More than half of businesses in the UK (57%) say that rising costs are influencing their strategy for employee benefits. Yet, as companies continue to grapple with attracting and retaining key talent, investment in benefits remains a major priority. That’s according to WTW’s 2023 Benefits Trends Survey (NASDAQ: WTW).
Compared with two years ago, concerns around rising costs have accelerated, as it’s now the second most important issue influencing benefit strategies, despite not even being in the top four issues in 2021.
Yet competition for talent is the number one issue faced by employers in 2023, as 77% of companies cite this as a factor influencing their benefits strategy. In fact, only two-fifths of organisations (43%) feel that their current benefits plan is effective or highly effective in attracting and retaining key talent.
As a result, a key area of focus for more than half of companies (56%) is to ensure that benefit plans meet the needs of all employees, as half (49%) look to focus on the wellbeing of their employees.
However, striking a balance between addressing these conflicting matters might prove a challenge. Employers are anticipating cost to be a top challenge for benefit budgets in next two years, as 46% say they are concerned about the persistence of higher inflation, while 36% expect an impact from the weakening economy and current business environment.
In a bid to conserve costs, more than half of employers (56%) have taken action to improve terms from vendor contracts, while 79% are planning to take action. More than a third of companies (37%) have taken action to bundle different services into one package from a single vendor, while 47% plan to do so. Alternatively, 27% of companies in the UK have secured additional funding for benefit programmes, while over a third (54%) are planning on doing so.
For some employers, their only option is to cut down on the amount of benefits they offer in response to rising costs. 7% of employers have opted to reduce the generosity of their benefit programmes overall, while 16% have plans to do so.
Andy Leighton, Senior Strategic Consultant at WTW says:
It’s a fine balance between streamlining benefit operations to become more cost-effective, while maintaining a focus on personalised benefit areas that are tailored to the individual needs of the workforce.
This is especially challenging when employees are demanding increasingly comprehensive benefit provisions which support key areas of inclusive wellbeing, lifestyle and financial protection, and are at the same time environmentally and socially conscious; as a result employers will not want to backpedal.
Andy Leighton, Senior Strategic Consultant at WTW
Joanne is the editor for Workplace Wellbeing Professional and has a keen interest in promoting the safety and wellbeing of the global workforce. After earning a bachelor's degree in English literature and media studies, she taught English in China and Vietnam for two years. Before joining Work Well Pro, Joanne worked as a marketing coordinator for luxury property, where her responsibilities included blog writing, photography, and video creation.