Multiple economic pressures, shifting social trends and the competition for talent are all leading employers to make significant changes to their benefits strategies, according to a new research report, ‘Benefits Design Research 2022: Aligning benefits with employee experience and business goals’ from Howden Employee Benefits & Wellbeing and Reward & Employee Benefits Association (REBA).

The research, conducted with REBA members and subscribers representing 1.2 million employees, reveals:

  • 60% of employers’ benefits strategies are not aligned with business goals;
  • 90% of employers will make changes to their benefits design over the next two years;
  • 46% of businesses plan to increase benefit spend in next two years; and
  • 85% of employers will be offering further personalisation of benefits by 2024

Shifting influences on benefits design

An effective benefits programme that aids recruitment and retention remains at the forefront of businesses’ strategy and design. The more interesting shift is how new drivers are factoring into many HR team’s thinking – changing societal values (72%), such as Diversity, Equity and Inclusion (DEI) and Environmental, Social and Governance (ESG) concerns, as well as new post-COVID and hybrid ways of working (69%) are the next biggest influences on design.

The research highlights that traditional design principles, such as seniority-linked benefits and fixed offerings are no longer fit for purpose in a world where DEI and fairness for all is increasingly important.

Currently just under half (46%) of employers say they focus on fairness in benefit offerings across pay grades, but by 2024 nearly nine out of 10 employers will be doing this. Howden report that they are seeing this shift already, with employers looking to equalise the benefits offer for all employees.

This move will support the removal of gender, ethnicity and other discriminatory gaps in benefits provision within workforces in the future, as seniority-based benefits impact those groups most.

Although wellbeing has dominated benefits strategies for the last five to ten years, benefits supporting DEI and the environmental agenda are going to be higher priorities for businesses over the next two years, whilst investment in traditional benefits is expected to remain static.

Emerging benefits

To support DEI and ESG agendas, 88% of respondents offer or plan to offer support for female health, 87% social wellbeing platforms and 87% will offer electric vehicle schemes, plus almost two-thirds of employers (64%) expect to invest in personalised learning and development programmes, reinforcing the trend towards greater personalisation in benefits.

Expanding mental health training is set to continue to be a top priority in the next two years. In Howden’s experience, this is likely to include resilience training to help employees avoid burnout, as employers are expanding their understanding of the nature of wellbeing issues impacting their people.

A flurry of new ‘green benefits’ (i.e. carbon reduction apps, ethical brands) are expected to enter the market as demand for innovation in this area increases, as well as support for remote workers with utility bill discounts and pet-related benefits,

Growing interest in ‘green benefits’

Almost three-quarters (70%) of employers are considering green benefits and 58% plan to increase spending on benefits that support the environmental agenda.

Although just 13% of employers currently offer green benefits, it is set for massive growth as employers and employees across all sectors adapt to sustainability targets and individual desires to do more to reduce their carbon footprint.

Electric vehicles are already in place at more than a quarter of businesses and just 13% of employers say they are unlikely to use these in the future.

Matthew Gregson, Executive Director at Howden Employee Benefits & Wellbeing said: “Unprecedented changes in the world of benefits and wellbeing are taking place. This is not just in response to the pandemic, but because we are seeing the majority of employers now evolving their cultures and EVP in light of DEI and ESG influences. Although transformation of benefits strategies has (rightly) lagged behind, we are now seeing it come to the fore.”

“We are not just seeing employers add more benefits and initiatives, but they are also reviewing their existing offer, especially the big ticket items, such as pensions, health and protection, to ensure benefits are fairer, more inclusive and more sustainable for the future. We welcome this shift in thinking and look forward to contributing to the next generation of benefits.”

To read the report in full click here.

*The research was carried out by the Reward & Employee Benefits Association among its approximately 2,400 professional members and 8,000 subscribers. The survey had 181 responses from employers representing an estimated total of approximately 1.2 million employees.

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Lisa Baker

Author Lisa Baker

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