By Peter Dando, Senior Director of Employee Benefits at BHN Extras

Ask employees what would make them happier at work and most will give a straightforward answer: more money.

New research shows that 62% of employees say a pay rise is their number one choice for boosting happiness at work. For business owners and HR leaders in small and medium-sized enterprises (SMEs), that may sound like both a challenge and a reality check.

With budgets tight and competition for talent fierce, pay pressure is very real. But while salary is undeniably powerful, it isn’t the only lever businesses can pull to build a happier, more motivated team. In fact, the research from BHN Extras shows that pay is just one piece of a broader happiness puzzle.

Pay still matters, but it doesn’t work alone

A pay rise is tangible recognition. It tells employees: you’re valued. Yet as many businesses have learned, financial rewards alone don’t guarantee long-term loyalty. After the initial boost, motivation can quickly fade if the overall experience at work falls short.

That’s where SMEs have an opportunity to stand out. Smaller organisations might not always compete on headline salaries, but they can offer something far more personal – culture, flexibility, and meaningful benefits that reflect the real lives of their people.

What benefits do employees really want?

While 73% of employees see benefits as a “nice bonus,” 63% still wish they had more benefits and greater flexibility within them. That tells us something important: the traditional, fixed benefits model isn’t cutting it anymore.

Employees now expect to choose what matters most to them. A one-size-fits-all approach might have worked a decade ago, but today’s workforce is more diverse and more vocal about what they value.

The most-requested benefits in BHN Extras’ research highlighted that diversity:

• Insurance (25%)

• Health-related benefits (24%)

• Retailer discounts (19%)

• Cycle to Work schemes (18%)

For SMEs, the good news is that benefits don’t have to break the bank. Digital platforms can now make it easy to offer flexible, scalable benefits – from everyday discounts to wellbeing programmes – without complex admin or huge cost.

Only 47% of employees rate their happiness between 8-10 out of 10

Employee turnover is expensive and disruptive. Every departure means recruitment fees, onboarding time, lost productivity, and, often, a dent in morale.

That’s why happiness isn’t just a “feel-good” metric, it’s a retention strategy. Happier employees are more engaged, more loyal, and less likely to leave.

Although the research shows burnout (41%) and work-life balance (49%) have improved compared to five years ago, fewer than half of employees (47%) rate their happiness between 8 to 10 out of 10. So, while progress has been made, there’s still work to do.

For SME leaders, that means regularly checking in with teams, not assuming that a pay rise or bonus will fix deeper issues like recognition, workload, or flexibility.

Being mindful of what employees want out of their work life balance

The world of work continues to shift. The data shows seven in ten employees (69%) now spend at least three days a week in the office. While in-person collaboration can strengthen culture, it’s also reshaping how people want to connect outside of work.

Half of employees (50%) said they rarely socialise with colleagues beyond office hours, and 46% cited preferring personal time as the main reason. Post-pandemic, many have re-evaluated how they spend their free time, and socialising after work often takes a back seat.

For SMEs that once relied on after-work drinks or team nights out to build culture, this is a cue to adapt. Connection doesn’t have to mean late-night events, it can be built into the workday: shared lunches, morning huddles, or celebrating milestones together. The goal is inclusion and belonging, not obligation.

Five Practical Steps to Boost Happiness

For SMEs looking to translate these insights into action, here are five steps to make a real difference:

1. Listen first.
   Run short, anonymous surveys or regular one-to-ones to uncover what truly matters to your people. Happiness isn’t uniform. Understanding the nuances helps target the right improvements.
2. Prioritise flexible benefits.
   With 63% wanting more choice, offering flexibility is key. Let employees tailor benefits around their lifestyles, from wellbeing support to everyday savings.
3. Recognise beyond pay.
   While salary sits at the top of the wish list, recognition fuels long-term satisfaction. Publicly celebrate wins, send personal thank-yous, and ensure people feel seen and appreciated.
4. Promote wellbeing and balance.
   Encourage breaks, manageable workloads, and clear boundaries around working hours. Even small gestures, like discouraging late-night emails, can signal that wellbeing is valued.
5. Lead by example.
   Culture starts at the top. When leaders model empathy, openness, and respect for work-life balance, it filters through the business. Happiness becomes part of “how things are done.”

The Pay Rise Conversation Is Just the Beginning

The BHN Extras research makes one thing clear: money talks – but it doesn’t say everything. Yes, pay rises are a powerful signal of value and fairness, but they’re only part of what makes people stay and thrive.

The real differentiator for SMEs is how they combine fair pay with meaningful benefits, recognition, and culture. When businesses create an environment where people feel genuinely supported – financially, emotionally, and professionally – happiness follows naturally.

So, the next time an employee hints that a pay rise would make them happier, it’s worth asking a deeper question: What else would make your work life better? Because in that answer lies the key to long-term engagement, retention, and business success.

About the author:
Peter Dando is the Senior Director of Employee Benefits at BHN Extras, the employee benefits platform that helps employees save money on things that matter.

The “Stretch It” research was conducted in the UK by BHN Extras on behalf of Sapio Research to help understand employee happiness and motivation.