Employers lose up to £15bn per year on unused employee benefits
News
- Isio research reveals less than a quarter of people (23%) think their current employee benefits package meets their needs, with dissatisfied employees 60% more likely to quit their job.
- Older, married homeowners are happiest with their benefits packages, while ethnic minorities are most likely to find their benefits do not meet their needs and move job. A more inclusive approach to benefit design is clearly needed.
- Employers must evaluate their benefits offer, making sure they give all employees the right benefits for them, and the confidence to understand and use them
9th November 2023: Employers across the UK could be spending up to £15bn a year on employee benefits that don’t resonate with their staff, according to new findings from Isio and YouGov, who surveyed over 7,000 private sector employees.
The findings show that there is a strong correlation between relevant benefit provision and employee retention, meaning getting this wrong is expensive, especially in the current labour market. Ethnic minorities were most dissatisfied, evidencing a need for a more inclusive approach to benefit design.
Of those surveyed, just 23% felt their current package meets all their needs, with levels of satisfaction highest amongst older, married homeowners of White ethnicity. Satisfaction levels dropped to 16% and 15% respectively for Asian and Black respondents. This means that three quarters (77%) of employees believe their benefits do not fully meet their needs. Those who are unhappiest with their benefits package often have needs that aren’t being met through their employer, such as a need for help with debt management.
The findings also reflect current struggles with the cost of living, with more than half (56%) of respondents admitting that they felt negatively about their imminent financial future and 79% of respondents making spending reductions in the first half of 2023.
Employer support within the benefits package makes a real and meaningful difference; people who felt their benefits package met their needs were 62% less likely to have made cutbacks to their spending, such as shopping essentials and utility bills, over the first half of 2023 than their less satisfied colleagues. While some of this will be driven by those having higher incomes receiving better benefits, Isio’s data shows there is still an underlying factor at play between the benefits package and cutbacks.
Benefit packages impact staff turnover
Benefits packages were also found to have an impact on staff turnover. Employees who thought that their benefits package met all their requirements were 45% less likely to move jobs. Conversely, those who thought their benefits package met none or very few of their requirements were 60% more likely to quit in the near future.
Isio found that, overall, a quarter (26%) of respondents were likely to move jobs in the next 12 months, but that ethnic minorities were more likely to switch. Nearly half (42%) of Black respondents said they were planning to move in the next year, versus a third (34%) of Asian respondents and just 23% of White respondents. While a lot of factors may contribute to this, it suggests employers need to carefully review their benefit provision through an inclusivity lens if they want to address this anomaly.
Financial education is increasingly important
There was a link between financial confidence and expected staff turnover. Employees who said they were financially unconfident are 23% more likely to want to leave their employer, therefore there is real monetary value to an employer in helping employees to bridge that confidence gap through appropriate support and financial education so they can get the most out of their benefits packages.
Employer provided financial education was welcomed by respondents across all topics, but most notably there was a demand for help with pensions (82% of respondents), knowing your rights (73%), saving (61%) and tax planning (56%). Ethnic minorities were much more likely to welcome financial education across all subjects, with education on pensions most in demand, requested by 87% of Black respondents and 86% of Asian respondents.
Flexible working remains high priority
The benefits found to be most impactful for staff retention relate to flexible working, with 70% of those with hybrid working and 65% of those with flexible working stating this would persuade them to stay in their role. Half (50%) said that pension contributions would persuade them to stay with their current employer and 45% said help to buy a home would have this impact.
Will Aitken, Director, Isio Reward and Benefits commented “It is not surprising that people who are older, married, homeowners and White are happiest with their employee benefits package. While a lack of inclusiveness in benefits design was unintentional, they are the people who traditional benefits packages were created by and for. It is clear we need change.
“There is an opportunity now for employers to reshape benefits packages so that they resonate not just with their current workforce but future employees. Those that don’t take up this opportunity will be losing vast amounts of money each year on unwanted benefits.
“It’s encouraging to see financial education high on the agenda for all demographics and also to see the demand for benefits which directly tackle the cost-of-living challenges so many people currently face. If employers can target benefits more specifically on the things that their employees actually want, they have a real opportunity to improve inclusivity, remove wastage and benefit from greater talent retention.”
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