As Judith Leary-Joyce, author of Becoming an Employer of Choice and founder of Great Companies Consulting, points out, the only thing your competitors cannot copy is your people.

‘People really are your greatest asset. Or they will be if you build a work environment in which they can shine. Once people realise they are in a good workplace, they want to stay. Great companies develop careers in-house – growing their own to make sure they keep all the expertise and experience. They also involve colleagues in seeking the best way to run the business, listening to their ideas and concerns from the front line,’ she believes.

She adds that it is not worth worrying that others might pinch your ideas and products. ‘They definitely will, alongside undercutting your price. Better to utilise your people to the full and go right on leading the field, while they struggle to keep up.’

Recruitment costs time and money

Keeping a competitive advantage is not the only driver – it’s getting harder and more expensive to attract and retain high-flyers.

‘Given the hefty costs of attracting, hiring, training and developing new employees, it’s no surprise that companies are giving high priority to creating benefits programmes that will enhance employee loyalty,’ believes Stephen Jones, employee benefits consultant at UHY Hacker Young Financial Planning.

At AIM-listed Pavilion Insurance, managing director Andrew Selby acknowledges that it is a challenge finding the right people.

‘We give our staff health cover, pension contributions and share options. We look after our people really well and I don’t underestimate the value they bring to the business. You can have a good business but it won’t work as a whole unless you have committed people,’ he affirms.

Re-inventing rewards

According to Jones, today’s employees have a very different set of needs from those of preceding generations. This would seem to suit smaller businesses better – they cannot always hope to match the type of benefits that big companies can offer, but instead can come up with more innovative ways of rewarding their staff on a flexible basis.

See also: Are workplace benefits all that complicated? – From experiential rewards to more substantial perks like extra holidays, here’s what works and why.

‘Employees actively seek benefits programmes that suit their aspirations, lifestyle and family needs, rather than simply accepting the company’s standard package, provided on the basis of grade, length of service or seniority. We are increasingly seeing evidence of employers putting a much wider diversity of flexible benefits in place – retail and childcare vouchers, massage at work, gym membership or spa days,’ he adds.

Money is not the only motivator

A recent survey from the Chartered Institute of Personal Development (CIPD), which questioned just over 500 organisations, showed that around a third of employers intend to amend their existing benefit provision this year. It found that in 2004, family-friendly, flexible, and voluntary benefits are all receiving a major boost, with the emphasis on initiatives such as enhanced paternity/maternity leave.

‘Despite a competitive cost-cutting environment, the survey findings may not be that surprising. Employers are finding it hard to recruit and retain talented individuals. One way of addressing this issue is by helping those workers with childcare or eldercare commitments to achieve an appropriate balance of time at work and time at home,’ noted the survey.

Another common change predicted for this year is in the provision of flexible benefits. Such initiatives are any set of arrangement that give employees a choice over the mix of cash and benefits they receive. However, the survey warns that although many employers consider introducing such benefits, few actually manage to implement them.

Case Study — How we reduced staff turnover and doubled our profits

Three years ago, Hillary’s Blinds completed a management buy-out when sales and profits were £55 million and £6.5 million respectively. It has recently undergone a secondary MBO.

Former finance director and now group chief executive officer James Nicholson believes employees have had a big part in shaping the business. In the last three years, staff turnover has reduced by 50 per cent, turnover increased to £85 million and profits more than doubled to £14 million. A variety of incentives are key to retaining staff.

‘We have a learning subsidy in place – staff can get £25 for training – it doesn’t have to be work-related – it could be for cooking courses or head massages! It’s easier for people in management positions to train because they are on a career ladder, but people on shop floors should have the same opportunities, even if they are not as ambitious,’ affirms Nicholson.

Every month, there are ‘muffin runs’ to celebrate a success or event, where managers hand out muffins to employees and there are variations on this theme. Regular coffee meetings are held between staff and directors to discuss workplace improvements.

‘On one occasion we wanted to boost sales, so we gave out chocolate Boost bars. On Valentine’s Day, we gave out love hearts,’ enthuses Nicholson.

The company also has a strong policy of promoting from within – 50 per cent of the senior management team have worked their way up from lower positions.