While hiring loyal, hard-working employees is crucial for any business, that’s only the beginning of maintaining a successful business. With costs of replacing employees ranging from 50% to 60% of the previous employee’s salary, it’s no secret that keeping an existing employee is the cheaper, more efficient option. So what is the best way to keep those productive employees around?
Well, like a break-up, sometimes it’s just not you, it’s them, and they’re looking for other things like a career change that you’re unable to support. And that’s okay, we wish them the best. Other times, keeping an employee happy involves factors that are well within your control, and worth the extra time and money. So if that’s why employees are leaving, that’s more of a, “it’s not them, it’s you,” ending which as much as we love The Devil Wears Prada and a good Meryl Streep moment, no business owner wants to be the villain keeping their employees from thriving in their workspace.
You might be thinking, “I run a small business and can’t compete with the salaries larger companies can offer. How else am I supposed to keep my employees happy?” And that’s a valid concern. But if there’s anything we’ve learned from running our own small business, it’s that keeping employees happy isn’t all about salary.
80% of employees prefer additional benefits over a pay increase. Source: Glassdoor Employee Survey
In fact, 70% of the employees we surveyed said they’d leave to work for a larger company that offered better perks and benefits if their pay stayed the same. Another survey by Glassdoor concluded that 80% of employees prefer additional benefits over a pay increase. So if that tells you anything, it’s that as a small business wanting to increase employee retention, shifting your focus from offering higher salaries to offering additional perks and benefits that support your employees’ lifestyles is actually a better way to keep them around.
To help fellow small business owners on their journey to increase employee retention, we did a survey on the most important benefits and perks for employees working for small businesses and this is what we found!
Let’s start off with the basics. In order to appeal to the majority of people, we found in our employee survey that it’s mandatory as a small business to offer paid time off and health insurance, understandably. A smaller number of people require retirement benefits which is a great thing to offer if you can, but for most people to have a good work/life balance and regular health check-ins at an affordable rate, unlimited paid time off and health insurance are the top two required benefits for small businesses that we felt was worth mentioning.
Now let’s dive into the top perks that will help your small business increase employee retention!
Top 8 Perks Employees Care About & How Often Small Businesses Offer Them
Would you stay in a relationship that wasn’t supportive to your needs or goals? If your answer is no, then you can probably understand why employees who feel unappreciated and overworked would seek jobs that make them feel valued, refreshed, and overall align with their lifestyle. It’s no surprise that we found most people want unlimited paid time off, employee appreciation programs, and mental health stipends which are all supportive to their overall well being and work/life balance.
It is, however, surprising that a very low percentage of small businesses are actually offering the most important perks to their employees that would keep them from switching jobs. With this information, you can turn your strategy around and focus your efforts on meeting your employees unique needs. But first, let’s take some time to understand why these perks are so valuable to employees, and why perks aligned with freedom, appreciation, and betterment are even more appealing than a salary increase.
Theme 1 – Freedom
Giving employees the ability to achieve their goals when they want and where they want is becoming more and more important. Offering flexible perks are not only supportive to work/life balance which 72% of workers say is very important to them when choosing a job, but it also establishes trust, encourages independence, and leads to more productive work.
With 77% of surveyed employees saying they’re experiencing burnout at their current job, it’s evident that there is a real need for flexibility in the workplace, not only for the sake of employee well being, but for the success of the company as well!
Here are the top three perks that you should consider to increase employee retention:
Unlimited Paid Time Off
Unlimited paid time off means employees have the freedom to take as much time off as they please, to a certain extent. Paid time off is still requested and documented through a preferred company system, and as long as there is no evidence of employees taking advantage of this perk, they really can take as much time off as they want. For example, while there may be no “limit” of PTO, if an employee started to request every other week off, the manager might start asking questions.
Employee productivity increases by 80% after a worker takes time off. Source: Alertness Solution Study by Dr. Mark Rosekind
This is of course a policy highly based on trust and encourages employees to take time for themselves while still being a valuable part of the company’s success. As long as employees understand the expectations, unlimited PTO can be a great benefit to both employees and employers. A study by Mark Rosekind found that after a worker takes time off, they can come back with an increased performance by 80%. The more time people have to recover and feel refreshed, the more productive they can be in their workplace.
84% of the employees we surveyed said they were very likely to stay in their position for 5 more years if offered unlimited paid time off. Yet only 11% of small businesses are actually offering these benefits. The good news is that when people see a small business offering a perk like this knowing it’s hard to come by, they’ll be more likely to not only apply for the job, but stay a long time.
Reduced Work Hours
Reduced work hours allow employees to work less than 40 hours a week. This could be a request from an employee or a perk implemented by the company. For example, Service Direct offers every other Friday off meaning our employees alternate taking every other Friday off which adds up to 35 hour weeks as opposed to working 40 hours every week.
Employees who worked 6 hour work days as opposed to 8 hours are 64% more productive. Source: Study of Swedish employees
A study in Sweden found that employees who worked 6 hour work days as opposed to 8 hour work days were 64% more productive. Another study showed that reduced work hours led to better sleep habits, less stress, and less negative emotions which resulted in better job performance overall.
As shown in the graph above, 76% of the employees we surveyed said they were very likely to stay in their position for 5 more years if offered reduced work hours while only 17% of small businesses are actually offering these benefits. This is clearly a perk that if implemented, has a high potential in increasing employee retention while encouraging healthier work habits for small businesses.
Flexible and Remote Work Options
Flexible work hours give employees the ability to work during times that suit their schedules best. For example, a working parent may prefer to work from 10am to 6pm to be available for the morning routine and school drop-off. Or they may prefer to work early from 6am to 2pm to have the rest of the day with their kids when they get home from school. A flexible work schedule allows employees to set the hours according to what works best for their lifestyle.
Additionally, remote work options make work even more flexible for those who need to be home during the day or for those who travel a lot. 40% of remote workers say the greatest benefit for them is the flexible schedule. Remote work can be supportive to any lifestyle and allow employees to get their work done from anywhere whether it’s in an airport, in the comfort of their own home, or in a hybrid-office workplace. There’s also a 25% lower turnover rate for companies who offer remote work.
Remote workers are 35-40% more productive. Source: Research done by Global Workplace Analytics
The benefits of offering remote work to employees seem to be endless with remote workers being 35%-40% more productive, 86% of remote workers feeling reduced levels of stress, and 22% happier than those working in-office.
As you can see from the graph above, 75% of the employees we surveyed said they were very likely to stay in their position for 5 more years if offered reduced work hours while only 39% of small businesses are actually offering these benefits. Even though that’s the highest percentage we’ve seen yet, it’s still a significant difference from the amount of employees who want that perk and the amount who are actually receiving it. Bottom line, employees are in need of this benefit and willing to stay longer with a small business that offers it.
Theme 2 – Appreciation
It’s no secret that people like to feel appreciated for their efforts, especially at a job where they spend most of their time every day. As mentioned above, salary is important but it’s not even close to the full recipe to making employees happy. 78% of employees say being recognized in their job motivates them, and almost 90% of employees who were recognized by their manager in the past month said they trusted their manager more. Curating a workplace culture of motivation, trust, respect, and appreciation is a great way to retain hard-working employees.
Employee Appreciation Program
Employee appreciation programs come in many different forms and can be as simple as a shoutout to someone’s awesome sale in a Slack channel or as extravagant as handing out an award or prize at a company party. There are structured employee appreciation programs like employee-of-the-month programs or unstructured programs that might involve prizes like movie tickets for the first employee to hit their goal or close a sale.
63% of workers that are regularly recognized are very unlikely to seek a new job within the next 3-6 months. Source: Bonusly & SurveyMonkey Survey
Overall, the point of an employee appreciation program is to regularly recognize employees for their hard work and accomplishments. Showing them how much they’re valued will encourage them to keep up the great work and stick around. In fact, 63% of workers who feel recognized are unlikely to look for another job, and 72% of businesses agree that employee recognition leads to more positive engagement.
70% of the employees we surveyed said they were very likely to stay in their position for 5 more years if offered an employee appreciation program while only 24% of small businesses are actually offering these benefits.
Theme 3 – Betterment
Offering benefits centered on overall employee well-being and self-improvement are wonderful ways to show your employees that you care about them as people because employees are more likely to work for a company they feel truly cares about them. In fact, 96% of employees believe empathy is a crucial part of advancing employee retention. Who doesn’t want to work for a company that helps support not only their work-related goals, but their personal growth goals as well?
Here are the top 4 betterment-related perks that employees care about!
Complimentary Snacks & Lunches
For employees who are still working in an office, complimentary snacks and lunches are a huge plus. Sometimes a midday snack whether it be a bag of Doritos, a rice crispy treat, (we don’t judge) or a granola bar is just the push you need to make it through the work day. Although the term, “hanger” is usually thought of as something silly, there’s some real truth to it!
“Hunger as a state actually causes a lot of shifts in hormones, brain processes and the peripheral nervous system that are comparable to what we see in anger, fear and sadness.” Dr. Kristin Lindquist
It’s no wonder complimentary snacks and lunches are a big perk to increase employee retention and that 61% of the employees we surveyed said they’d stay in a position for 5 years if offered this perk. Yet only 21% of small businesses are offering it, meaning you’ll stand out even more as a small business if you decide to add this perk.
As a small business owner, having a stocked pantry and catered lunch can make a real difference on employee satisfaction. In fact, offering employees free food can result in a 67% job satisfaction rate. Even if catered lunch is only once a week, or once every other week, a free meal is always appreciated, and as we learned above, sometimes necessary to keep a calm working environment.
Mental Health Stipend
A mental health stipend is a taxable benefit paid to employees to help cover mental health costs like therapy or meditation classes. There are different ways to manage a mental health stipend. Your business could offer this as an on-going stipend that’s paid out monthly, quarterly, or annually. There are many softwares available to help manage this benefit and ensure everything runs smoothly.
Psychologists received an increase in referrals of 37% in 2020 and an additional 67% in 2021. Study by American Psychological Association
Mental healthcare has always been important, but it seems to be even more crucial after the pandemic. In 2020 there was a 37% increase in psychologists receiving referrals, and that number increased to 67% in 2021. While mental health treatment is available, not every mental healthcare provider takes insurance, and even with health insurance, mental healthcare is still expensive and sometimes too much for people to afford.
It makes sense that 60% of the employees we surveyed would very likely stay at their small business for 5 years if offered this perk. Like most of the perks we mentioned, only a small percentage, 16% to be exact of small businesses are actually offering this perk. When it comes to employee retention, this perk is high on the charts for what employees consider important.
88% of HR professionals believe offering mental health resources boosts productivity. Survey by the Society for Human Resource Management Foundation
91% of Gen Z employees and 78% of millennial employees think every company should offer mental health benefits. As a small business, the more you’re able to help your employees, the more it will help your company overall. With 88% of HR experts believing access to mental healthcare boosts productivity in the workplace, it’s evident that people who receive mental healthcare are in higher spirits and able to focus more. Any small business supporting their employees to be as productive and healthy as possible is a business with a higher retention rate than those who are not implementing similar benefits.
An education benefit is a policy that provides employees with financial help to go towards expanding their knowledge through education. There are a couple ways to provide these education benefits. The most common two programs are tuition reimbursement and tuition assistance. Both programs pay some or all of the college tuition; the first one being paid after the employee has paid for it, and the second program typically provides aid up front.
60% of our respondents said they’d stay in the company for five years if education benefits were offered, only 24% of small businesses actually offer it. It’s certainly worth having a conversation with your employees and asking them how important this perk would be to them, or if they’d prefer something else.
Even though many people go to school to attain a job, furthering education doesn’t have to stop there. Data reveals that 80% of working adults are interested in going back to school, and other independent studies have shown that as much as 76% of employees would be more likely to stay with their company because of the tuition reimbursement benefits. Offering an education benefit as a small business would support employees’ professional and personal development which in turn, would help the company. It’s a win-win!
Wellness Challenges with Monetary Rewards
A wellness challenge is any type of wellness program designed to promote health and fitness in the form of a friendly competition. It can come in many different forms, the most important part is to bring employees together, encourage self-care, increase engagement, productivity, and to have fun!
Service Direct has participated in many wellness challenges. Some are focused on different categories such as journaling, reading, drinking enough water, getting enough sleep, or exercise. Our most recent challenge was using StepBet where the winners received a profit of the amount of money they put in to play. One of our favorite parts is sharing our progress in a channel on Slack and connecting on the rewards and challenges.
70% of employees that participated in wellness programs reported higher job satisfaction than those that had not. Aflac Workforces Report
Like all of these perks, a wellness program isn’t just good for employee job satisfaction, as 70% of employees who participated in wellness programs reported higher job satisfaction than those without wellness programs. It’s a huge benefit to the employers as well, in fact, 63% of employers offering wellness programs reported higher growth and financial sustainability.
55% of employees we surveyed would stay at their company for five years if offered this perk, only 15% of small businesses are offering it. Offering this perk is a great, low-cost way to keep employees more engaged, productive, and more satisfied overall!
How Your Small Business Can Offer Employees the Freedom They Deserve
At Service Direct, we offer unlimited paid time off, reduced work hours, and flexible remote work options. We like to check in with our team on perks and what is most important for the overall job satisfaction, and these three perks supporting work/life balance have been consistently huge factors in our employees’ happiness and success, so naturally, we want to keep providing these options.
We have always subscribed to the idea that as long as you’re getting your work done and hitting your KPI’s, we don’t really care when and where you do it!
Unlimited Paid Time Off
People need time to rest and come back feeling clear-headed and refreshed. The last thing we want our employees to stress about is not feeling like they can take time off when we know studies have shown employees come back even more productive after taking time off. As long as no one is taking advantage of the perk, we think unlimited PTO is a great benefit to the company as a whole.
“We don’t see unlimited PTO as freedom for our employees to do whatever they want, but rather freedom to accomplish their goals whenever they want.” Matt Buchanan, Co-Founder of Service Direct
Reduced Work Hours
After reading this article, our CEO decided to take it a step further and try offering an alternating four-day workweek and see if it resonated with our team. Our hypothesis was that implementing this new perk would increase employee job satisfaction, improve retention, and make our team feel more rested and ultimately, more productive, and motivated.
93% of our employees have said their productivity has improved, while the other 7% said their productivity has been the same. 85% of our employees said they feel more rested and happier at work.
“Coming from an agency where 60+ hour work weeks were expected, I realize Service Direct truly values my happiness by making sure I have more time to focus on myself.” Weslee Clyde, Marketing Operations Specialist at Service Direct
Flexible & Remote Work Options
We have always subscribed to the idea that as long as you’re getting your work done and hitting your OKRs, we don’t really care when and where you do it!
“Being able to work where I feel most productive and happy is a huge perk that allows me to find the right work/life balance.” Kim Wysong, Sales Account Executive
When implementing these benefits, we think it’s helpful to keep these three things in mind to ensure the benefits remain an aid to our overall company success and employee satisfaction:
Make The Right Hire
If it’s important to us as a company to offer flexible perks, then when it comes to hiring new people we need to be sure that they can thrive in a flexible work environment. For example, while many people are more productive working remotely, some people are less productive.
This would be a question we might have when calling a reference and if they say it seemed it was more difficult for the candidate to focus while working from home, then our environment might not be the best fit for that candidate, and we would look elsewhere.
Set Goals and Clear Expectations
When choosing to give employees more freedom to do their work that works best with their lifestyles, it’s very important to not neglect clear communication on what’s expected of them. If employees and employers are not on the same page with expectations, it’s going to leave disappointment on both sides.
To avoid miscommunication, it’s good to communicate how many hours are expected of them, to keep up to date on project goals they’re working on as well as set deadlines to ensure the environment is still a productive one.
Build a Culture Centered on Collaboration & Accountability
Collaborative culture creates an environment open to knowledge, sharing, and ultimately, growth. Approaching things in a collaborative effort rather than a demanding effort, encourages learning from all aspects, employees learning from employees, employers learning from employees, and vice versa.
The more collaborative your team is, the more likely they are to remain accountable to each other and not want to fall short or let other departments down. With this atmosphere, people are less likely to take advantage of freedom and more likely to want to be a valuable part of the team.
As a small business owner, we hope your biggest take away from this is that there is so much more value in supporting your employees’ lifestyles, wellness, and growth, than there is in raising salaries. Turns out money really can’t buy happiness. If your goal is to increase employee retention, the best thing to do is to ask your employees what’s most important to them. But we’re confident that any of the benefits we mentioned will be a great addition to your small business benefits and a great way to keep your best employees around.