Employee Benefits Research 2009: benefits strategy

Over the last five years, little seems to have changed in how employers view their benefits strategies. With many compensation and reward professionals coming under increasing pressure to control reward costs and demonstrate that they are obtaining value for their spend, it is encouraging to see that just under two-thirds (64%) of respondents say their strategy provides good value for money. The rise in importance of issues such as communication in the latest survey indicates employers’ desire to obtain the greatest value from the benefits that their organisations offer to their employees.

The percentage of employers that view their employee benefits strategy as an effective recruitment and retention tool also remains high. In 2004, 66% said retention and 64% said recruitment was the main impact of their benefits strategy, compared with 62% and 61%, respectively, this year.

Possibly in response to the economic downturn, some of the main issues that shaped employers’ benefits packages back in 2004 are no longer such high priorities. For example, matching benefits to employee needs, and linking benefits to performance both appear to have slipped down the agenda.

Five years ago, these were cited as influencing factors by 64% (for matching needs) and 51% (for linking benefits to performance) of respondents, respectively. Those figures have now fallen to 52% and 31%.

The top issues shaping benefits strategies have also remained fairly constant. Making benefits more cost-effective and improving the perceived value of the package remain the top two priorities for employers, although, perhaps not surprisingly, they have switched in order of importance.


The difficult economic climate has not significantly altered employers’ fundamental reasons for offering a benefits strategy. Instead, the recession appears to have enhanced the need for employers to prove the worth of their reward strategy. Keeping staff motivated (43%) is the most common action taken by employers in response to the recession, with product price reviews (33%) coming second. Respondents’ priorities for the next 12 months, meanwhile, are focussed on improving engagement and communication. This is not surprising given that employers’ benefits spend as a percentage of payroll appears to have changed little over the past five years. Just as in 2004, the vast majority of respondents spend up to 20% of payroll.

A quarter (25%) spend more than 20% of payroll costs on benefits. Getting the most from the spend is crucial.


Back to ‘The Employee Benefits Research 2009’