Businesses should improve analysis of employee benefits spending

Coffee. Espresso
Free coffee was among popular workplace employee benefits, the research found. Photo: Shutterstock

Almost all employers say they will maintain or increase spending on employee benefits over the next two years, new research from the CIPD and Lane Clark & Pocock (LCP) reveals. But a lack of analysis means that benefits spending isn’t always well directed.

The figures also revealed that work-life policies were often better at companies where more women were in management positions.

In the Reward Management report, released today (29 November), the CIPD and management consultant LCP found that eight in 10 employers (81%) intended to spend the same amount on employee benefits over the next two years as they do currently, while 16% planned to increase their investment.

All employers were asked which benefits they intended to spend more on in the next two years, even if their overall budget did not rise. Respondents said they would most likely increase investment in the following areas:

  • Professional development (43%), which includes training, paid study leave and professional subscriptions
  • Health and wellbeing (29%), covering the likes of occupational sick pay, employee assistance programmes and flu jabs
  • Financial benefits (25%), such as pension schemes, loans to help staff in financial hardship and free money and debt advice.

The research showed that one in six employers (17%) expected to invest in a formal work-life balance policy within the next year. This could include flexible working and shared parental leave arrangements.

Interestingly, the study showed that when there was a higher number of women in management positions an organisation was more likely to already have a formal work-life balance policy in place.

The research found that the area where businesses most needed to improve was in monitoring and communicating their benefits policies.

Most respondents (74%) said did not conduct reviews of their benefit spend, so were not necessarily sure how effective their benefits were. And 21% said their benefits were not easily accessible. However, organisations recognised that benefits helped them succeed, with two-thirds (66%) of respondents saying their main purpose was to attract, recruit and retain staff to support current business needs.

The lack of analysis by employers was a concern for CIPD senior reward and performance adviser Charles Cotton: “The people profession has an important role to play in analysing spend on benefits to see if the business is getting maximum value from them. Analysis provides crucial evidence for making changes for the better if this is not the case.”

Dipa Mistry Kandola, head of flexible benefits services at LCP, said that not informing staff about benefits could result in businesses wasting money: “Our report reveals that more employers than expected don’t promote their benefits or make them easily accessible. Organisations could be wasting significant costs if their people don’t know about the range of benefits on offer, or are put off utilising them if they’re not easily accessible.

“Organisations will only be able to get true engagement from their people if they offer tailored benefits facilitated through a communication strategy that encourages feedback. The way benefits are communicated, delivered and measured is just as important as having the right benefits in place.”

Employers are legally required to supply some benefits, such as a pension for automatic-enrolment purposes and paid leave, but can otherwise choose what is offered as they see fit. Benefits range from social events to more substantial rewards, such as Christmas bonuses and company cars.

The survey found that currently the 10 most popular benefits offered to employees across all sectors (private, public and voluntary/not-for-profit) were:

  • Pension scheme – trust or contract-based
  • Paid leave for bereavement
  • Training and career development
  • Childcare vouchers
  • Occupational sick pay
  • Employee assistance programme
  • Christmas party and/or lunch
  • Free tea and coffee
  • 25 days’ or more paid leave for full-time employees
  • Paid leave for jury service.

The study surveyed 568 HR practitioners about their organisation’s benefits provision.

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