Employers are spending up to £15bn a year on employee benefits that are not being used by staff according to new research.
Isio’s research found that less than a quarter (23 per cent) of workers said their employers benefits package matched their need. The survey also indicated that dis-satisfied employees were 60 per cent more likely to quit their job.
Overall satisfaction rates were particularly low among employees from ethnic minority backgrounds – with the numbers dropping to 16 per cent and 15 per cent respectively for Asian and Black respondents.
Of those surveyed the levels of satisfaction highest amongst older, married homeowners of white ethnicity.
One area cited by employees where benefits packages were not meeting their needs was support with the current cost of living. The findings reflect the problems this is causing in the workforce with more than half (56 per cent) of respondents admitting that they felt negatively about their imminent financial future and 79 per cent making spending reductions in the first half of 2023.
Employer support within the benefits package can make a difference; people who felt their benefits package met their needs were 62 per cent 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.
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 per cent less likely to move jobs. Conversely, those who thought their benefits package met none or very few of their requirements were 60 per cent more likely to quit in the near future.
Isio found that, overall, a quarter (26 per cent) of respondents were likely to move jobs in the next 12 months, but that ethnic minorities were more likely to switch. Nearly half (42 per cent) of Black respondents said they were planning to move in the next year, versus a third (34 per cent) of Asian respondents and just 23 per cent of white respondents.
While a number of factors may contribute to this, it suggests employers need to review their benefit provision through an inclusivity lens if they want to address this anomaly.
There was a link between financial confidence and expected staff turnover. Employees who said they were financially unconfident are 23 per cent 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 per cent of respondents), knowing your rights (73 per cent), saving (61 per cent) and tax planning (56 per cent).
Ethnic minorities were much more likely to welcome financial education across all subjects, with education on pensions most in demand, requested by 87 per cent of Black respondents and 86 per cent of Asian respondents.
The benefits found to be most impactful for staff retention relate to flexible working, with 70 per cent of those with hybrid working and 65 per cent of those with flexible working stating this would persuade them to stay in their role. Half (50 per cent) said that pension contributions would persuade them to stay with their current employer and 45 per cent said help to buy a home would have this impact.
Isio Reward and Benefits director Will Aitken says: “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.”
