Employers feel under-supported despite benefit spending hike

Even as employers increased investment in benefits during pandemic, many employees did not feel supported. New research suggests that a breakdown in communication may be to blame for this disconnect.

The lock-down brought in to slow the spread of the global coronavirus outbreak impacted businesses right across the industrial spectrum. The move to remote work where possible improved work-life balance for many employees, boosting their productivity in turn – but it also left them feeling increasingly isolated.

In response, companies ramped up their spending on health and wellbeing benefits for their staff over the last two years. According to the latest Mercer Marsh Benefits report, 88% of companies moved quickly to adapt their benefits in response to the pandemic, and 69% said they increased benefit spending considerably. However, simply throwing money at the issue is only half the fight – and many workers still feel their employers are not doing enough to support them.

Four-in-ten felt their employee experience was worse as a result of the pandemic, and only 55% of employees felt they received the support they needed at the right time. Meanwhile, just 22% of employees realised that their benefits had changed, and now included new offerings that could be of help to them. When asked why their company’s benefits were failing them, a further 27% said they were not aware of what was on offer.

Mercer Partner David Dodd commented, “While the pandemic caused businesses to pivot their benefits offering at a pace not previously thought possible, employees are yet to notice an improved experience. Better communication is needed to close this gap, as well as delivering more relevant, personalised benefits, ideally through a consumer grade digital experience… In this period dubbed the great resignation, ensuring the workforce feels supported and heard is not only important in fostering a positive culture, it is also key to effective talent retention and attraction.”

That is not to say that firms need only communicate better, though – the things they are investing in are not guaranteed to be what their workforce actually want. For example, staff also noted a lack of flexibility – a quarter said there were not enough options in their benefits, while the same number added that their benefits had not changed with the evolving pandemic situation.

Justifying the spend

According to the research, the increased investments in benefits means that more than six in ten employers are now spending between 16% and 25% of base salary per employee. At present, though, only 55% of companies are seeing an increase on benefit take-up, further indicating a disconnect between employers and employees. Problematically, this smaller uptake also means they are lacking insights as to what returns they are getting on their investments. They will not be able to adapt their offerings to the needs of their staff, then, or justify the spending to upper-management.

As companies look to re-evaluate their business models and position themselves for the economic recovery, this could place many new benefit programmes – which might be very helpful for staff – in danger. With 84% of respondents seeing more C-suite involvement in the benefits design and communication, being able to make a compelling business case to secure budgets is becoming a key priority for HR.

Dodd added, “If employees are not perceiving the value of their benefits, there is a danger that when this spend comes under greater scrutiny, justifying budgets will become increasingly difficult. For many the collection of this data remains a challenge, but a challenge that simply has to be overcome if true success is to be achieved.”