Majority of employers struggle to offer standardised benefits

Survey finds businesses worry about rising costs of appealing to diverse workforce

The majority of businesses in the UK are struggling to create a standardised, flexible benefits package that appeals to an increasingly diverse workforce, an influential annual survey of employers has found.

The Benefits Strategy & Benchmarking Survey, conducted by Gallagher, found that two-thirds (67 per cent) of employers felt appealing to a diverse workforce was an obstacle to implementing a fairer, ‘same for all’ benefits offering.

And while 43 per cent of businesses were planning to make changes to their benefits offerings in 2020, just 15 per cent said they were planning to alter their eligibility criteria to extend the same benefits to all employees.

Speaking to People Management, Charles Cotton, the CIPD’s senior adviser for performance and reward, said offering the same benefits to all helped reinforce a sense of inclusivity and community so that no one was treated differently because of their status within an organisation.

But he added: “The various needs of a diverse and demanding workforce means this approach can result in many benefits being ignored and the value of the benefit spend not being appreciated.

“One way of trying to get the appropriate balance between diversity and inclusion is by offering flexibility in the benefits package, such as allowing people to dial down on some benefits and dial up on others so they have a package that best suits their circumstances.”

More than three-quarters (78 per cent) of employers surveyed did not offer flexible benefit packages, while 17 per cent offered some flexibility in their offerings and just 5 per cent described themselves as fully flexible.

In those organisations offering flexible benefits, the most commonly offered benefits were flexible pension schemes (84 per cent) and private medical insurance (74 per cent).

Employers raised concerns about the rising costs of benefits (71 per cent), and 23 per cent admitted that keeping track of costs while ensuring good corporate governance was difficult.

The survey also found that two in five (37 per cent) businesses were concerned about boosting the awareness and value of their benefits offering through effective communication – but less than half (43 per cent) actively polled their employees to develop a better understanding of what they wanted, and just 27 per cent had a predefined communications budget around their benefits.

The report said this was “unsurprising” given the limited budget available to HR teams, as well as the reliance on traditional communication channels, but added it was important that employers highlight their offerings to manage employees’ expectations and improve their feelings of trust and motivation in the business.

Nick Burns, CEO of Gallagher’s UK employee benefits consulting division, said benefits were not a “silver bullet” towards achieving a happier workforce, and that employers needed to adopt a holistic view of their offerings.

“With the needs and priorities of employees changing, this report highlights how employers address their employees’ concerns and balance rising costs to face the future with confidence,” he said.

Cotton added it was vital organisations better understand how people make choices so they could target messaging more accurately. But he said: “For this process to work, employers must invest in employee communications and education so that individuals are aware of the choices they face, how to make them and the potential consequences of their decisions.