Many small businesses see employee benefits and incentives as wasteful capital expenditures, but they can provide a return on investment in multiple ways.
Small businesses face seemingly insurmountable challenges each and every day. Gaining market share, boosting brand awareness and securing seed money are what some owners may call, "Just another Tuesday."
But in the era of the candidate-driven job market, recruiting and retaining employees have risen to the top of many lists as two of the more trying aspects of building a company.
Large organisations have the financial capital to outbid any other business for an applicant's skills. This in large part contributed to the reason behind 47 per cent of all rejected job offers in 2016 - because those candidates accepted another job, Glassdoor reported.
"Employee benefits and incentives are valuable during recruitment."
Annual compensation isn't the only component taken into consideration though. Employee rewards and recognition are increasingly playing a bigger role in whether companies can attract and retain new talent, and small businesses seem to be missing the mark.
A smart investment
Frivolous expenditures can sink a startup before it gets moving. Employee incentives and benefits are lumped into the same category as reimbursed meals or corporate car rentals far too often. In fact, they can be a crucial bargaining chip in a bidding war for a potential applicant.
The sooner small businesses see this possibility, the better prepared they'll be to hire. Roughly 71 per cent of all organisations offer benefits packages, leaving the other companies without anything other than financial compensation to put on the table, Small Biz Trends reported.
Small businesses can earn an advantage by not only proposing standard insurance coverage, but also by giving other employee rewards and recognition. In implementing a point-based system, candidates have the ability to decide what they earn, which is a lucrative concept. Concert tickets, the latest technological gadgets and travel rebates are all within the realm of affordability for startups if they pair with the right third-party provider.
Thinking long-term
Of course, improved recruiting isn't the only advantage small businesses gain by integrating benefits. Incentives help to drive productivity, despite the negative connotation they're costly and provide little or no return on investment, according to Tom Gaynor, employee benefits director at MetLife UK.
"Small businesses are under considerable financial pressure and it is understandable that many have either not taken the step of investing in benefits for the first time," Gaynor told Is4Profit.com. "However, this calls into question the effectiveness of the intermediary market as a valued source of strategic business advice to small businesses. Benefits should be seen as a performance driver worth investing in, not as a cost without payback."
"Employee incentives are powerful performance motivators."
Performance-based employee rewards can be a unique asset to small businesses. If implemented correctly, they can help the organisation stand out from the crowd not only at the negotiating table, but also drive productivity in a way that doesn't seem contrived. The latter is ultimately the most important. A startup's financial health is closely related to its staff's productivity. An organisation needs all hands on deck, and a point-based employee incentive system is one approach a company can take to encourage that change in culture and mentality.
Startups that think incentives and benefits have little sway with candidates are only fooling themselves. Roughly 56 per cent of job seekers list those two aspects as either very or moderately important when considering employment, Small Biz Trends reported.
Cost-cutting measures will only bring a small business so far. At some point in time, employers need to evaluate their human capital. Employee rewards and recognition programs go a long way towards putting the company on a pedestal in the eyes of applicants, and maintaining loyalty and productivity among staff.
Is your organisation interested in a performance-based employee rewards program? Contact a Power2Motivate representative today.