Employee Engagement – using reward, recognition and engagement to drive performance

Boost attraction, motivation, and retention to drive performance and engagement

As the employment market becomes increasingly changeable and competitive, employee benefits can be a sure fire way to support attraction, motivation and retention.

Jobseekers place greater emphasis on total reward packages, so organisations are significantly altering recruitment processes and offerings. Candidates no longer just compare salary when choosing a new role, they also analyse the full range of benefits on offer and how they correlate with their needs, lifestyle, and values.

Indeed, research highlights that 65% of candidates consider employee benefits when considering job offers, while 80% of employees are more likely to stay with a company that offers well-structured benefits packages

So it’s no surprise that businesses have been reflecting on their benefit strategies over the years. The focus has shifted away from generic rewards to a more tailored, flexible approach that can support the diverse needs of employees.

The rise of meaningful, money-saving benefits

One growing ‘must have’ within benefits packages is a range of salary sacrifice schemes that are both cost-effective and highly valued by individuals. Examples include:

• Car benefit schemes, including electric and hybrid vehicles
• Cycle to work schemes
• Car parking solutions
• Annual leave purchase options
• Technology schemes (laptops, smartphones, tablets)
• Childcare vouchers

These are offered alongside more traditional, lifestyle focused benefits, including:

• Employee assistance programmes (EAPs)
• Retail and leisure discounts
• Travel savings
• Cashback offers
• Health and wellbeing memberships
• Recognition and reward programmes

Why salary sacrifice car schemes are surging

Salary sacrifice schemes, especially for electric vehicles, are one of the fastest growing employee benefits. YouGov research indicates that over 74% of the workforce would like an EV salary sacrifice scheme at their workplace. The appeal of these schemes to talent is evidently receiving recognition from many employers, with overall fleet numbers for salary sacrifice vehicles rocketing by 63% year on year. As a result, over 80,000 UK employees are now driving electric cars via these schemes, many of whom were unable to afford or access them before.

One reason for this surge is the cost savings associated with salary sacrifice car schemes. On average, drivers on Tusker’s salary sacrifice scheme saved more than £320 a month in 2023. Not only are these drivers reporting £1000 saved on fuel per year with electric vehicle options, but the schemes also reduce monthly tax and National Insurance by being paid for through salary reductions. They are also helping employees to budget more efficiently – there are no financial surprises; as the monthly cost typically includes insurance, servicing, maintenance, replacement tyres and breakdown cover, at fixed rates to protect from price rises.

As a further bonus to the financials, these schemes support wider employer and employee ESG goals by making lower-emission vehicles more accessible. For example, Tusker has successfully moved car orders from 17% electric in 2019, to 80% electric by 2024. Some studies have suggested that electric vehicles emit 17% to 30% less carbon dioxide than petrol cars over their lifetime, massively enhancing organisational sustainability with every employee who switches to electric.

All these combine to drive employee performance. But add into the mix that individuals have more flexibility to manage work/life balance and that they can reduce stress, perhaps by alleviating financial burdens of maintenance costs or surprise expenses that cars create – and some companies are super-boosting it. Consider too that employees can gain from a more convenient commute or being able to conduct work-related travel both of which can ease time pressures. Cars can be tied to recognition too – one company offers a car as a prize for one lucky employee annually who exceeds their target. Together, a salary sacrifice car scheme helps engagement, motivation, productivity and retention.

Take for example, Leicester City Council. Its salary sacrifice scheme with Tusker has been running since 2013 and not only delivers six-figure savings, but 50% repeat uptake. It was originally introduced as a way to save money while offering employees access to better benefits. Over a decade later, the scheme is still delivering six-figure annual savings and has become a cornerstone of the council’s reward strategy. The savings from the scheme, originally used to subsidise travel options like bus passes, car parking and cycling, are now built into the Council’s financial forecasts.

Today, it plays a key role in supporting recruitment and retention at the council, delivering on sustainability goals and helping employees – particularly those on lower incomes – gain access to electric vehicles that might otherwise be out of reach.

As Cory Laywood, Head of Revenues, Benefits & Transactional Finance at Leicester City Council, explains: “An EV is typically 20% more expensive than a comparable petrol or diesel car. For many of our employees, a tax-efficient salary sacrifice scheme is the only way they can afford one. I don’t think they’d be able to do it otherwise.”

Uptake remains strongest among lower- to middle-income employees. More than one-third (35%) of scheme participants earn less than £25,000 a year, and just 6% earn over £60,000.

“This definitely has the most impact on our lower-paid workers,” says Laywood. “Of course, some senior staff love it too, but they make up a very small percentage of the workforce. It’s our everyday staff that benefit most.”

Employee loyalty is key. More than 50% of those who’ve taken a car through the scheme have gone on to lease a second or even a third vehicle. Increasingly, new employees are joining the scheme almost immediately upon starting their roles. The trend towards longer terms is also growing.

Ultimately, the scheme has become one of the most powerful benefits the Council can offer, as it helps compete with the private sector, where company car schemes are more common.

“People are always surprised when we tell them we offer this,” says Laywood. “They often say, ‘Oh wow, you’ve got a car scheme?’ It’s a great tool for recruitment and for keeping people here.”

Ultimately, the key to a great benefits strategy is to select options that align with employee priorities, strengthen their financial health beyond pay, and deliver strong ROI. When done correctly, benefits become a strategic asset, not a resource drain, helping attract top talent, boost employee engagement, drive performance, and provide a reward that truly helps them.