Employers have been making significant investment in their employee benefits programmes in response to external pressures, including talent shortages, the COVID pandemic and the cost-of-living crisis, demonstrating their increased importance to a compelling Employee Value Proposition (EVP). The research report, ‘Benefits Design Research 2023: Adapting to external and internal business change’ from Howden Employee Benefits & Wellbeing and Reward & Employee Benefits Association (REBA) explores the impact of internal and external pressures on benefits and wellbeing strategies and design over the past three years and looking ahead for the next two.

The research, conducted amongst REBA members and subscribers representing 1.1 million employees, reveals key trends:

  • Benefits are resilient – very few employers are reducing benefits funding despite economic pressures – they remain a vital part of the Employee Value Proposition.
  • There has been significant investment in benefits – 64% have already or plan to improve their benefits funding, especially for lower grades and in the health & protection space.
  • Employers continue to increase choice and personalisation within their benefits programmes, in response to the cost-of-living crisis and to cater for diverse workforces.
  • Fairness, inclusivity, sustainability and wellbeing are the key drivers for benefits design.

64% of employers said they plan to increase or improve benefits funding, and, as just 15% said that benefits technology is at the desired level, it’s no surprise that nearly 60% of respondents are looking to introduce new benefits and wellbeing technology in the next two years.

One striking note was that employee wellbeing is now firmly established at the heart of benefits strategies, with most (89%) respondents citing their benefits strategy is highly or somewhat effective at supporting talent goals. Benefits strategies are also providing good support for wider company culture (86%), employee engagement (84%) and helping companies respond to talent shortages, with 89% of companies seeing benefits as key to recruitment and 85% as helping to retain employees. However, more could be done to link Diversity Equity and Inclusion (DEI) goals with benefits design. Nearly one-third of organisations said their benefits strategy was ineffective at supporting DEI goals.


Where are companies falling behind?

Matthew Gregson, Executive Director at Howden Employee Benefits & Wellbeing said, “In the past three years, we have seen a seismic shift in the approach to employee benefits. Over half of respondents have reviewed their benefits despite economic and salary pressures, with the biggest changes to programmes being improved funding.

“Two thirds will have addressed health and protection gaps in the five years 2020 to 2024, whilst nearly 6 out of 10 will have improved benefits for lower grades.

“However, for all positive efforts made by Reward teams in the past three years, certain elements of their offer are still falling behind, especially in terms of communications and technology – which together make up how employees “experience” their benefits. This can correlate to poor results, in terms of the impact of benefits on HR goals.

“We are seeing most employers fall into one of three camps – the very small minority who likely feel they are achieving their desired benefits goals, those who’ve made the strategic changes and now need to improve experience and those who may well be left behind, if they don’t hurry up and undertake the same strategic review of their own programme.”


Benefits will be fairer and more accessible.

Fairness and inclusivity will be a major driver of future benefits decisions. Over half of companies plan to fill benefits gaps for lower grades; a quarter plan to reduce the waiting period on joining for benefits; 70% will introduce or increase benefits choice, flexibility, or personalisation, while 20% will extend benefits availability to employees’ dependents. A further two-thirds have, or plan to, introduce or extend, benefits to support diversity, such as gender health support and benefits for neurodivergent employees.


More focus on data to drive benefits design.

There is a growing focus on benefits data with more than three-quarters (76%) of employers are intending to increase their use of metrics and analysis of benefits. Although this is a continuation of a long-term trend towards greater use of analytics, it may also be attributed to the current economic situation and the increasing internal pressure to prove return on investment and the value of employee benefits.

This means many employers will need to invest in technology to improve their data analysis capabilities and to truly understand and measure the effectiveness of their benefits design strategy. Currently most rely on internal measures, benefits take-up rates and employee retention rates/feedback, but could be missing a trick when it comes to claims data.


Redefining the employee value proposition (EVP)

48% expect a high impact on their benefits strategy in 2023 due to a new EVP/culture definition. As changes in working processes, such as flexible and remote working beginning to settle post-pandemic, business sustainability (which considers elements such as the link between business behaviours and employee wellbeing), diversity, equity and inclusion factors and HR transformation, are all moving up the benefits agenda.

Together, these elements are helping to create the workplace culture. Even if employers are not looking at a wholesale shift in their EVP, the impact of these other elements will certainly influence how it evolves.


Debi O’Donovan, director of the Reward & Employee Benefits Association said, “REBA’s data shows that for most employers, culture and wellbeing are still the primary purpose of benefits. This is possibly why these results predict that new employee value propositions and cultures will have a rising impact on benefits strategies.”


Matthew Gregson added: “In spite of the economic and salary pressures of the past three years, this research shows that benefits are in a fantastically strong position, having weathered many storms. Now, having addressed some of the largest challenges with at a strategic level, employers are turning to the day-to-day execution of their benefits offers, and will be focusing on their data, their benefits communication and technology to ensure all that investment and value is recognised and valued by employees.”


To read the report in full click here.

*The research was carried out by the Reward & Employee Benefits Association among its approximately 3,800 professional members and 20,000 subscribers during January and February 2023. The survey had 210 responses from employers representing an estimated total of approximately 1.1 million employees.

For more information, please visit www.howdengroup.co.uk

Lisa Baker

Author Lisa Baker

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