Managing rising costs with smarter employee benefits

Rising costs are putting pressure on almost every part of a business, and employee benefits are no exception. Inflation, healthcare costs and changing employee expectations all mean benefits spend is under closer scrutiny than it has been in years.

The challenge for employers isn’t whether to manage costs, but how to do it without removing support or undermining trust. For many organisations, the answer is being more intentional about how benefits are designed and delivered.

Smarter employee benefits focus on sustainability. They help employers manage spend while continuing to support employees in ways that feel relevant, fair and practical.

Why employee benefit costs are rising

Benefit costs are rising for obvious reasons. Healthcare prices are going up, employees are using more services, and expectations are higher than ever. People want support that feels meaningful.

Howden’s Global Employee Health Report notes that most employers expect health-related benefit costs to increase this year, reflecting both inflation and growing demand for services. At the same time, employees increasingly see benefits, particularly healthcare and wellbeing support, as a key part of what makes an employer attractive.

The hidden cost of poorly aligned benefits

It’s easy to spend a lot on benefits without actually getting much impact. If offerings don’t match employee needs, usage can be low and perceived value even lower.
Howden’s research suggests that employees do notice when benefits don’t align with their priorities.

Many report that benefits influence whether they stay with a company or even consider joining one. When benefits aren’t relevant, organisations risk wasting money and missing opportunities to engage their people.

What ‘smarter’ benefits actually mean

 Smarter benefits are about having the right options. That usually means:

• Targeted support that meets real employee needs
• Flexibility so benefits can adjust as circumstances change
• Clarity so employees understand and value what’s available

A smaller set of benefits that employees actually use is far more effective than a long list that no one engages with.

Using flexibility to control spend

Flexibility is a practical way to manage costs. When employees can choose the benefits that matter to them, spend naturally moves toward what is actually used, rather than being tied up in perks that go unnoticed.

It also benefits employees directly. Someone juggling family responsibilities might value childcare support, while another person might prioritise mental wellbeing services. Giving people that choice makes them feel supported - and that support translates into engagement, loyalty, and long-term productivity.

Supporting long-term benefits planning

Smarter benefits also make planning easier. With insight into what employees use and value, employers can forecast spend more accurately and make adjustments without major overhauls. 

Many organisations are investing more in preventative care and wellbeing initiatives, which not only support employees but can also reduce costs in the long run. A flexible, targeted approach allows employers to offer meaningful benefits while keeping budgets predictable.

Rising benefit costs are real, but they don’t have to force organisations into tough trade-offs. Smarter benefits focus on relevance, flexibility, and long-term thinking, helping employees feel supported while keeping spend sustainable.

If you’d like to explore how smarter employee benefits could work for your organisation, get in touch with our employee benefits team today to start the conversation.