Small businesses need to prevent staff defecting to larger employers by improving benefits provision, with an estimated 6 million workers in smaller businesses missing out entirely.

39% of small business workers are receiving no benefits, compared to 24% in larger enterprises. 82% of smaller business employees saying that benefits would encourage them to stay in their jobs, according to research by Grass Roots Employee Solutions.

On average, the smaller the company you work for, the less likely you are to receive benefits. For example, in businesses with up to 10 employees 53% received no benefits. Compare this to businesses with 50 to 250 employees and this figure drops to 27%, and companies with over 250 workers only 24% received no benefits.

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.

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 small and medium-sized enterprises (SMEs) from retaining valuable staff members who may be tempted to move to a bigger organisation.

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:

“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.”