More than half (51%) of UK employers cite employee benefits costs as their top financial challenge, down from 60% in 2023, according to research by Gallagher.
Its Workforce trends report, which surveyed 236 UK organisations, found that other challenges include appealing to a diverse workforce with different preferences (42%), and communication (31%).
In 2024, more than half reviewed their current pay systems and structures. The minimum wage increase was cited by 11% as a financial challenge, up from 3% in 2023.
In addition, 41% introduced programmes focused on improving and changing culture in 2024, a 9% increase from 2023. Meanwhile, 90% offered some form of hybrid working, and in the past 12-18 months, 61% rolled out flexible-working arrangements to support recruitment and retention.
More half (53%) offered condensed working weeks, and 21% offered 4-day work weeks. This was despite more than a third citing adapting strategy in the context of a changing landscape as the single biggest cultural challenge facing their organisation.
Steve Threader, managing director, employee benefits consulting at Gallagher’s UK Benefits and HR Consulting Division, said: “In an era of increasingly pinched budgets, it is understandable that return on investment on employee benefits is top of mind for benefits professionals. In the long term, investment into preventative healthcare, such as targeted health screening and wellbeing support to meet the varying demographics of an employee population and considering health cash plans models that offer support in everyday healthcare, are going to help drive down long terms costs. It’s important to develop a cost-management strategy that best suits the individual needs of an organisation at a set point in time.”
Sarah Jefferys, head of reward consulting at Gallagher’s UK Benefits and HR Consulting Division, added: “The onus is on benefits professionals to understand what people really want. The key to getting good engagement and positive return on investment on benefits hinges on employers communicating the options available and being open to adjusting strategies to meet the shifting needs of employees.”
