By James Malia, Managing Director of P&MM’s employee benefits division,
According to a new report carried out by Oxford Economics, the average cost of taking on a new member of staff for companies in the UK is £30,614. This is based on three main aspects – logistics in bringing someone new on board, the recruitment process and absorption into the business, and the cost of lost output whilst a new recruit reaches their ‘optimum productivity level’.
There are of course variations by industry, the size of the company and the complexity of the role, but bringing in someone new is, for most businesses in the UK, a cost that can be ill afforded. It is crucial therefore, that business owners and HR managers keep the need for recruitment down. A business should aim to recruit new staff only in circumstances such as expansion or diversification, not on replacing long-serving employees. It should instead focus more on retaining good staff to avoid this unnecessary expense.
Impressive pay packets can supposedly retain staff, but they are not available to all businesses and are not always effective. Offering an attractive benefits scheme on the other hand, along with a competitive salary package is often cost effective and can even be cost-neutral. The right benefits package can potentially save employees up to £1,000 per year. Benefits are not only an easily implemented solution, but they are also an important part of both recruitment and retention. It is a common misconception that a high salary is the only way to keep the best talent, but an attractive benefits package can just as easily make the difference between someone ‘jumping ship’ and being a loyal member of staff.
Furthermore, long term salary sacrifice benefits such as cycles to work, mobile phone or laptop schemes can play a valuable role. These schemes require a member of staff pay over, for instance, 2 years with the balance due in full from the final salary payment if the employee decides to leave. Staff who sign up to these terms are, by doing so, implicitly indicating their intention to remain loyal and may be deterred from leaving before the contract period elapses.
The right employee benefits package, tailored correctly, can have a huge impact on morale and productivity, however many business owners, particularly those running smaller companies, think that these schemes are expensive and time consuming. When pitted against the recruitment process and costs it really is a most viable option. A benefits package will also impact all staff, not just the top tier and, after all, a happier workforce is a more productive workforce.
Every business, no matter how big or small, needs to cut down on recruitment costs and staff turnover. As these costs can be reduced or even eliminated entirely by the appropriate benefits package, every business owner or HR team should be considering the changes they can make to ensure their staff remain loyal.