Skills investment in employee benefits' spotlight

Total rewards packages look set to rise with a fifth of employers planning to upgrade benefits budgets, adding to recent inflation-beating wage rises. Professional development is the biggest beneficiary.

Graphic of talent management description
The CIPD’s latest reward management report, released this week, surveyed 568 HR practitioners about their organisation’s benefits provision.It found that nearly all employers (97%) are planning to maintain or increase spend on employee benefits over the next two years.While 81% intend to spend the same amount on employee benefits over the next two years as they currently do, 16% plan to increase their investment.

Top ten most popular employee benefits

Employers are legally required to supply some benefits, such as a pension for automatic-enrolment purposes and paid leave, but can otherwise choose what’s offered as they see fit.Benefits range from social events to more substantial rewards, like Christmas bonuses and company cars.The survey found that currently the ten most popular benefits offered to employees across all sectors (private, public and voluntary/not-for-profit) are:
  • 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.

Which employee benefits are becoming more popular?

With employers voicing their concerns about skills shortages and recruitment difficulties, and representative bodies like the CIPD urging more investment in professional development to bridge the gaps and boost productivity, the report’s findings suggest this advice is being heard.Asked which benefits respondents intend to spend more on in the next two years, even if their overall funding will remain steady or decrease, professional development, which includes training, paid study leave and professional subscriptions, came top at 43%. Next were health and well-being (29%) schemes, covering benefits like occupational sick pay, employee assistance programmes and flu jabs.A quarter were also investing their budget in financial benefits (25%), such as pension schemes, loans to help staff in financial hardship and free money and debt advice.

Rewarding employees and retention

Charles Cotton, senior reward and performance adviser at the CIPD, commented: “Despite the recent economic and political uncertainty, employers are committed to investing in their employees and their future. “It’s encouraging to see the benefits that have been earmarked for further spend in the near future relate to people development and well-being. Spending in these areas can help to improve employee, and ultimately, corporate performance.”
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Getting the benefit of extra investment

However, the study also highlighted how the majority of respondents (74%) don’t currently conduct a review of their benefit spend and so could be missing the opportunity to establish how effective their benefits are.This despite benefits playing an important role in helping organisations succeed. Two-thirds (66%) of respondents say the main purpose of benefits was to attract, recruit and retain staff to support current business needs.The report also reveals that 16% of employers do not always communicate what benefits are on offer and one in five (21%) say their benefits are not easily accessible. 

Could HR take a more analytical approach?

“The people profession has an important role to play in analysing spend on benefits to see if the business, its people and other key stakeholders are getting maximum value from them,” said Mr Cotton. “Analysis provides crucial evidence for making changes for the better if this is not the case.”As an example of where analysis can offer useful insights, the research shows that one in six employers (17%) expect to invest in a formal work-life balance policy within the next year, which can include flexible working and shared parental leave arrangements.Interestingly, the report finds that when there are a higher number of women in management positions an organisation is more likely to already have a formal work-life balance policy in place.Dipa Mistry Kandola, head of flexible benefits services at actuary LCP, which partnered the CIPD for the research, commented: “Organisations will only be able to get true engagement from their people if they offer tailored benefits facilitated through a comprehensive, multi-channel communication strategy that encourages feedback. The way benefits are communicated, delivered and measured is just as important as having the right benefits in place.
The CIPD is therefore calling for better analysis of benefits so that employers can be confident they’ll contribute to the success of individuals and the business as a whole. It is also encouraging HR teams to be more proactive when promoting benefits and to adopt a multi-channel approach. This includes using tech solutions to allow employees to explore the benefits available to them in their own time, and for managers to have one-to-one discussions with their direct reports.Head to our HR section for more news and insight from the CIPD.  
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