Chief Executive Officer, Benefits Consulting Division, UK Gallagher
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Benefits in 2020: how can HR meet the changing needs of employees?

Many organisations today struggle with the rising costs of providing a benefits package that suits the needs of all employees, no matter what their preferences. So, here’s how HR professionals can better meet the challenges they face in 2020, whilst keeping the books balanced.

25th Nov 2019
Chief Executive Officer, Benefits Consulting Division, UK Gallagher
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excited employee being offered a bonus
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There can be no denying that there are significant struggles for HR professionals today. The rising costs of employee benefits provision are proving a big challenge for many organisations as they try to juggle the differing needs and priorities of their employees.

Our annual Benefits Strategy and Benchmarking Survey confirmed this pressure. From speaking to hundreds of UK companies, we found that that 71% of them are struggling with the rising cost of benefits provision. At the same time, just over two thirds say they face challenges appealing to employees with differing needs and priorities.

If HR departments want to offer a well-rounded package that evolves with the pace of changing employee priorities, they must look both outwards and inwards.  

Employers need not fear innovation when it comes to striking the right balance and delivering a holistic offering to their talent. Here are some steps that organisations can take in order to overcome the challenges, starting with talking to one another.

Communication is key

It’s always surprising how many organisations are attuned to the need to offer a universally appealing benefits package to employees, but how few of them actually ask what it is they want. In fact, over half of companies don’t survey their employees about benefits and wellbeing at all.

This is unusual because the number of companies who said they struggle to understand their organisation’s position against the market has dropped in the past year, suggesting more are benchmarking themselves. If HR departments want to offer a well-rounded package that evolves with the pace of changing employee priorities, they must look both outwards and inwards.  

Allowing employees the freedom to work how they choose has been shown to have a positive impact on productivity and morale, and drive a sense of career wellbeing.

Even if companies are making progress understanding their market position, many organisations say they find communicating about benefits a challenge. It’s surprising to me that more than half of companies do not have a pre-defined communications budget, and of those that do, 85% spend just 10p per employee per month to outline the benefits available to them.

This is an own-goal, and HR should look to maximise their communications efforts, because without actively telling employees about and promoting the benefits on offer, companies are limiting the maximum value they can get from them.

At the same time as communicating the benefits available, they must also ensure that employees are capable of understanding them. Financial education is essential, given that money worries are the biggest source of stress for UK employees. Just half of employers offer financial advice, although this has increased since last year. Employers should acknowledge the link between financial confidence and productivity; by removing stress, headspace is freed up for better-quality work.

Act on insights

Although more organisations are benchmarking themselves, it is surprising how few act on the insights they have learned. Despite the fact that last year we heard that many employers were looking to improve flexibility in their offering, this year just one in five companies offer flexible benefits.

In addition, 43% told us this year that they want to make changes to their benefits offering in 2020, and the majority of those planning changes say they are going to enhance benefits. Organisations must learn from insights, and embrace change.

This has to be done in the right way, however. If we consider short-term sickness, last year, the norm for organisations enhancing sick pay was to include provisions as a contractual entitlement. This year, more are choosing to offer discretionary arrangements – perhaps to limit financial liability in the case of sickness. Where discretion determines any enhancement, however, employers must take a consistent approach to avoid the risk that their decision is considered capricious, which may affect trust.

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Adopt a flexible approach and avoid ‘one size fits all’

Many companies are reluctant to offer flexibility. Over three quarters of firms – a staggering amount – offer no flexible benefits at all, and nearly as many do not provide any voluntary options, while a mere 5% offer full flexibility.

Flexible and voluntary benefits offerings may have stagnated or regressed due to an increasing emphasis on fairness, with 15% of companies saying they plan to change their eligibility criteria to extend ‘same for all’ treatment to all employees, regardless of level, category or service.

Benefits are by no means a silver bullet towards achieving a happy workforce, however employers must adopt a holistic view if they are to improve retention and engagement of talent.

This year, 42% of companies are offering shared parental leave on the same basis as maternity leave, up from 35%. Fewer are offering enhanced maternity pay after in weeks 14-26 (56%, down from 65%), however. While meeting the needs of a diverse workforce, employers must try not to cut or simplify benefits elsewhere to recuperate costs.

On the plus side, many employers appear to be broadening their horizons when it comes to working patterns. Most organisations offer part-time or shorter hours, flexi-hours are now offered at over three quarters of organisations, and home working is in place at more than half of companies. Allowing employees the freedom to work how they choose has been shown to have a positive impact on productivity and morale, and drive a sense of career wellbeing.

The best benefits don’t need to cost the earth, and by empowering employees with the flexibility to opt in or out as they wish according to personal preference, employers can maximise their returns by maximising employee wellbeing, and by extension, productivity.

Innovate for health and wellbeing

Mounting evidence shows that people need to switch off to do their best. While annual leave is a statutory benefit, we have also seen a trend towards ‘same for all’ annual leave eligibility, and a reduction in leave tied to service. Equally, trading holidays is becoming increasingly popular, and many now offer a buy or sell option. Organisations are learning that they have to offer a better work/life balance, and this is crucial for productivity, because the less fatigued the employee, the better the quality of their work.

While it is recognised that annual leave is important for employee engagement, few organisations are innovating, and not many companies offer any other type of leave. For those that do, the most popular is a day off for a birthday, which is offered by three in five companies. Several employers pay membership fees for employees to join a professional body, while nearly half provide a discounted gym membership.

These types of benefits are crucial for supporting both physical and emotional wellbeing, and in the case of the latter, bolstering the productivity that comes with a healthy workforce, so employers must innovate if they want to build an attractive employee value proposition (EVP).

Benefits are by no means a silver bullet towards achieving a happy workforce, however employers must adopt a holistic view if they are to improve retention and engagement of talent. This is crucial, because employees who feel informed, engaged, and provided for are not only more productive, they are also more likely to act as positive ambassadors, which is good news for the whole company.

Interested in this topic? Read Business benefits: what do employees really want?

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