3. The value of benefits is reinforced during times of constrained pay
Benefits offer true value to employees when they provide the level of support they require and a greater focus is placed on them during times of constrained pay. Employers are increasingly analysing whether their policies are sufficient to meet a plethora of individual needs and underlining the wider investment they make in their employees beyond base pay.
Around one third of employers offer flexible benefits schemes, and one in five are considering it, enabling employees to tailor their benefits to their own circumstances. The top three benefits on offer are pensions, Employee Assistance Programmes and occupational sick pay, all aimed at supporting the financial position of the employee. We are seeing companies increasingly use their benefits offering to demonstrate their credentials when it comes to Environmental, Social and Governance issues. Only 17 per cent offer a fuel allowance, as many consider how they can offer electric vehicles through salary sacrifice schemes. 39 per cent offer the traditional season ticket loans to encourage use of public transport. In terms of their ‘social’ responsibility, 33 per cent have created a dedicated volunteering allowance and 31 per cent also offer the option to ‘give as you earn’.
Accommodating the employee’s individual preferences has been seen through the review of leave policies. Employers increasingly recognise and provide unpaid and paid leave for lifetime milestones, such as fertility treatments and the menopause. There is greater recognition of how this can affect individuals, when they require greater support and access to leave. Many employers are increasingly acknowledging these impactful life events, tailoring the available support to the individual.
4. Cautious business optimism into the New Year
As 2023 comes to a close, there is sustained business optimism with revenues expected to increase for 46 per cent of respondents. This is consistent with falling inflation, which may prompt interest rate cuts.
However, optimism is somewhat curbed because of the continuing cost of living pressures meaning that employees and employers alike face higher costs, in addition to the rising National Minimum Wage in April 2024. We hope the report supports employers’ evidence-based approach to defining an effective reward strategy for 2024.
Clear communication strategies are a key priority of respondents who highlight the importance of communicating that they are doing their best to balance affordability with meaningful reward. Being open and honest engages employees and achieves buy-in to the approach of the employer. Providing insight into an organisation’s financial position could help explain to employees why higher pay settlements might not be possible or highlight the competitive pay on offer in the market.