How will the shape of reward will change, and what trends should we expect to see in 2023?  

Sarah Jefferys, Head of Reward Consulting, Reward & Benefits Consulting, Gallagher, said: “The connection between employee wellbeing and organisational wellbeing has become more significant.

Rewards are one facet of people’s broader expectations in terms of organisational culture, career progression and development, wellbeing and general investment in employees.

“Diverse workforces and hybrid working are impacting how rewards and benefits are now viewed by employees and candidates, with organisations realising the need to design benefits programmes to suit a variety of demographics.

“This is evidenced by organisations telling us in our 2022 UK Benefits Strategy & Benchmarking Survey, that ‘appealing to a diverse workforce with different preferences’ is their top organisational challenge. Therefore, we can expect to see a greater focus around enhanced diversity within the benefits structure in 2023 – making it easier to address employees’ needs as individuals, while creating a greater Employee Value Proposition (EVP).”

Appealing to a diverse workforce with different preferences

Sarah Jefferys, Head of Reward Consulting, Reward & Benefits Consulting, Gallagher, said: “What we see from our research is that there’s an appetite to create a fairer and more equitable workplace and to develop more flexibility in benefit programmes so that they can be tailored.  Service or status-based benefit approaches are in decline, while fairer and more equal practices are on the rise. For example, the annual leave trend is moving towards a single-status holiday entitlement and it’s encouraging to see that nearly 60 percent of organisations, are applying the same holiday entitlement to all employees (up on last year’s 52.4%).

“This year’s UK Benefits Strategy & Benchmarking Survey report highlights, that just over a quarter (28%) of organisations, have made changes to environmental or sustainability policies. Within this we see firms taking actions to minimise their carbon usage/footprint (24%) and implementing focussed ESG policies (23%) – while around one in five (21%) are still developing their plans. It is clear the lockdowns have increased society’s interest in protecting the planet and those who do not have a clear purpose and commitment to climate change, could be judged negatively by existing and prospective employees.

“We are also seeing movement in the Diversity, Equity & Inclusion (DE&I) approaches in organisations.  This topic is now firmly on board agenda’s.  For example we’ve seen positive signs of better support for women in the workplace. Firstly, it is reassuring that the majority of organisations (97.2%) support mothers by having flexible working policies in place. However, research shows that Menopause remains a hidden workplace taboo and that the majority of employers, have not implemented the right policies and tools needed to support women in the workplace who are experiencing menopause

Secondly, only around one in five (22.8%) firms have formal policies in place. These findings, reinforce the need to treat menopause like any other important workplace topic such as bullying. What’s clear, is that if we want to create diverse and inclusive places to work, firms need to do more to break down the stigma surrounding menopause.

“Gallagher is seeing a shift away from statutory-only maternity and paternity. Yet two in five (40%) employers still provide statutory-only paternity pay and almost a third (26.1%) are only providing statutory maternity pay. We’ve seen a marginal increase in paternity-enhanced contractual schemes (30.6% vs 29.4% in 2021), but a slight decrease in discretionary schemes compared to last year (28.8% and 30.3% respectively). While fewer organisations offer statutory-only shared parental leave compared to last year, displaying a trend in line with DE&I values.”

Commitment to supporting diverse families

Sarah Jefferys, Head of Reward Consulting, Reward & Benefits Consulting, Gallagher, said: “Organisations are showing increasing support for diverse family models, with employers more likely than in the past to provide benefits to parents opting to raise their children how they wish to, or grow their families in different ways. Employees’ family lifestyle choices in 2023 will no longer be a barrier to them receiving parental benefits.

“For example, 46.5 percent of firms stated that they offer enhanced shared parental leave on the same basis as maternity, an increase from 2021, meaning men can also take time off to look after the family. While this year, 98 percent of organisations offer some sort of “other” leave not covered in family leave — showing a positive trend towards employers’ providing more choices to their employees, to better fit their individual needs.”

How do you think benefits and rewards will be affected by current events such as the rising cost of living in 2023?

Sarah Jefferys, Head of Reward Consulting, Reward & Benefits Consulting, Gallagher, said: “Due to the cost of living crisis, many organisations are reviewing their approach to reward. In our 2022 UK Benefits Strategy & Benchmarking Survey, almost half (48.5%) of organisations stated they were planning changes to their current benefit offering (compared to 46% last year and 33% the previous year). Whereas only 5.2 percent of firms are looking to remove benefits, even in these difficult cost-saving times — which shows that benefits are a valued part of the employment package.”

What else did the research highlight?

Of those firms who are planning changes, 79.1 percent will be enhancing benefits, an increase compared to last year — 70.7 percent.

Also, 73 percent are looking to improve communication, whilst 47.8 percent want to improve flexibility in order to extend individual choice.

In addition, 23.5 percent are going to change their delivery method and the same percentage are looking into changing their benefits provider.

Sarah Jefferys, Head of Reward Consulting, Reward & Benefits Consulting, Gallagher, said: “The second top challenge we’ve identified in the 2022 UK Benefits Strategy & Benchmarking Report is: ‘Increasing cost of benefits within tight budgets.’ With this front of mind, we were not surprised to see that affordability for pay increases is still a huge consideration for firms which are also recovering from the impact of the pandemic and world events such as the war in Ukraine.

“However, due to the struggle for talent and the rising costs of living, pay awards are expected to be higher than we have seen in recent years — evidenced by the fact that many employers (40.3%) told us they are reviewing their pay scales in response to the current harsh economic climate. However, a third of firms are not planning any pay policy changes.

“The Bank of England’s rise in interest rates to 3 percent is another blow to UK households already reeling from record levels of inflation. With further raises expected, these are worrying times. Although many organisations already provide a range of money-saving benefits for their people, there are other ways they can help to alleviate the stress and worry facing employees who are concerned about debt and their personal finances. Financial wellbeing is ultimately about employees feeling that they have confidence, control and capacity in their finances.

“When inflation-busting pay rises aren’t possible, employers should modernise employee benefits to help address financial struggles. In view of the large number of people being impacted by the rising cost of living, we were shocked that 43.8 percent of organisations are not providing any form of financial education or advice to employees. While a decreasing number (21.9%) of organisations are offering group advice year on year (compared to 28% last year and 31.6% in 2020). Organisations providing money-saving benefits, practical tools and advice to support their people — while communicating them effectively — will help employees through the cost-of-living crisis and those struggling with debt throughout 2023 and beyond.

“During these times it is important to call out the things that you already have in place to support employees – such as employee discounts or tax-free loans for example, which could help with employees with everyday struggles.”






Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.