between 2020 and 2023. This is one of the highest voluntary turnover rates in Europe.
Naturally, there are a range of factors that make an organisation attractive to join and stay loyal to. Salary is only part of it. “Do people come to an organisation for the benefits?” asks Andy Craig, partner and head of rewards and benefits at Isio. “Maybe some, such as hybrid working. But it’s more that benefits retain people, by providing wider aspects of professional life that make people feel valued in an organisation.”
In October 2024, HR and people leaders assembled to discuss how organisations can create the optimal benefits packages to attract and retain talent. It quickly became clear that building benefits for all is a far from straightforward process.
What is a benefit?
Jorge Aisa-Dreyfus, executive vice-president of talent, capability and culture at Sage explains that the initial challenge could be that our definition of benefits may be too narrow to be impactful. “We’re experiencing some of the lowest attrition we’ve had in quite some time, but getting the right talent is also challenging. Benefits are critical but in a broader context, what employee experience are you providing overall?”
Isio conducted a far-reaching study into the importance of benefits in partnership with YouGov. It surveyed more than 7,500 people representing the wider overall workforce, looking into the value of work benefits.
Benefits packages that fail to drive employee engagement usually do so due to a lack of employee understanding or awareness
Overall, pay came out on top. No matter how old someone is, overall compensation is more likely to be the most important aspect of an employment package. However, only 58% of those under age 25 (Gen Z) considered pay to be extremely important (rating it five out of five). This compared to 73% for those aged between 25 and 44 (broadly the Millennial generation).
This is something Kweku Yankson, head of HR at JLL, has already taken on board. “We conduct exit interviews, and the data shows that some employees leave in pursuit of greater work-life balance. We offer flexibility to our employees and regularly review our benefits programs. Benefits are central not just for retention now, but for retention in the long term,” he says.
Offering these benefits is one thing, but they must also be communicated effectively. “I’ve also heard about jobs getting minimal applications when they’re advertised with no option for hybrid working,” adds Rebekah Wallis, board director, people and ESG at Ricoh. “The challenge is that people joining the organisation don’t know about the wider employee value proposition.”
Education, education, education
There isn’t just a tension between what employees perceive to be a benefit and what is on the table. Benefits packages that fail to drive employee engagement usually do so due to a lack of employee understanding or awareness of them. This is both a lack of education about what is available and of how to make the most of it.
Pensions and associated financial rewards bear the brunt of this lack of understanding. “Organisations have significantly incentivised retirement planning but not financial wellness. That’s too narrow and it’s caught in the legacy of the past,” says Craig.
This is partly down to the variety of other, more immediate demands, particularly on younger people’s finances – paying back student debt, starting a family or buying a house. It’s also partly down to not appreciating the long-term view. When they have support with financial wellbeing, it can transform their relationship with their benefit package.
“Employees desire some level of financial education. When companies explain the long-term advantages of retirement plans, for example, a light bulb goes off and they fully understand the benefits. Actually explaining the benefit is better for the employee and creates a stronger affinity towards the organisation for them - it’s a true win-win,” says Yankson.
Wallis admits that there’s a similar challenge around healthcare. “How do you get people’s perception of how important a benefit will be to change? No one goes into a company thinking healthcare will be great because no one wants to need it. It’s about getting the employee value proposition right and storytelling it.”
Instead, Craig suggests companies need to invest – and yes, that can be a cost in itself – in helping their employees take a much more holistic view of their benefits. “How much do you spend on the benefit versus how much you spend on helping employees understand and use the benefit? Coaching is the most transformational thing I’ve done in my career. You need to bridge the understanding and confidence gap.”
Interestingly, the confidence gap isn’t necessarily an age gap. “The people we employ are curious. They’re taking more ownership of what they’re trying to do,” Sage’s Aisa-Dreyfus claims. “The new generation is more attuned to learning through videos, they go to TikTok and find things out very quickly.”
“It’s the people in the middle where the confidence is lacking,” Wallis warns. Craig agrees,
“I often plot a scatter graph based on age and salary, showing who is paying the maximum pension contribution and who is paying the minimum contribution. It demonstrates the lack of inclusion because you can invariably draw a box around the lower paid under 40s because they just can’t afford to participate,” he warns.
Supporting benefit evolution
Organisations themselves must also review how fit for purpose their benefits are. Education won’t solve the problems entirely.
“The disconnect between benefit design, wellbeing and inclusion is quite stark,” Craig notes. He adds that many benefit packages are created by individuals with deep expertise and confidence in the field. They lack the perspective of the rest of the business.
This alone can create a ‘them and us’ view of the company’s package. Craig gives an example of a large organisation whose benefit structure had not been updated for two decades, and still provided age related pension contributions. This meant that older employees received significantly larger pension contributions than younger ones. As a result, there was over 80% satisfaction with the benefit scheme among over-55s, but only 8% among under-25s.
Understanding that employees need to exercise choices that fit their life stage is crucial in successful benefit design
“Diversity, equity and inclusion are also important,” Yankson proposes. “In some businesses, certain benefits tend to be available only at more senior levels. With representation in senior roles still needing to be addressed, this tends to not be reflective of the wider employee demographic.”
Understanding that employees need to exercise choices that fit their life stage is crucial in successful benefit design – as is acknowledging that the landscape will keep changing. One of the most successful packages at Ricoh currently, Wallis reveals, is electric vehicle leasing. It’s a hot trend, as well as a financially savvy one. Similarly, the cycle-to-work schemes highlighted by Aisa-Dreyfus or senior sabbaticals, such as the one Craig just took for four months in Africa, are big trends.
“The size of the organisation makes a difference,” Aisa-Dreyfus warns. “Sage is large enough to be robust but small enough to be dynamic.” He raises the issue of smaller businesses’ ability to participate, but they too can be expected to keep up with demand. “Historically, smaller companies had less comprehensive benefits but the gap is being closed as they find cost-effective ways to deliver employee experience.”
Benefits at what cost
In an ideal world, businesses would offer gold-standard packages that incorporate financially advantageous products with a raft of ‘softer’ options. These might include flexible choices such as hybrid working and community projects that fulfil a growing need for purpose. Employers might also offer extensive coaching and support for employees to help them navigate each life stage seamlessly.
The reality is costs are scrutinised and companies can’t offer everyone everything they want. Compromises must be made at every level. As Craig suggests: “No one says they have a 100% alignment with the interests of their organisation, but you can find common cause. Do they know me? How do I fit? That’s very powerful from a retention perspective.”
As a result, both Ricoh and Sage have ‘work for good’ policies in their wider benefits offerings that satisfy their ESG commitments and deliver highly on employee engagement. However, it’s not a benefit that’s easy to attribute a number to, and numbers are often all that matters – to both employee and employer.
For the employer, the push for measurable ROI may not be possible 100% of the time, but being able to quantify some of the larger financial commitments can build confidence at board level for further investment in schemes.
Similarly, for employees who feel their salaries aren’t quite up to snuff, it helps to have a dashboard that can comprehensively demonstrate the value – financial or otherwise – of their benefits package. “When the value of all of their benefits is explained, it becomes a very different proposition. To do this effectively, you need to have a platform through which employees can see all the benefits available to them, and the value of these benefits,” Yankson states.
In many cases, good benefit husbandry is all about management. “You will always have core benefits such as pensions and bonuses, but it also comes down to having good line managers who can communicate individualised benefits, where people can choose what’s relevant to them at a certain point in life,” Wallis concedes.
Ultimately, making the most of workplace benefits comes down to communication and engagement. It’s about understanding what is available and how to extract the maximum value from it, and making the right choices while having the flexibility to evolve as time and circumstance demand.
Above all, pleads Aisa-Dreyfus, let’s get back to what having benefits is all about. “I want benefits to be exciting. They’re a hidden gem that we all offer.” Given the right care and attention, benefits could sparkle like never before.
For more information please visit isio.com/reward-and-benefits or email curious@isio.com
