Employers face a critical gap between recognizing the value of flexible benefits and actually implementing them, according to new survey data that shows while 68% of Canadian organizations say flexible benefits are important for retention, only 17% offer cafeteria-style plans.
PerkShift, survey of 189 HR professionals conducted by HR News Canada in partnership with Venngo, reveals a disconnect that experts say stems from concerns about cost and complexity — but those calculations may be missing the bigger picture.
“What HR is calculating is the additional upfront cost of implementation — HR resources, configuration of technology platforms, vendor integration, and communication,” said Sally Benn, senior vice-president of group customers at Venngo, which provides employee perks programs to organizations across Canada. “Another way to look at this is what are the potential costs of continuing to offer a traditional benefits plan where ‘one size fits all.'”
Hidden costs of inflexibility
Those hidden costs include paying for coverage that some employee groups don’t value while failing to provide what matters to others, as well as expenses from turnover, recruitment and lost productivity, according to Benn.
The survey data supports this concern: 59% of respondents identified flexibility and personalization as areas needing improvement in their current benefits packages, making it the top area for enhancement. Close behind, 46% said inclusive and unique perks needed improvement, while 42% cited work-life balance as an area requiring attention.
Despite the recognized importance, implementation remains limited. Only 17% of organizations offer flexible/cafeteria-style benefits, though 42% provide health spending accounts and 20% offer lifestyle spending accounts — more targeted approaches to flexibility.
The implementation gap appears across organization sizes and industries. Among survey respondents, 24% came from companies with fewer than 50 employees, 29% from organizations with 50 to 249 employees, and 26% from companies with 250 to 999 employees. The challenge of implementing flexible benefits affects organizations regardless of scale.
Workforce evolution drives change
The shift toward flexible benefits mirrors broader workplace transformations. “Advancements in AI and automation are significantly reshaping how work is done — both today and in the future,” Benn said. “Jobs and portions of jobs will be automated, resulting in as much as 40% of our workforce being comprised of poly-workers, gig, and remote workers.”
Different workforce segments have different expectations and needs. Flexibility in where and when work gets done is and will continue to be important to attract and retain the right skills. The survey found 70% of organizations offer remote or hybrid work arrangements, with 21% fully remote and 49% hybrid. Only 30% of organizations remain almost exclusively on-site. This evolution means flexible benefits and work flexibility have moved from nice-to-have to must-have status, according to Benn. She noted that 89% of Canadian professionals now say personal wellbeing has become a top priority.
“The future workforce will be global, more diverse and include five generations, with enhanced expectations for personalization and emphasis on overall wellbeing,” Benn said. “Organizations that take a broader approach to Total Rewards and flexible benefits to include additional time off, work flexibility and other non-financial rewards such as housing stipends, elder care, and dependent education will be competitively positioned to attract and retain top talent.”
What flexibility looks like in practice
When organizations do offer flexible options, the survey shows certain benefits rise to the top. Extended health coverage leads at 59%, followed by coverage for mental health services at 57%. Telehealth or virtual care services are offered by 38% of organizations, while health spending accounts are provided by 42%.
Lifestyle accounts and health spending accounts rank as highest priorities, Benn said, because they allow employees to choose what matters most to them.
Popular options include wellness and fitness reimbursements at 28%, critical illness insurance at 31% and flexible work equipment or technology reimbursement at 16%.
The survey also showed that childcare subsidies are offered by 11% of organizations, while eldercare subsidies are provided by 8% as part of flexible/personalized benefits options.
“Workforce dynamics, changing demographics, technology impacts and innovations, along with increasing expectations of employees are challenging organizations to rethink their Total Rewards strategies,” she said.
Mental health emerges as priority
The survey reveals mental health support has become a cornerstone of benefits. Among respondents, 75% offer employee assistance programs, while 59% provide therapy or counselling coverage. Dedicated mental health days are offered by 20% of organizations, and 26% provide stress management or mindfulness workshops.
When asked to rate mental health’s priority in their overall benefits strategy, 35% of respondents called it high priority and 7% designated it as top priority. Another 35% rated it as moderate priority.
Looking ahead, 25% of survey respondents identified mental health and wellbeing support as the area most likely to grow in importance over the next two to three years — second only to flexible and personalized benefits at 31%.
The tipping point for adoption
For organizations that have made the shift to flexible benefits, two factors typically drive the decision: being market competitive to attract and retain the right talent, and ensuring dollars are spent cost-effectively and meet the diverse needs of employees..
“Many leaders now realize that a one-size-fits-all approach cannot effectively meet the needs of employees, while staying within budget,” Benn said. “Providing coverage that some employees don’t value is not cost-effective.”
Benn added that with a diverse workforce, increased employee expectations and five generations in the workplace, flexibility and choice have become more important than ever. Flexible benefits plans, especially those with flex credits, offer a cost-effective way of providing choice to meet diverse needs.
“It’s not possible from a budget perspective to give everything to everyone, and it’s important to ensure fairness and equity in your benefits programs,” she said. “This includes considering different demographics as well as life stages and lifestyle preferences.”
The survey indicates growing momentum for change. Among the 41% of organizations planning to introduce or expand benefits in the next 12 months, many cited adding health care spending accounts, flexible benefits and enhanced coverage options. Some plan to extend health spending accounts to all employees or give workers options to upgrade coverage at their own expense.
Technology enables broader adoption
Concerns about administrative complexity may ease as technology advances, Benn noted.
“The world is changing, and it is changing fast,” she said. “Technology will make companies more profitable, and program administration will be made easier and increasingly managed with AI.”
This technological shift comes as organizations face increasing pressure to adapt. The survey shows that attraction and retention of talent with the right skills to meet business needs is becoming increasingly challenging, especially as AI and technology continue to change how work gets done.
“Leaders understand that companies that invest in employees including reskilling and upskilling as well as providing a meaningful Total Rewards package that provides flexibility and choice, supports overall wellbeing and employee engagement will have the competitive advantage,” Benn said.
The competitive imperative
Survey data reveals that organizations recognize room for improvement. When asked about satisfaction with their current benefits program’s comprehensiveness, only 6% reported being very satisfied, while 43% said satisfied and 33% remained neutral. Another 18% indicated dissatisfaction or significant dissatisfaction.
Organizations with five or more generations in the workforce face particular pressure to offer flexibility. Survey respondents identified work-life balance, mental health support and personalized benefits as top improvement areas, reflecting diverse generational needs.
Looking ahead, 31% of respondents identified flexible and personalized benefits as the area most likely to grow in importance over the next two to three years — the highest percentage among all benefit categories surveyed.
The message from Benn is clear: as the future of work evolves, traditional Total Rewards programs will become increasingly ineffective in meeting the needs of diverse employee segments.
“Leadership will increasingly recognize that without adapting benefits to align with these shifts, their organization risks the ability to attract and retain talent with the right skills to deliver on their business objectives,” she said. “Once leadership becomes aware that flexible benefits are the most cost-effective way to provide flexibility and choice to deliver meaningful options, a traditional benefits plan becomes untenable.”
Get the full survey results
View a copy of the full survey results here: https://hrnewscanada.com/perkshift/
