The rising cost of living in the UK has affected everyone. In March 2022, 83% of adults reported seeing everyday costs rising, including energy prices, fuel, and food and drink. 

As someone living in the UK, you’re probably also looking for ways to cut costs. As a business owner, it’s likely to be the same story; however, in this case, you’re also responsible for a team of people who are going through the same ordeal – and who may just be on the hunt for a job that pays more.

For some businesses, the solution to this is to raise salaries in line with inflation. However, raising salaries is simply not an option for every business, and so they must turn to other ways to entice workers to stay, including improving employee benefits.

But what are the pros and cons of increasing employee benefits rather than raising salaries?

Employee Benefits: The Pros

Firstly, employee benefit schemes are an easy way to both attract and retain talent at your company. Overall company culture is massively important to employees – 47% of people who seek a new job cite company culture as the main reason for leaving their role. As such, any way you can make your company more appreciative of employees will be valuable.

Offering added extras to your employees on top of their salary is also a way to show that you value their work and input. Rewards might be as small as a free lunch every week, but that’s still more cost-effective than raising salaries across the board. 

Similarly, some employee benefits have the added advantage of improving the well-being of your workers, so something like a complimentary gym membership or free fruit in the morning could even make your employees more productive. 

Some employee benefits you might consider offering include:

  • Health insurance
  • Gym membership 
  • Flexible working
  • Birthday days off
  • Bereavement leave
  • Company lunches every week

Employee Benefits: The Cons

Sadly, employee benefits also have their disadvantages. Most importantly, all of the work that goes into introducing employee benefits may end up being worthless as salary is still one of the most important factors for workers. 

This year, 64% of workers said that a significant pay increase is the most important factor when finding a new job, and you can expect this to rise as the cost of living worsens. As such, a pay rise may be the only effective way to increase loyalty in this economic climate.

Additionally, some workers may view employee benefits as a superficial way of improving the workplace. In this case, your efforts to improve your workplace culture could backfire, with some employees seeing it as patronising or out of touch. 

Our Advice

UK workers are going through a difficult time right now, and increasing employee loyalty should be a priority. Proving you’re looking out for your workers will pay dividends in the future. But how should this be achieved? 

As with UK households, businesses will also be looking for ways to keep costs low as inflation rises. It’s not always sustainable to increase salaries, especially as the UK teeters on the cusp of a full-blown recession. 

Introducing more employee benefits is a cost-effective way to improve motivation and loyalty. To get the most out of additional benefits, it’s worth asking your employees which ones they would like to see most.