Organisations in the UK are improving their pay and benefits package despite facing pressure on budgets, new research has found.
The study by Gallagher showed that more than one in four (42%) employers have awarded extra salary increases or one-off lump-sum payments specifically to help with the cost of living, and nearly half (49%) have reviewed pay systems and structures in light of the current economic conditions.
This year’s Organisational and Career Wellbeing Strategy Report revealed a 15% rise in the number of businesses offering private medical insurance from last year, with more than half (52%) now doing so. The number providing life assurance also grew by 5%, from 35% in 2022 to 40% in 2023.
The HR and employee benefits consulting services company surveyed around 250 employers across a range of sectors and found that physical fitness was a priority for organisations, with the percentage providing cycle-to-work schemes marginally increasing from 73% last year to 75% this year, and those offering gym memberships rising from 34% to 45% in the same period.
Most companies (85%) also reported plans to further improve their benefits packages, which Gallagher believes suggests that the battle to attract and retain top talent through competitive benefits will intensify.
Speaking to Benefits Expert, Steve Threader, managing director, reward and benefit consulting practice at Gallagher, said: “There is no doubting the UK workforce is facing increasing financial pressures due to the escalating cost of living, but it is clear that organisations are taking steps towards supporting their people.
“Our study reveals that 43% of organisations have made specific ‘cost of living’ interventions through additional salary increases or one-off lump sum payments, and 49% have reviewed their pay systems and structures. This suggests that UK employers are committed to ensuring fair and competitive compensations, which is not only reassuring for staff but something that is especially important in these high inflation times.”
Gallagher suggests that businesses which are unable to offer pay rises or lump-sum payments could consider enhancing their benefits packages as a lower-cost alternative to satisfy employees.
In addition to pay and benefits enhancements, employers were discovered to be improving their flexible working arrangements, with 84% introducing hybrid working policies and three in five (60%) making working from home a standard.
More than two in five (43%) organisations now offer compressd hours and 15% have introduced a four-day working week on the same pay rates, while around two in five (41%) also allow staff to work remotely abroad. However, just 36% have formalised this with a policy.
Threader added: “Employees across the UK value flexible working arrangements highly, and it is encouraging that employers clearly respect this demand. Our study shows that the majority of organisations (84%) have implemented hybrid working arrangements – which has given workers more time back to balance their work and home life, whist also potentially delivering financial benefits such as reducing childcare or transport costs.
“Consistent with our 2022 results, hybrid, part-time and flexible working hours are prevalent and remain a welcome layover from the pandemic. What is different this year is a spike in new ways of working, such as four-day weeks which 15% of organisations have implemented. Furthermore, 42% of firms are offering compressed hour models (same hours in fewer days) – a sign that employers are starting to call time on the traditional five-day week. We know that having options on choosing how and when you work triggers a sense of agency and belonging among employees, and firms that fail to do so risk not being attractive to prospective employers.”
In terms of the challenges employers are experiencing, 60% cited the cost of enhancing benefits while facing pressure on budgets as their top challenge, a rise of 5.2% from 2022.
Nearly three in five (57%) employers highlighted concerns about appealing to a diverse workforce through their benefits provision, noting factors like age, gender and lifestyle choices. Last year, this was listed as the number one challenge.
Now, more than two in five (43%) have increased their focus on diversity, equity and inclusion to establish a fairer and more equitable working environment.