Employees often leave for a combination of reasons, not just salary. Feeling valued, having financial security, access to health support, and work-life balance can influence whether someone stays with an employer. For many workers, these factors are part of their overall employment experience.
Recruiting and retaining great employees is one of the biggest challenges for small businesses in New Zealand.
Many SME owners have experienced the same situation. A strong candidate accepts a role at a larger organisation. A trusted employee leaves after receiving a better offer elsewhere. Salary often becomes the focus of these conversations.
However, salary is rarely the only factor influencing someone’s decision to join or stay with a company.
Many businesses that succeed in attracting and retaining talent have recognised that a well-structured employee benefits package can be an effective part of their overall employment offering. In many cases, it can strengthen recruitment and retention outcomes without relying solely on salary increases.
What you should know about small businesses
Small businesses often assume that larger organisations will always have the advantage when competing for talent. Bigger companies may have larger payroll budgets and more resources.
However, employees often look beyond base pay when evaluating job opportunities.
Research on employee retention in New Zealand consistently highlights a range of factors that influence whether people stay with their employer. These include feeling valued, financial security, access to health support, and well-being support. Benefits that address these needs can influence how employees view their overall employment package.
What small businesses can now offer to their employees
Historically, benefits such as health insurance or income protection were often associated with large employers.
That assumption is changing. Group employee benefit schemes are now accessible to many New Zealand businesses with relatively small teams. These programs are now accessible to many New Zealand businesses with relatively small teams. These programs can include options such as:
- Health insurance
- Income protection
- Group life insurance
- Critical illness cover
- Wellbeing and employee assistance support
Because these benefits are arranged on a group basis, the pricing and underwriting terms may differ from what employees could obtain individually. For a small business, this means it may be possible to provide benefits that employees value while maintaining a manageable cost structure.
Some examples include
The cost comparison that matters
When evaluating employee benefits, many business owners focus on cost. However, it can be useful to compare that cost with the potential impact of employee turnover.
A structured employee benefits package typically costs between 0.5% and 1.5% of a business’s total wage bill.
For some businesses, retaining even one additional employee each year may offset the cost of implementing a benefits program.
What employees actually value in an organisation
Not all benefits have the same impact when it comes to retention. Some consistently stand out as particularly meaningful to employees.
Understanding which benefits employees value most can help employers design a program aligned with workforce needs.
How employee benefits can support small businesses
Marsh explains that offering company benefits to employees can help retain and attract top staff. Select by Mercer Marsh Benefits offers employee benefits specifically designed for small to medium-sized businesses with between 5 and 100 employees. employees. These benefits can include health, workplace wellbeing and employee insurance solutions designed to support employees and recognise their value to the business.
For many SMEs, benefits are not only about supporting employees but also about strengthening the business.
According to Marsh, providing benefits to employees can help businesses attract new staff, reward loyal employees, and support workplace wellbeing. Employee benefits can also play a practical role in business performance. A healthy workforce can contribute to higher productivity and a more engaged workplace.
Not ready to talk to someone yet?
Try the Employee Benefits Evaluator, a free, 10-minute tool that bencmarks your current employee benefits against the NZ market and identifies where income protection, group life, and wellbeing support could strengthen your offering.
The competitive hiring reality
As employee benefits become more common among New Zealand SMEs, they are increasingly part of how candidates evaluate job offers. Many candidates now compare total remuneration, which includes both salary and benefits.
In some situations, a role offering a strong benefits package may be more attractive than a slightly higher salary without additional support. Benefits can also create practical reasons for employees to remain with their employer.
Getting started without complexity
Many small businesses assume that introducing employee benefits requires significant HR resources or ongoing management.
In practice, group benefit programs arranged through a specialist broker are designed to reduce administrative burden. The broker can assist with comparing providers, structuring the program, onboarding employees, and managing renewals.
Frequently asked questions
Yes. Candidates increasingly compare the total employment package, which includes salary and benefits. A business offering benefits such as health insurance or income protection may appear more attractive than a slightly higher salary without additional support.
Employee benefits are additional forms of support provided by employers alongside salary. They may include health insurance, income protection, life insurance, and employee wellbeing programs designed to support employees and their families.
Many group employee benefit schemes are available to New Zealand businesses with around 5 employees or more. These schemes are designed to make benefits accessible to smaller organisations without the scale of a large corporate employer.
Income protection can provide financial support if an employee cannot work due to illness. This can be particularly relevant because New Zealand’s ACC scheme generally supports accident-related injuries rather than illness.
According to ACC, “Our no-fault scheme covers everyone, including visitors, who are injured in an accident in Aotearoa New Zealand.”2
However, ACC generally does not cover illnesses that are not injury-related, which is why some employers consider additional protection options.
An Employee Assistance Program provides confidential support services for employees. These may include counselling, financial advice, or legal guidance. EAP programs can help employees manage personal or work-related challenges.
No. Employee benefits are usually designed to complement salary, not replace it. They can strengthen the overall employment package and provide support that salary alone may not address.
A structured employee benefits package typically costs between 0.5% and 1.5% of a business’s total wage bill. For some organisations, the cost may be offset if improved retention reduces recruitment and onboarding expenses.
Many employees place a high value on benefits that provide financial security or health support. Health insurance, income protection, and life insurance can be particularly meaningful for employees with families or long-term financial responsibilities.
Some organisations use benchmarking tools to understand how their benefits compare with those of similar businesses. Tools such as an employee benefits evaluator can help identify gaps and highlight areas where additional support may strengthen recruitment and retention.
References
- Worksafe, “Managing health and safety – Getting started”, https://www.worksafe.govt.nz/managing-health-and-safety/getting-started/, accessed 22 March 2026.
- ACC, “What we cover”, https://www.acc.co.nz/im-injured/what-we-cover, accessed 22 March 2026.
- Employment New Zealand, “Employment legislation”, https://www.employment.govt.nz/employment-new-zealand/employment-legislation, accessed 22 March 2026.
- Employment New Zealand, “Employee rights and responsibilities”, https://www.employment.govt.nz/starting-employment/rights-and-responsibilities/employee-rights-and-responsibilities, accessed 22 March 2026.
Marsh Limited (NZBN 9429040918792)(“Marsh”) arranges the insurance and is not the insurer. This page contains general information and does not take into account your individual objectives, financial situation or needs. For full details of the terms, conditions and limitations of the covers, refer to the specific policy wordings and/or Product Disclosure Statements available from Marsh on request. This publication is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Marsh makes no representation or warranty concerning the application of policy wordings or the financial condition or solvency of insurers or re-insurers. Marsh makes no assurances regarding the availability, cost, or terms of insurance coverage.
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