Although it remains uncertain whether the UK will enter an economic recession during 2024, geopolitical volatility and risings costs will have an influence on budgets and spending. This year, many companies will be reevaluating their strategies to ensure targets are met and margins are sustainable.
One often overlooked yet powerful tool in a company’s toolkit is its employee benefits programme. A well-designed benefits package can be a strategic asset during challenging times; contributing to talent attraction and retention, improved productivity, and cost-effectiveness when compared to pay increases.
In a competitive job market, attracting and retaining top talent is a perpetual challenge. During a recession, the landscape can become even more difficult for companies to navigate the need to attract great talent whilst balancing tight budgets.
Companies that offer robust employee benefits can gain a significant edge in attracting skilled professionals and keeping their current workforce engaged; our 2023 Mind the Gap survey shows that 53% of employees would switch employers purely for better benefits elsewhere.
An investment in wellbeing
Employee benefits serve as a tangible representation of a company’s commitment to its employees’ wellbeing. In tough economic times, potential hires are not just looking for a job; they seek stability and security. A comprehensive benefits package signals that a company cares about its employees’ long-term welfare.
An investment in financial wellbeing can also provide much-needed support for employees who are also facing rising costs and tight budgets. Only 13% of companies provide employees support for their everyday finances, but nearly a third of employees would like dedicated support in this area. Implementing financial wellbeing benefits and facilitating better financial decision making could provide some relief for employees struggling to navigate a difficult economic landscape.
An investment in profitability
When employees feel supported and valued, they are more likely to remain focused, engaged, and committed to their work. Comprehensive health and wellbeing benefits, including medical insurance, mental health support, and wellbeing programmes, can contribute to a healthier, more resilient workforce. Healthy and happy employees are generally more productive, have lower absence rates, and have higher levels of engagement in their work.
Our Mind the Gap research shows levels of concern for several key areas – including finances, health, and access to leave – can be so high they are negatively impacting employee productivity.
An investment in financial efficiency
While pay increases might seem like an obvious solution to attract and retain talent, they can be financially burdensome for companies, especially during a recession. Employee benefits, on the other hand, can be a more cost-effective alternative with long-term advantages. Moreover, many employee benefits, such as health insurance and retirement plans, can offer tax advantages for both employers and employees. These savings can offset the costs associated with providing benefits, making it a financially viable option even in challenging economic times.
Voluntary benefits can also be a good option for companies who want to provide a wider range of benefit choices, without prohibitive upfront costs. Our 2023 Mind the Gap survey shows that 66% of employees would prefer more control and flexibility over the benefits they have access to, and voluntary benefits can serve this need. Companies can tailor their benefits packages to meet diverse needs, allowing for flexibility in cost management. Offering a mix of core benefits and optional perks allows employees to choose the options that matter most to them, without imposing unnecessary costs.
In the face of a tough economic environment, companies must adopt a strategic mindset to not only weather the storm but also position themselves for future growth. Employee benefits – when strategically designed and communicated – can play a pivotal role in talent attraction and retention, improved productivity, and cost-effectiveness. By viewing employee benefits as a valuable asset rather than an expendable cost, companies can create a resilient and motivated workforce that will contribute to the organisation’s ongoing success.
If you’d like to read more about how you could enhance the ROI of your employee benefits, our latest guide has more information and actionable insights.
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