Why respondents offer benefits
They are an effective retention tool 81%
They are an effective recruitment tool 76%
To support employee health and wellbeing 72%
They support their employer brand 54%
They promote work-life balance 47%
Because industry or regional competitors do 39%
They are seen as entitlement by staff 39%
To drive desired employee behaviours 36%
They have to by law (for example, to comply with pensions auto-enrolment) 34%
They help reduce the national insurance (NI) bill 31%
They are good value for money 26%
Perceived moral or ethical responsibilities 25%
They help control sickness absence 24%
They are cheaper to offer than cash salaries of similar perceived value 18%
They produce a measurable return on investment 14%
They feel they have to 12%
To meet Transfer of Undertakings (Protection of Employment (Tupe)) obligations 9%
Other 2%
Sample: All respondents (280)
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Recruitment and retention remain top reasons for offering benefits
In the 12 years since the inaugural Benefits research was published, the top reasons behind respondents’ decisions to offer benefits have not changed. In 2004, two-thirds (66%) said that benefits were an effective recruitment tool, while 64% said that they aided staff retention. This year, 81% offer benefits because they are an effective retention tool and 76% do so to aid recruitment, according to the Employee Benefits/Xerox HR Services Benefits research 2016, which surveyed 338 respondents in May 2016.
Over the past 12 years, other consistently popular reasons why employers offer benefits include their role in supporting the employer brand, the fact these can support employee health and wellbeing, and because industry or regional competitors do.
However, not all of the reasons why employers offer benefits have remained quite so popular over the years. This year, for example, 26% of respondents say they offer benefits because they are good value for money; the same proportion as in 2014 when we last conducted this research. Yet, this has fallen consistently over the years from 64% in 2009, 50% in 2011 and 34% in 2013.
The issues shaping respondents’ benefits strategies in 2016
Desire to improve employee engagement 67%
Desire to be seen as an employer of choice 61%
Employee influence or expectations 54%
Multi-generational workforce 46%
Desire for flexibility 42%
Advancements in technology 39%
Aligning benefits strategy with HR strategy 38%
Aligning benefits with business strategy 35%
Driving a high-performance culture 34%
Corporate reputation 33%
Desire to reduce or control costs 33%
Tax changes and legislation (such as pensions changes or age laws) 29%
Ageing workforce 27%
Perceived moral or ethical responsibilities 25%
Pensions auto-re-enrolment 25%
Increasing workforce diversity 24%
Desire for cultural change 24%
Poaching of staff by competitors 20%
Organisational change (such as merger, acquisition, downsizing or expansion) 17%
Remuneration strategies for high earners 16%
Operating on a global/multi-national basis 16%
Pay freezes or low pay increases 15%
The economy 11%
Breaking down workforce hierarchies 8%
None of the above 2%
Other 1%
Sample: All respondents
How respondents see their benefits strategy changing to adapt to future industry challenges
There will be better or more targeted communication of benefits 71%
There will be better integration of a wider range of technology with their benefits offering 51%
There will be closer alignment between reward strategy and business strategy 43%
They will offer multiple savings vehicles (in addition to pensions) such as Isas or share plans 37%
They will flex all benefits to give employees more control over their benefits spend 37%
They will identify alternative funding options for benefits spend 36%
None of the above 5%
Other 1%
Sample: All respondents (231)
The barriers to respondents introducing benefits they would like to offer
Budget 72%
Time 29%
Not applicable 18%
Technology limitations 13%
Lack of engagement 13%
Parent company guidelines 11%
Other 10%
Sample: All respondents (198)
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Employee engagement remains top issue shaping benefits strategy
Employers’ desire to improve employee engagement in their organisations remains the key issue shaping benefits strategies in 2016. Just over two-thirds (67%) of respondents to the Employee Benefits/Xerox HR Services Benefits research 2016, which surveyed 338 respondents in May 2016, said this was the main issue currently shaping their benefits strategy.
This has been the case since 2011, when 71% of respondents said this was true of their organisation, followed by 73% in 2012 and 74% in 2013.
Broader business issues currently impacting employers are also reflected in the issues shaping benefits strategies. Respondents’ desire to be an employer of choice and the multi-generational workforce, for example, also sit near to the top of this year’s list.
Perhaps unsurprisingly, advancements in technology are also increasingly driving employers’ benefits strategies. Just two years ago, 15% of respondents cited this as a key issue shaping benefits strategy. This year, 39% said the same. This rise could be attributed to developments in areas such as wearable technology, apps, and gamification, as well as in the functionality of reward portals and platforms.
This trend looks set to continue. Going forward, more than half (51%) of respondents believe there will be better integration of a wider range of technology with their benefits offering.
When it comes to the barriers to employers introducing some of the benefits they would like to offer, cost is by far the largest, cited by just under three-quarters (72%). This is followed by time, which is a barrier for 29%.
The main ways in which respondents’ organisations fund benefits
Part employer/part employee funded 49%
Employer funded 44%
Employer funded through national insurance savings 4%
Employee funded only 4%
Sample: All respondents (257)
How respondents see benefits funding methods will change in the future
They will remain broadly the same 50%
Employers will share the cost with employees more 29%
Employers will fund more options for staff 12%
Employers will pass on the full cost to employees more often 4%
Employers will move away from funding benefits through national insurance savings 4%
Other 2%
Sample: All respondents (257)
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49% share cost of funding benefits with staff
Just under half (49%) of respondents share the cost of providing their organisation’s benefits package with employees, according to the Employee Benefits/Xerox HR Services Benefits research 2016, which surveyed 338 respondents in May 2016.
This is likely to comprise a selection of employer-funded core benefits, alongside a range of employee-funded voluntary benefits or those offered via salary sacrifice arrangements.
A further 44% offer employer-funded benefits only.
In the future, half (50%) of respondents believe this will remain broadly the same, while just under a third (29%) think that employers will share the cost with staff more.
Despite ongoing speculation about the future of salary sacrifice arrangements, just 4% of respondents predict employers will move away from funding benefits using national insurance savings.
