The evolution of compensation & benefits by company stage with Ben

The evolution of comp & benefits by company stage

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Changes in the workplace are unavoidable and sometimes unpredictable, but that doesn’t mean that you can’t prepare using industry trends. 

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By now it’s common knowledge that employers are expected to offer benefits in addition to salary for employees. It’s also pretty common to assume that salaries and benefits fluctuate depending only on a candidate's experience. Call us mythbusters, because we’re here to tell you that salaries and benefits also fluctuate based on a company’s size. 

And our proof? Using our own salary dataset, and our expert partner Ben to give you real data from over 1000+ companies located in the UK. 

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Not in the UK? Check out our benefits reports for France, the Netherlands, or Germany. 

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So, here’s what you need to know about how compensation & benefits typically evolve with the stage that a company finds itself in:

• Why might compensation & benefits change with company size changes? 
• Do salaries change based on company size?
• What benefits change based on company size?
• Benefits best practice checklist

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Why might compensation & benefits change with company size changes? 

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Offering competitive salaries & benefits is beneficial for all sizes at all stages. Here are some key differences we can see with smaller and larger companies and their offerings: 

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To attract talent 

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As a small company: 

• Some smaller companies decide to offer higher salaries as a way of offsetting the lack of “old school” benefits that an employee could typically find at a larger company. 
• Since there are no rules engraved in stone regarding policy creation, your HR team can be agile in their benefit offers. By using recent trends and market research, smaller companies can adapt their benefit offerings to match with candidates requests and stand out. 

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As a larger company:

• Having a larger budget means that you can offer a comprehensive benefits package that will attract candidates.

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To retain talent 

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As a small company: 

• Small companies tend to have little or no structured onboarding program for new employees, so their manager usually needs to be very hands-on with the whole onboarding process. If done right, this hands on onboarding can lead to clear communication on benefits, values and perks of the company. 

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As a larger company: 

• Hiring usually needs to go through lots of vetting, approval, and general processes. It's worth keeping your valued employees in the company to avoid long processes for your HR team, typically a larger company will have more flexibility in their budget to allow valued employees to negotiate or offer bonuses. 

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Let’s look at just a few examples that could apply to you… 

• Perhaps you are in a competitive market, or your scaleup has been stressful for your long term employees - if you have the resources, this could be a critical time to put them towards higher salaries or extra benefits to ensure employee retention (especially in the tech talent war). 
• Maybe you are looking to attract new talents with your new funds. Transparency is a big demand for candidates now and having great benefits and a real above-market salary range  can make you stand out from the crowd. 

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The key takeaway here: it is important that your compensation & benefits are aligned with your stage. Keep reading to see the data on salaries and culture & benefits…

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A look into compensation

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It’s a common misconception that “the more experience you have, the higher your compensation is.” The truth is; salaries and benefits are complicated matters that aren’t always black and white (and we have the data to back that up).

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We looked mainly at two sample sizes, comparing base salary, company size, and experience level. 

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The results?

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The results show that in roles ranging from Junior to Lead, the base salary generally stays the same, with the largest difference in salary from 1-25 → 100+ companies being for Junior software engineers and lead product designers, each jumping 7% from small 1-25 person companies to 100+ person companies. 

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The biggest increase was in Head Of and C-Level roles, where we saw a jump in salaries up to 122% higher in 100+ companies vs.1-25 person companies, where as the next level down, head of, salary was only 16% higher in a 100+ employee company than a 1-25 person company. 

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Why are Senior Engineers compensated more than Lead Software Engineers on the chart? There are a few factors in play that include, increased responsibility, more company funding, and overall scope of work in a large company vs. smaller company.

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An investigation into benefits

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Now looking into data provided by Ben, we can also see some major trends showing that company size influences the benefits offered. We’re breaking it down into sections to make it more digestible. 

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Some of Ben’s customers have however designed their programmes to encourage retention, whereby your benefits allowance increases based on your tenure -> each year you stay you get more.

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A few notes about the data:

Compensation can be very complicated with the amount of £ spent, so we kept it simple with our generalizations of “do you offer benefits? Y/N” and based on our >200 vs. <200 headcount.

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Benefits like Dental Insurance, Health Cash Plan, Vision/Optical, Pension, and Annual leave tend to be consistent through companies of >200 and <200 employees.

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Medical Benefits

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This includes dental insurance, employee assistance program, health cash plans, mental health support, private medical insurance and vision/optical insurance. 

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39.03% of companies under 200 employees do not offer any medical benefits, while 14.66% of companies over 200 employees do not offer any medical benefits.

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Why could this be? 

• Budget and resources. Medical insurance is typically very expensive and can be a lot of administration to source and manage. For example in the UK, when there is the option of the NHS, many small companies won't consider offering medical benefits.
• Larger companies are reputed to have “old school” benefits like medical and dental while smaller companies typically focus on flexible work and instant gratification benefits. 

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Employee Assistance Programs

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EAP (Employee Assistance Programme) are benefits that provide employees with advice and support, rather than a product or service in itself. It can include many things from employee education to short term counseling. In this context, we’re referring to any medical EAP’s.

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9.59% of companies under 200 employees offer employee assistance programs, while 19.83% of companies over 200 employees do.

Aligning with the point above, larger companies tend to offer more “practical” benefits than the smaller companies. It could also be reflective of larger organizations struggling to provide more personalized benefits as an EAP is a great way for employers to offer ‘personalized’ treatment without much intervention.

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Flexible leave benefits

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This includes expanded annual leave, expanded maternity and/or paternity leave, pension, remote working. 

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What we can see here is that regardless of company size, remote working for office and pension are the most popular benefits to offer. 

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What does this mean for you?

• The movement to offer more flexibility, has had a massive impact on companies of all sizes (and is here to stay). 
• There are no more excuses to no longer offer a flexible working environment, especially with many flexible benefits having low cost to implement (like remote working). 

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Benefits best practices checklist

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Before you implement your benefits, you should go through our mini-checklist with Ben on benefits best practices (our ultimate fair compensation checklist is here). 

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For creating benefits

• To support your benefits budget plan, do you have key stakeholders involved?
• Do you have trackable internal metrics to measure the success of the benefits?
• Have you done a benchmark of what other companies are offering? Or spoken with an expert/consultant? 
• Have you decided if you will be using a DIY solution or platform? 

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For external candidates

• Are your external candidates aware of the benefits and compensation? (Job description, careers page, communications from social accounts)
• Are your interviewing managers comfortable with answering questions about benefits and compensation? 

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For employee retention

• Have you asked your team what they would like to have? 
• Are you regularly collecting feedback from employees about their satisfaction?

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Conclusion

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Compensation and benefits are critical factors for employees when choosing a job, and the differences in benefits packages between small and large companies can have a significant impact on their decision-making process. Therefore, it's important for employers to understand the needs and desires of their workforce and to offer a comprehensive compensation and benefits package that attracts and retains top talent as the company grows. 

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When choosing their next adventure, compensation and benefits will play a huge role in influencing a candidate's decision. 

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Key takeaways

• The good news is that regardless of your company size, you can compete in your offerings to attract the right talent. 
• Leave and flexible work presents a great opportunity to smaller companies to remain competitive, as these benefits typically don’t require as much resources to deploy. But this isn't the only area they can shine. 
• Using real-time market data through salary benchmarking is the best way to ensure that you are offering competitive salaries based on region & size.
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