Expert view: Cost pressures compete with proof of value in deciding what’s next
A lot can change in 12 months and so it is in the employee benefits space. The Benefits Design Research 2023 showed that the cost-of-living crisis and talent shortages were the greatest stresses on benefits design. With that in mind, improvements in health benefits and investing in benefits for employees in lower-grade roles were the most anticipated changes to programmes last year.
Fast-forward 12 months, and employers are concerned less about general inflation and more about medical inflation. While a significant minority of this year’s research envisage spend on health benefits increasing, none of the 50% of respondents concerned about costs believe that they will be putting new investment into benefits in the next 12 to 24 months.
In fact, the most anticipated change for 2024-25 will be to review suppliers in an attempt to reduce spend. But that doesn’t mean a downturn in focus on benefits. Just as with previous years, there is very little appetite or intent to reduce benefits funding or design.
Strong core
With changes that were made in 2023, mainly focusing on health and wellbeing, benefits programmes are in a reasonably strong position. The majority of respondents attested that their core offering of pensions, health and protection is in good shape.
By comparison, communications and technology remain the least satisfactory elements of programmes, with more than four in 10 respondents stating that they need to review – as in 2023. Getting business backing, including time and money, for what some may see as nice-to-have aspects of an effective benefits offer appears to be harder for some employers.
Linked to this challenge are barriers to implementing changes that reward professionals encounter within their organisations. And this isn’t down to cost pressure alone.
Data and evidence
Although more than eight in 10 respondents cite budget approval as a barrier to change, only half this number see the ability to demonstrate return on investment and to gain stakeholder consensus as barriers. If reward and benefits teams were better at measuring and evidencing the business impact of benefits, then consensus – and, as a result, the required budget – would be more easily gained.
Benefits programmes are going to come under more cost pressure than in recent years, and the aspirations of reward and benefits professionals to improve their programmes will fall on deaf ears unless they use data and evidence to aid decision-making.
In partnership with Howden Employee Benefits & Wellbeing
Howden provides insurance broking, risk management and claims consulting services, globally. We work with clients of all sizes to provide dedicated employee benefits & wellbeing consultancy.
