How Beneficial are Benefits?

How Beneficial are Benefits?

Office-based benefits are still eating up budgets in a remote world. Read on to find out how:

Despite the pandemic, employers are still offering a wide range of benefits that are linked to the workplace. Some might have become almost obsolete during the pandemic — gym memberships or cinema tickets, for example. With around 20% of employee remuneration made up of employee benefits, streamlining these would have been a way to trim costs with little impact on the employee experience, according to a Mercer Marsh Benefits survey. Mercer Marsh provides a range of digital solutions to help its customers manage workforce health and wellbeing.

With 72% of organizations spending more as a result of the pandemic, the C-suite will be looking for evidence that this additional expenditure is yielding results. However, a number of employees still do not appreciate just how much their organisation is investing in these benefits with a third saying they do not know how much their benefits are worth. With the shift to home working during the pandemic, wellbeing has also moved out of the office.

There is one quick win that many employers seem to have overlooked. Despite vast investments in workplace environments, very little has been spent in investing in the home-workplace environment with only 1 in 4 benefiting from this (although 36% of organisations do say they have increased investment in benefits to support home working).

Lack of communication creates disconnect

The main failings are an inability to flex and adapt—particularly to the new climate and a lack of communication and choice. This is a recurring theme for a significant minority, who perhaps lack the data and analytics capabilities to support decision-making when changing benefits or communicating them to employees.

Looking to the future, how will benefits stay relevant? Employee benefits have proved their worth during the pandemic — helping employees to remain connected and engaged, supporting them with wellbeing and leaving most employees feeling their employer’s do care. However, one-third of employees are still not happy.

This disconnect — between employees’ perception of benefits and the changes their employers have made — means that employers are often missing out on the opportunity to build engagement and loyalty capital with their employees. After all, if they do not realise that their employer is investing more in their wellbeing, how can they appreciate these efforts? More investment in communication is needed.

A digital-first approach to benefits in a post-pandemic world

The big win from investment in digital platforms is that employers have been able to adapt their benefits offering to deal with a workforce that has often been working remotely. Those using centralised, specialist systems also have more engaged employees, being twice as likely to exceed their employee engagement score targets (42% vs 20%).

Virtually every organisation has started their digitalization journey, using software to administer and deliver benefits —and the vast majority use centralised software to do so. It has invaluably helped organisations to pivot during the pandemic.

The fact that most organisations have adapted so effectively to the seismic shifts in the way their employees work, has definitively shown just how vital the right technology and software platforms are to deliver on organisational goals and provide the benefits employees need. As a result, technology spend has taken an increasing proportion of the overall HR budget for 76% of organisations.

HR must use analytics

All other areas of the business use data and analytics — HR needs to step up too and use data more effectively. The key question is, if HR and benefits teams are asked to justify their average spend of 20% of salary on benefits (bearing in mind this is increasing YoY), will they be able to do so, and prove the return on this investment to the board? Nearly 9 in 10 HR and benefits teams have already reported that they could make changes quickly thanks to the technology they’re utilising. This enabled them to adapt to changing needs — and delivery methods — as a result of COVID-19.

However, did they know if they were changing the right things? Did they have the ability to measure the value of their additional investment in benefits? And how did they know if they were getting it right? Data analytics is essential to be able to make these changes effectively. Without the analytics underpinning these decisions, it’s impossible to be sure that they are having a meaningful effect. And it’s equally difficult to react to changes in the future — how can you form a robust strategy if you don’t understand the impact of changes?

Making data accessible

There is still work to be done when it comes to reporting on areas that really matter when it comes to meeting organisational goals. If you don’t have the data, how can you generate insights? Despite employers’ high spend on employee benefits, just 53% report on benefit take-up levels (this is largely unchanged from last year’s 50%) so are lacking the data to know whether this spend is providing ROI. Yet take-up levels should be relatively easy to measure.

One explanation could be that the data employers require is not easily accessible—perhaps because it is held outside of the HR and reward department, in finance for example. HR professionals may also not have the time to devote to analysis, or they don’t know where to start.

Or, it could be that data is stored in multiple systems, so forming an aggregated and accurate view of different metrics across the entire workforce is impossible. Either way, HR teams need to take ownership of benefits data and ensure they are able to derive meaningful and actionable insights in the short and long-term.

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