Employee benefits news: The average cost of employee benefits programmes When it comes to the average cost of employee benefits programmes, could ris
Employee benefits news: The average cost of employee benefits programmes
When it comes to the average cost of employee benefits programmes, could rising costs be a barrier to the UK taking the initiative and making programme changes?
Employee benefits budgets ‘challenging’
Do you see the changing benefits landscape as challenging? If you are struggling to review your benefits strategy, you aren’t alone. The new 2017 Benefits Trends Survey from Willis Towers Watson has found that 50% of HR decision-makers see rising benefits costs as a key challenge over the next three years, while 35% are concerned they will have an insufficient budget to make benefits changes. On top of this, 40% claim they do not know their current total benefits spend, which could provide cause for concern.
However, there does appear to be recognition of a need for change. The study found 67% of companies plan to review benefits strategy and programme design over the next three years to better manage costs, while 69% intend to do so in order to better influence employee behaviours.
Employee benefits move away from ‘one size fits all’
“An increase in the cost of traditional benefits will understandably provide cause for concern but it shouldn’t be seen as prohibitive to implementing a programme of employee benefits that deliver business value,” said Mark Ramsook, Head of Sales and Marketing at Willis Towers Watson Health and Benefits.
“The challenge for businesses is to become more creative in the design of benefits schemes because a one-size-fits-all approach is rarely appropriate. Instead, consideration should be given to how benefits can be targeted towards areas of greatest need and how traditional products, such as medical insurance, might be supplemented by more niche products that can be used to address specific health issues in a more cost-effective manner.
“Employers should start by using available employee feedback to identify trends and the underlying root causes. It is then important to build a clear picture of cost and desired outcomes resulting from each area of spend. This will make it easier to measure progress, reallocate spend where necessary and provide clearer evidence of return on investment.”
How will spending change?
In 2013 studies showed that in the US, private industry employers spent an average of 30 percent of total costs on employee benefits. However, in the new competitive market, this is all changing.
In the past, many firms offered comparable benefit packages, and companies generally did not need to specifically point out the value of their benefit programs. Indeed, employees often took generous benefit packages as a “given.” However, employers should ensure that prospects and current employees are fully aware of the total compensation they are offered. – The Center for Advanced Human Resource Studies (CAHRS)
That doesn’t mean that there are ‘trends’ for employee benefits you can take learnings from. Whilst your contemporaries might be trimming down healthcare and boosting up their wellbeing benefits, you need your own path.
Never has it been so true that the actual costs of insurance, retirement benefits, stock options, and time off does not necessarily reflect the value that employees place on these forms of compensation. In short, teams with different personal situations will value benefits differently. With more and more sophisticated forms of employee benefits compensation at play, the conversation may need to move away from the cost of employee benefits programmes to the costs of educating and informing employees about the compensation and employee benefits – the one element that will make all the difference in how the compensation strategy is viewed.