Increasing costs are affecting the employee benefits strategies of nearly three in five (57%) businesses, new research has revealed.
WTW’s 2023 Benefits Trends Survey found that this is now the second key issue for employers, despite not having been listed as one of the top four concerns in 2021. However, the study showed that investment in benefits is still a high priority for talent attraction and retention among the 339 UK businesses polled.
The research also discovered that competition for talent is the primary concern for organisations this year, with 77% saying this influences their strategy for employee benefits. Just over two-fifths (43%) of respondents believe that their current benefits offering is effective or highly effective when it comes to talent attraction and retention.
As a result, more than half of companies (56%) want to focus on ensuring that benefit provisions meet the needs of every worker, with half (49%) planning to concentrate on employee wellbeing.
Andy Leighton, senior strategic consultant at WTW, said: “The current state of both the economic and labour market is putting employers in a precarious position, when determining how to win the competition for talent and contend with the rising cost of services, while budgets remain tight.
“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.”
The research further revealed that in the next two years, costs are expected to be the main challenge for benefits budgets, with nearly half (46%) of those surveyed worried about high inflation persisting, while more than a third (36%) anticipate the weakening economy and business environment to impact their plans.
In a bid to save money, 56% of employers have improved terms of vendor contracts, while 79% plan to do so. Nearly two in five (37%) have combined different services into a single package from one vendor, while 47% intend to. More than a quarter (27%) of businesses have secured extra benefits funding, while 54% plan to do so.
However, 7% of organisations have reduced the overall generosity of their benefits, while 16% intend to.
