Employee wellbeing is now a priority for employers, and the significance of benefits programmes continues to rise, according our latest benefits design research*.
This study highlights the substantial impact of external and internal factors on the evolving expectations and requirements of both employees and employers regarding benefits strategy.
While external pressures, such as the Covid-19 pandemic and the cost-of-living crisis, have shaped benefits design in recent years, employers also face the persistent challenge of talent shortages, with six out of ten companies in the UK grappling with this issue.
Consequently, organisations are actively revisiting their employee benefits strategies to ensure they serve as effective tools for attracting and retaining talent. To tackle these challenges head-on, a considerable proportion of companies (64%) are increasing their investment in employee benefits and wellbeing, with a specific focus on offering fair and equitable programmes for all employees.
Benefits becoming fairer and more inclusive.
One noteworthy trend in benefits design is the growing emphasis on providing employees with greater choice and personalisation within benefits programmes. This shift is in response to the cost-of-living crisis and the need to cater to diverse workforces.
Fairness, inclusivity, sustainability, and wellbeing are now key drivers influencing benefits design. More than half of companies plan to address benefits gaps for lower grades, while a quarter intend to reduce the waiting period for new employees to receive benefits. Additionally, seven in ten employers plan to introduce or expand benefits choices, flexibility, and personalisation. Furthermore, one in five companies aim to extend benefits availability to employees’ dependents. The study also reveals that two-thirds of employers have either introduced or plan to introduce benefits to support diversity, such as gender health support and benefits tailored for neurodivergent employees.
Employee Wellbeing as a central focus:
Employee wellbeing has firmly established itself as a core aspect of benefits strategies, with most employers acknowledging the effectiveness of their benefits programmes in supporting talent goals. These strategies also contribute significantly to shaping company culture, enhancing employee engagement, and aiding in talent retention. Notably, nearly one in nine companies considers benefits as a key factor in recruitment, while 85% perceive them as instrumental in retaining employees.
Increasing Focus on Data to Drive Benefits Design:
The use of benefits data is gaining traction, with over three-quarters of employers intending to increase their usage of metrics and analysis to inform benefits decisions. This trend aligns with the long-term trajectory of greater reliance on analytics. However, the current economic situation and the growing internal pressure to demonstrate return on investment and the value of employee benefits have likely contributed to this heightened focus on data. Consequently, employers will need to invest in technology to enhance their data analysis capabilities, enabling them to comprehensively understand and measure the effectiveness of their benefits design strategies.
Areas for Improvement:
Despite positive efforts by HR and reward teams, certain elements of benefits programmes still lag, particularly in terms of communication and technology, which significantly influence employees’ experience of their benefits. Inadequate communication and technology may impede employees’ access to the benefits they require when they need them. The emphasis on personalisation and choice requires technology that supports employees in understanding their needs and connecting them with appropriate solutions. Similarly, as communications are consistently identified as the weakest aspect of many benefit programs, urgent improvements are needed in this area.
To maximise the impact of their benefits offerings, employers must proactively communicate the value of their programmes to employees on a regular basis. Failure to do so not only hinders the measurement of HR impact but also risks wasting budget at a time when investing in benefits and wellbeing is critical.
More also could be done to link Diversity Equity and Inclusion (DEI) goals with benefits design, since nearly one-third of organisations said their benefits strategy was ineffective at supporting DEI goals.
To conclude
In conclusion, the landscape of employee benefits is divided into three main groups: a small minority of companies who feel they have achieved their desired benefits goals, those who have implemented strategic changes and now need to focus on improving the employee experience, and those who risk falling behind if they fail to promptly undertake a strategic review of their own programs.
Employers have navigated through numerous challenges in recent years and have strategically overcome major obstacles. As a result, benefits today are in a much stronger position. However, it is crucial for employers to shift their attention towards the day-to-day execution of their benefits programmes to ensure that employees fully recognise the investment and value they offer.
Benefits not only enhance recruitment and retention efforts, but they also contribute to the overall well-being and health of the workforce. In times of adversity, benefits serve as a support system. Employers with cohesive benefits structures tailored to the specific needs of their workforce will ultimately be the winners in attracting and retaining talent in the future.
To read the report in full click here.
*The research was carried out by the Reward & Employee Benefits Association among its approximately 3,800 professional members and 20,000 subscribers during January and February 2023. The survey had 210 responses from employers representing an estimated total of approximately 1.1 million employees.
Matthew Gregson
Matthew Gregson is the executive director at Howden Employee Benefits & Wellbeing. Matthew helps Howden Employee Benefits deliver market-leading products and services to UK and global clients, so they can drive better outcomes from their investment in their people.
