What benefits are important to employees in 2024?
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by Michael Lantry
IT Jobs and Recruitment Insights
At GemPool, we spend all day talking to candidates about their salary expectations, but also the benefits they currently have. It's not always the salary that is the most important aspect of the remuneration package. All parts of a benefits package have the ability to sway a candidate to accept an offer, and also retain existing employees. There are many factors that impact the decision to take one job offer over another, but the package is a very important one. In this blog, I will reflect on the tech market in Ireland in the context of benefits packages and focus on what candidates are looking for in 2024.
The information I will share is both anecdotal (from our daily conversations with candidates) as well as from the research we did for our Tech Salary Guide Ireland for 2024.
When I reflect on the benefits offered to candidates post covid, there was a huge push to add more benefits and incentives. This was, in part, due to the lack of supply of talent driving employers to have to offer more carrots to attract talent. This was particularly true in 2021 and 2022. Things really slowed then in 2023 and the demand for tech talent in Ireland significantly slowed. Along with this, employers felt less pressure to give give give to employee’s and the playing field level slightly. Where we saw sign on bonuses and fully remote working and 4-day weeks being offered, this has become less common again in 2024.
The power dynamic at play between candidates and employers has shifted. Whereas candidates had all the power post covid, due to huge demand for tech talent, this demand has cooled and therefore there is a little bit more choice for employers. My sense is the pendulum of power sits somewhere in the middle now, rather than all to one side.
A big trend we have seen over the last twelve months is the slow move back into the office. Everyone has seen how traffic has increased and buses are jammed packed again, especially on a Tuesday or Wednesday. So what is happening? This brings us to our first key benefit for discussion…flexibility.
Flexibility
In a survey published by the Western Development Commission in November 2023, 59% of respondents work hybrid, 38% fully remote and 3% fully onsite. When working hybrid, most were working either two days in the office (35%) or three days in the office (24%). This is a big shift from the covid times when a huge % of us were fully remote. We see the 59% of hybrid workers growing as employers are encouraging people back into the office more and more.
There are many reasons for this. But what we hear a lot is the need for better collaboration and connection. These are worthy causes for sure. Culture and relationships are critical to the success of any business. Where there is a disconnect is when employers don't structure their working weeks, the work environment and the hybrid policies in a way that demonstrates flexibility and supporting the employees desire for work/life balance. In the survey, 72% of respondents felt their needs were being met, so a lot is being done well. Employer’s need to be very careful with how they implement change and policies on this topic as 44% of the respondents said they would definitely change jobs for less pay if their flexibility needs were not being met. 31% said they would consider changing jobs.
Those employers who push too hard to get employees back into the office will drive up attrition. They are also reducing the candidate pool they can hire from. When retention is one of the key issues facing tech leaders in the Irish market right now, you need to be doing everything you can to offer as much flexibility as possible.
After flexibility, I want to highlight the importance of what I call the ‘big 3’. These are bonus, health and pension. These benefits have been around for a long time and continue to be important offerings that employers can use to reward their employees.
Bonus
The bonus has been used for a long time as a way to encourage high performance and reward employees. As a mechanism of reward, you can look at it in a number of ways. You could argue that the bonus is a way for an employer to hold back salary and only give it to you if you do your job. Why not just increase the basic to include the bonus amount? On the other hand, it can be seen as a way to reward employees for doing a great job and motivate them to stay with you.
Across the tech market, bonuses are offered to employees in a variety of ways also. The two main approaches are to offer the bonus based on individual performance (based on agreed metrics) or company performance. The former is popular as you have full control over whether or not you achieve your bonus. The latter is dependent on the whole company doing well. Often you see a hybrid bonus with some based on the individual and the rest on the company performance. Over the last twelve months, we have seen bonuses being awarded, but not to as big a degree as in 2021 or 2022. Tech companies are performing well, but have also made a lot of layoffs, so have held back bonuses in a lot of cases.
In 2024 we see that the typical bonus on offer to tech staff up to managerial level is 7%-10%. We expect this to stay steady throughout 2024 and into 2025. Also, bonuses are more prevalent in larger tech companies rather than start-ups or mid sized companies. When you get to managerial level the bonuses range from 10%-15% and then 15%-30%+ for VP level and CTO level.
Health Insurance
Private health insurance is a very popular benefit that we see. It's a strong indication that an employer cares about the health and wellbeing of their employee. This insurance is mostly offered for just the individual employee, but we have seen it covering the employee plus partner and dependants too. Again, this tends to be in the larger organisations.
From our research, 52% of those we spoke to had private health insurance through their employer. Keep in mind that our sample was IT workers in permanent full time roles, not IT contractors who would not get any benefits. Also, the data would be skewed based on our mix of clients that we recruit for also. One thing to look out for is premiums going up in 2024. This is a cost for the employer. Perhaps this will mean that the employer will select a policy at renewal stage that does not cover as much, in order to keep the costs down.
Pension
It is a legal requirement to offer access to a pension for your employees, but not yet a legal requirement for an employer to make any contributions on your behalf yet. This will all change in 2025. The pension auto enrollment is coming. So employers will have to pay into a pension for each employee. In the tech industry in Ireland, this won't cause too many waves as many offer contributions already. E.g. From our research, 68% of those we spoke to get contributions from their employers. This is encouraging, and, I would suggest, high when compared to other industries in Ireland. The typical approach employers take is to offer a contribution based on the employee also making contributions themselves.
For example, the range we typically see employers putting in is 5%-8%. Often the employee will have to put in 5% of their pay to trigger the employer's contribution. For more senior roles, pension contributions from employers can be up to 15%, which is very good at keeping people in jobs over time.
After flexibility, bonus, health and pension, the next most valued benefit is annual leave.
Annual Leave
The quantity of annual leave on offer is a big consideration for candidates deciding on whether that will take an offer or not. We see this all the time. Those companies offering 25+ days, do better than those offering as low as 20 (the statutory minimum). In the tech recruitment industry, we see very generous annual leave allowances. Many employers offer unlimited leave or offer 30 days or more.
The creative use of annual leave can also feed into the candidates' need for flexibility. We have seen some employers offering chunks of time off for the whole company as a ‘burnout break’. This is carefully selected as times when the business is slow anyway. Also, in the summer of 2023, many employers offered Fridays off or the last day of the month off. These gestures would not be part of an individual's annual leave allowance so were popular benefits that made a big difference to retention and employee satisfaction.
In 2024, we haven't seen any major changes to the annual leave policies being implemented. They have been pretty steady since 2023.
Shares
This benefit definitely held more weight in 2021 and 2022. Employee’s and potential employee’s could look at the share price of a company and see how they could be sitting on a lot of wealth if they worked for that company. However, tech stocks have not done particularly well in 2023. They are doing better again in 2024 since they have lowered headcount and gotten back to profitability. But my sense is that people have learnt that you cannot rely on the value of your shares and therefore, they are less attractive as a benefit.
There are many different employee share incentive schemes that can be offered. Like share options, ‘KEEP’ shares, restricted shares, profit sharing etc. I won't go into all these in this article. The main point to make is that shares are a great way to incentivise employees to stay, long term, and also feel a stronger sense of ownership of the company and the work they do.
The value of shares plays a large role in how impactful a share incentive scheme will be. For example, if you are being given shares in a PLC, the value is defined by the trading markets. If you have shares in Nvidia, you are probably delighted over the last 12-18 months. You can track what they are worth and know how valuable your shares are. If you are given shares in a start-up, they are really worth nothing unless there is a future event (like an acquisition). You are setting the value based on what they could be worth, in the future, if the company gets sold.
From our research, shares were of much less importance than other benefits. I think a big part of this is that many tech stocks tanked in the second half of 2022 and into 2023, so their value diminished. Most of the candidates who worked for PLC’s had stocks of some kind but many of the candidates in smaller companies did not.
Other company benefits to keep an eye on
Employee mental health has become, and rightly so, a far more acknowledged factor in the workplace. For employers, this has presented opportunities to do things for their employees to help them live a more fulfilled life and career. This is one of the positive legacies of Covid, in my view. As I mentioned above, time off and annual leave has been a popular way to address this. Other ways have been simply by talking about this in teams on a more regular basis. It's more front and centre in the conversation. It's a topic with less stigma attached and employers are more empathetic, generally, and supportive to employees with mental health challenges.
Other benefits that we also found our candidates mention were things like educational assistance (so this could be a training budget for exams or time off for study), bike to work scheme, travel saver tickets, free food in the office etc. These benefits tended not to be important factors to candidates though. The focus is very much on salary, flexibility, bonus, health, pension and annual leave. These are the key elements to the remuneration packages and will continue to be throughout 2024.
If you would like to learn more about the tech market or tech recruitment, please visit our IT career insights page or reach out on info@gempool.ie.
