New CIPD research finds one in five UK employers is not taking a strategic approach to their employee benefits. Of the 1,059 reward or HR decision-makers surveyed, 22% report having no clear objectives for their benefits.
This lack of a strategic approach prevents organisations from accurately assessing the impact of their offering on key business and people outcomes. Charles Cotton, senior reward and benefits adviser at the CIPD, says: “Organisations invest significant time, money, and energy into employee benefits to boost performance, wellbeing, and engagement. So, it’s worrying that one in five don’t actually know what they want their benefits to achieve. That means a sizeable chunk of spend risks lacking clear direction or measurable impact.”
The CIPD’s Reward 2026 survey, supported by Everywhen, reports that among the 77% of employers that do link their benefits to at least one objective, employee retention is the most common (44%), followed by supporting engagement (37%).
The research also finds a significant flexible working gap. Despite this benefit being considered a key objective-driver among 75% of employers that set clear objectives, only 40% of total respondents offer it. This suggests a missed opportunity to leverage a benefit that drives value for both employees and the business.
The rise of ‘benefitsmaxxing’
This lack of strategy comes at a time when jobseekers are placing greater value on comprehensive benefits packages.
According to new YouGov research commissioned by Employment Hero, 53% of UK workers say better benefits are the third most important factor in changing jobs, closely following salary increases and flexible hours.
With UK employers facing rising costs and struggling to grow wages, workers are increasingly choosing job opportunities based on the full package, not pay alone. This trend – dubbed ‘benefitsmaxxing’ – suggests that organisations risk losing talent to competitors if they don’t update their benefits offering to meet employee demands.
Employers ‘fumbling in the dark’ with benefits will lose talent
As jobseekers increasingly prioritise benefits, organisations without a clear reward strategy are missing a significant opportunity to attract and retain people. 45% of UK businesses are already spending more on recruitment than in previous years, according to Employment Hero – making the cost of losing good people a risk many organisations can ill afford.
With National Insurance contributions rising, the National Living Wage increasing, and the Employment Rights Act bringing further cost implications, employers have less room to manoeuvre on pay. A smarter, more strategic approach to benefits is to ensure every pound invested works harder and aligns with clear business and people priorities.
As Cotton notes: “What turns benefits from a cost into a genuine strategic asset is having clear objectives that are regularly reviewed. Employers should be acting on employee feedback, or using data such as turnover and team performance, and tracking progress against defined success measures. Without this discipline, employers are fumbling in the dark when it comes to knowing if their benefits are truly delivering for both the business and its people.”
Key takeaways for HR leaders
- Set clear objectives for your benefits, and review them regularly. One in five employers currently offers benefits without any defined purpose. Before you can assess whether your investment is delivering, you need to know what you want it to achieve. Tie each benefit to at least one measurable objective, whether that’s retention, attraction, engagement, wellbeing, or performance.
- Close the flexible working gap. Flexible working is the benefit most commonly cited as effective for meeting employer objectives. If you’re not already providing it, this is a relatively low-cost, high-impact lever worth prioritising.
- Use benefits strategically in a constrained cost environment. A well-targeted benefits strategy can help you remain competitive on the overall package without relying solely on pay increases.
- Don’t underestimate ‘benefitsmaxxing’. Over half of UK workers now cite better benefits as a factor in changing jobs. If your offering hasn’t been reviewed recently, you may be losing candidates – and employees – to organisations whose packages better reflect what people actually value.
