The current figure was slightly lower than the previous year, when as much as 60% of the respondents pointed to employee benefits as a primary challenge. The results highlight the ongoing pressure to manage benefit costs while working with limited financial resources. Other key challenges in 2024 included ‘appealing to a diverse workforce with different preferences’ (42%) and ‘communication’ (31%).

Steve Threader, Managing Director, Employee Benefits Consulting, Gallagher’s Benefits & HR Consulting Division in the UK said: “In an era of increasingly pinched budgets, it is understandable that ROI on employee benefits is top of mind for benefits professionals and C-Suite. In the long term, investment into preventative healthcare, such as targeted health screening and wellbeing support to meet the varying demographics of your employee population and considering health cash plans models that offer support in everyday healthcare, are going to help drive down long terms costs. In the short term, some employers are still failing to take advantage of salary sacrifice savings, specifically within pension schemes, to provide immediate cost saving to both themselves and their employees. There is also a host of other benefits from discount schemes to gym membership that help employees save on everyday spending. In the end, it’s important to develop a cost-management strategy that best suits the individual needs of an organisation at a set point in time.”

Other economic factors are also pinching workplace budgets. In 2024, over half of companies reviewed their current pay systems and structures. The minimum wage increase was cited by 10.5% of respondents as a pain point, up from 2.9% in 2023.

Nevertheless, UK companies are still investing resources into their Employee Value Propositions (EVP). The report highlights that 40.5% of companies introduced programmes focused on improving and changing culture in 2024 – a 9% increase from 2023.

The importance of moving with the times

Flexible working arrangements are increasingly popular as a method of offering value to employees with lower direct costs, the report also found. Almost 9 in 10 companies surveyed (89.9%) offered some form of hybrid working. In the past 12-18 months, 61.3% of companies rolled out flexible working arrangements to support recruitment and retention efforts – perhaps in response to the ‘new normal’ ushered in by COVID-19 pandemic.

Over half (53%) of UK companies offered condensed working weeks, and 21% offered 4-day working weeks. This is all despite more than a third of respondents naming ‘adapting strategy in the context of a changing landscape’ as the single biggest cultural challenge facing their firm, indicating that some cultural transitions are smoother than others.

Sarah Jefferys, Head of Reward Consulting, Gallagher’s Benefits & HR Consulting Division in the UK, said “The onus is on benefits professionals to understand what people really want. In some cases, a condensed work week may suit a workplace well, but like any benefit, its relevance to the workplace must be assessed and evaluated on a case-by-case basis. Condensed working works best when employees are working set hours or have set tasks, so both the employer and employees can clearly identify the benefit to each other. The key to getting good engagement and positive ROI on benefits hinges on employers communicating the options available and being open to adjusting strategies to meet the shifting needs of employees.”

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