A quick summary:
- Key differences between employee benefits and pay increases 🔎
- Do employees prefer benefits or higher salaries? 👀
- Best employee benefits to offer instead of a pay rise 🏆
- Using Heka to transform your employee benefits package 💪
Employee benefits and pay increases are two of the biggest reasons for a person to accept a job. They determine and dictate the affordability, (and sometimes the quality) of everyday life. In this blog post, we’re taking a deeper look into the true comparison of higher salaries vs employee benefits.
We want to make sense of the small details and statistics that can help us draw a clearer comparison between the two - a much-needed analysis given the current economic uncertainty we’re living through.
By the end, you should have a stronger grasp of whether your company is doing enough to support employees outside of pay increases. You’ll also find out, if you haven’t already, why employee benefits can drive health and happiness higher than higher salaries.
Before we jump in, don’t forget to check out our employee financial wellbeing guide - the ultimate resource for leaders looking to improve financial wellbeing of employees.
And yes, you read that right!
Similar read: The ultimate guide to employee benefits in 2022
What is the difference between pay increases and employee benefits?
Before rolling your eyes at the sight of such a simple question, let us explain. It’s important for leaders and HR teams to understand the key differences between pay increases and employee benefits - because many simply do not!
Firstly, pay increases should happen every single year. This allows for employees not to fall victim to the rise of inflation, which in recent months has skyrocketed. However, whilst beneficial, and seemingly fair for an employee, it isn’t an obligation of employers. Pay increases aren’t required to be conducted on an annual basis, and thus many employers simply don’t.
This, of course, can create chaos for companies, who eventually find themselves with an unhappy workforce, trying to stay afloat financially. The consequences of unfairly paying employees will unavoidably trickle into things like employee retention, job satisfaction and other attributes that make for a great workplace.
Receiving a pay increase, whether it be annually or not, kickstarts a new monthly take-home salary, increase in tax and NI, and other implications. Generally, though, pay increases are positive events for employees. In a nutshell, that is the most basic understanding you’ll need for pay increases.
Turning our attention to employee benefits, these are non-financial incentives available to employees at no cost to them. It is used to provide either access or discount to very much anything and everything. Here at Heka, we focus on providing access to all things health and wellbeing.
Yet, other providers will offer high-street discounts, fast-food vouchers and percentages of household goods - or as we like to point out, the not so essential things in life.
In an essence, however, employee benefits are one of the stronger ways to boost the value perceived by employees, without raising salaries. It enables employers to seek out a set of perks and incentives that can help make life that little bit easier.
Think life insurance, private dental care, learning and development budgets, earlier finish on Fridays, travel expenses, coffee vouchers - you name it, and it’s likely on the employee benefits page of a company somewhere in the world.
So, that said, what do employees truly prefer when it comes to higher salaries or better benefits? Let’s take a look at that now!
Why are employee benefits worthwhile for your company?
If you aren’t already aware, employee benefits are great for both the employer and the employee. In certain circumstances, it’s important to consider employee benefits as a means of boosting the employee experience and value of working for a company.
Assuming pay increases aren’t something a company can carry out, here are just a handful of reasons why leaders should look on the bright side of employee benefits:
Generally, employee benefits are cheaper and more affordable for an employer to provide. Given that some employee benefits don’t have to have a monetary value at all, such as flexible working arrangements, it’s a given to consider employee benefits for that sole reason.
Boost staff morale and happiness
As we’ve touched on in this blog post, better employee benefits equal healthier and happier employees. We’ve all heard the saying “money doesn’t buy happiness” and that’s exactly right. Using an employee benefits scheme, you can provide true health and happiness benefits, without the cost.
Good alternative during economic downturns
Finally, economic downturns occur from time to time and leave businesses struggling to stay afloat. This huge knock-on effect can see employees also struggling with their current financial situation. Through employee benefits, not only do you cut out the cost of direct pay increases, but you can open the door to employee benefits that help employees financially.
Think paid gym memberships, food shopping vouchers, financial education and support - all areas that can help employees stay financially sound during a recession.
Do employees prefer higher salaries or better benefits?
Salary increases are one of the most powerful persuaders in choosing a new job. Despite an employee loving their job, the responsibilities, lifestyle and desires of everyday life are much more important - and to deny this as true is bizarre. At the end of the day, we all have families to feed, things to buy and experiences we’ve always wanted.
However, and that’s a big ‘however’!
Times are changing, and employees are beginning to recognise the potential employee benefits have on improving key areas in life. This is especially true for employee benefits that focus heavily on improving things like health, happiness and general wellbeing - something that’s built into our platform here at Heka. So, if that’s to be an emerging truth in the modern workplace, do employees prefer higher salaries or better benefits?
The answer is more of a combination of the two. Fairly paying your employees, and recognising that an employee benefits package is also necessary is the best balance for building healthier, happier teams. Rather than seeing pay increases as an attack on the bottom line of your business, or employee benefits as a tickbox exercise, they must co-exist with purpose and intention.
As a leader, you should start with employee salaries, looking at whether your people are paid fairly. No matter how great your employee benefits package, and how long the list falls, it just can’t make up for the downfall in fair pay. Compare the figures against industry standards, even better, role-specific. This will give you the best possible insight into how well your employees are paid.
If you have a robust HR team, this is a project you should assign to them. Once you have the details, it’s time to make some adjustments to employee salaries. If you believe some employees should be promoted, this is a great chance to both congratulate and reward them for their hard work.
Once you’ve adjusted wages, consider your employee benefits package. Here are a few questions to grasp the quality of your existing workplace benefits:
- Do you have a set employee benefits package?
- How readily accessible are your employee benefits?
- Does your team know about all of their employee benefits?
- Have you ever surveyed your employees on the current benefits package?
- Do you monitor the use of your employee benefits scheme?
- Who is responsible for employee benefits, and what are their KPIs?
- Have you asked your employees about things like job satisfaction and happiness?
This list is by no means exhaustive and should act as a starting point for you to dig deeper into whether your current employee benefits package works. Now that you’re aware of the current state of your benefits, contemplate whether there’s room for improvement.
If you are paying your employees fairly, and your employee benefits scheme is being used a lot by your people, you’re likely doing a great job with a healthy balance. Still not sure? Let’s find out about some of the employee benefits you should include in your employee benefits scheme instead of a pay rise.
Similar read: Employees would choose these benefits over money
Best employee benefits to offer instead of a salary increase
So you’ve decided there’s a much-needed ramp-up of employee benefits in your company; a package that doesn’t just tickboxes, or only mildly support the lives of employees. Instead, you’re looking for employee benefits that can compete against pay increases. Below, we’ve explored four to get you started!
Health and wellbeing benefits
Health and wellbeing incentives have been around for some time in the workplace. Whether it’s life insurance, private healthcare or subsidised gym memberships, there’s a reason they work. We all want to lead healthier, happier lives, and these kinds of incentives unlock just that.
When we feel that our employer supports our health and wellbeing, we feel much more valued. Not only that but we are empowered to work at our best. Still not sold on health and wellbeing benefits? One study found that 91% of Gen Z thinks companies should have mental health benefits.
It isn’t just about cutting the costs and saving your employees more money, but being able to support them in other areas of improvement like health or fitness.
Remote and flexible working arrangements
It’s no secret that remote and flexible working arrangements have taken the workplace by storm. All of a sudden, employees can work just about anywhere and everywhere. This was an attributing factor in the Great Resignation, which saw record-breaking figures of people moving between jobs.
In the modern workplace, employees are looking for careers that consider flexibility and put people first. In one survey, 69% of millennials said they’d “give up on certain other workplace benefits” for a flexible approach to the workspace. The serious demand for remote and hybrid working has driven workplaces up in value, even without pay increases.
Office-based employee benefits
Following on from remote and flexible working benefits, there is a range of employee perks that should exist in the work environment. Perks of the workspace that can set your workplace apart from the next.
Essentially, it’s important to build a workplace that people enjoy working in. Remember, with the rise of remote work, there must be a substantial reason and desire to work in the office from time to time - but how do you create that desire?
It’s time to consider things like earlier finishes on Friday, social gatherings, Wellbeing Wednesdays, healthy office snacks, paid travel expenses, and other office-related benefits. By offering employee benefits that are directly related to the working space, you are not only encouraging employees to return to the office, but also creating a better culture and environment altogether.
And if working day-to-day has taught us all anything, it’s that we’d rather enjoy our careers, our colleagues and our work environment than receive a small pay increase.
Using Heka to improve your employee benefits package
Heka is an employee benefits platform built for your employees, not employers. What this means is that while it takes out the stress of managing an employee benefits package, and frees up time for your HR department, it’s mainly beneficial for your employees.
For your employees, Heka grants them access to thousands of wellbeing experiences, services and products. Think life coaching, fertility planning, nutrition support, yoga classes, axe-throwing and much more. There’s essentially something for everyone and anyone in the workplace when it comes to health and wellbeing.
We also understand that unlike high-street vouchers and coffee discounts, health and wellbeing must be personalised. That’s why our team are constantly onboarding great new partners across 50+ wellbeing categories each month.
If you’d like to find out how Heka can help your employees, get in touch and book a demo with one of our wellbeing experts today!