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Britain's Got Talent
Introduction
For many employers, retaining talent and skills has become a greater priority than external recruitment, both now and for long-term success. A perfect storm is brewing as employers face a variety of pressures, many of them new.
With UK economic inactivity and long-term sickness at record highs, employers continue to face challenges around workforce participation and productivity. At the same time, talent pools are tightening. Changes to UK immigration rules are reducing visas for degree-level roles, while declining birth rates further constrain the availability of home-grown talent.
Policy change could also add further pressure. The Employment Rights Bill is expected to bring new levels of compliance for employers, changes to the use of zero-hour contracts and wider shifts in workforce economics.
AI further contributes to the challenge, shaping both recruitment and retention in ways not necessarily expected. Feedback from HR directors suggests that a successful AI and automation strategy could give a company an advantage as an employer of choice. Yet, as more junior roles become automated, a critical question arises: how will tomorrow’s leaders gain the early-career experience they need? If entry-level work is replaced entirely by AI, businesses risk a future talent vacuum. The solution is not to remove junior positions, but to reshape them and ensure new hires still build skills, knowledge and pathways to progression.
Retaining your best talent company-wide is increasingly no easy matter. Remuneration, benefits, workplace flexibility and succession planning demand a strategic outlook balanced against commercial outcomes.
Our employer research shows how organisations have become laser-focused on retention. By understanding their biggest risks and the detail of what really matters to employees, employers are more likely to find effective solutions to complex concerns.
The growing commercial importance of retention
Strategies for success
Employer preparedness
Talent challenges
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Partner, Head of Employer Consulting
NICK GRIGGS
Partner and Client Relationship Manager
NICK CLYNES
Partner, Head of Platform & Benefits
JULIA TURNEY
Partner, Head of People Risk
PAUL LEANDRO
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The challenges reshaping the landscape for talent
Businesses undoubtedly feel the net tightening with decreasing availability of both domestic and overseas talent, as well as the expected loss of current overseas workers.
Tightening talent pools
Rethinking recruitment strategies
Worryingly, our research shows that employers are increasing investment in training and benefits without first having access to the data that shows what matters to employees at different stages of life, their engagement levels with benefits and whether these investments are delivering the intended outcomes.
The reality is that stronger use of data and analytics is central to helping employers move beyond surface-level data to identify root causes and solutions. For example, by examining whether there is a correlation between mental health PMI claims and human errors being made in the business, or whether turnover patterns stem from issues like culture or management, businesses can uncover the real drivers of risk and performance. Our Employer DNA framework recognises the areas of analytics that yield the highest level of business understanding.
Map your workforce DNA
Without the data, investment could fall short of goals. It’s data that will enable businesses to prioritise investment and tailor solutions to match business and employee goals. Crucially, it enables businesses to diversify their talent pool and strike a balance between short- and long-term investment.
Effective investment decisions remain important as employers continue to navigate wider cost pressures, including pension contributions, the minimum wage and taxation.
This is where our Employer DNA approach can provide a clear, evidence-based view of your organisation’s strengths, gaps, and priorities – helping you make smarter investment decisions, optimise retention strategies and build a workforce capable of thriving today and in the future. By mapping Employer DNA, organisations can turn insight into action and workforce challenges into a competitive advantage.
62
Three in five employers are concerned about the shrinking availability of domestic talent, driven by the long-term decline of UK birth rates.
are concerned about the decreasing availability of overseas talent that they could previously depend on, caused largely by recent changes in immigration laws.
as many as one in six expect to lose overseas employees because of new policies.
16
%
64
%
%
Our Employer DNA framework recognises the areas of analytics that yield the highest level of business understanding, including:
Your existing workforce segmented by age, gender, role, salary and tenure as a minimum.
of employers track workload levels, staff retention, productivity, or eNPS.
50
Correlations and discrepancies between different data sets (e.g. absence rates vs turnover; employee wellbeing vs existing industry benchmarks).
Benefits usage and engagement levels across all benefits, particularly company-funded ones such as pensions and healthcare. Detailed reporting will often be available from your providers.
Under-tracked areas: eNPS (likelihood to recommend), workload, retention and what matters to individuals.
Discover more
Our data-led article uncovers why employers must understand their business’s unique ‘DNA’ to unlock sustainable ways to positively impact employee retention and development while maximising return on investment.
Discover more
BW analyses ageing workforce pressures, skills gap risks, and employees’ mental health challenges to help businesses survive and thrive.
Discover more
Data-led insights explore how employers can align benefits strategy with generational needs to unlock productivity, resilience and innovation.
Employers should think hard about increasing focus on retention and hiring from alternative sources to secure talent.
With three out of four employers (77%) saying they’re concerned people don’t have the skills they need, our research shows how older workers and those returning to the workplace following extended breaks in their career are increasingly in demand:
An ageing workforce brings different workplace needs, from specialised training and development to increased pension and healthcare provision. While employees cite concerns around training (19%) and insurability (18%), these can be far outweighed by the value these employees potentially add to businesses. As their role in the workforce grows, pension and healthcare benefits become an important tool to secure their loyalty and motivation over the long term.
When planning benefits and training company-wide, employees need to motivate different age groups effectively. This pull employers in different directions simultaneously if not approached correctly.
Many companies are still being held back by not having gathered the right data on the make-up of their workforce. Those that do will be the winners in building more effective retention, benefits and training strategies. Success will also depend on the market and providers recognising these shifts, and adapting products to meet employers’ and employees’ evolving needs.
are looking for strategies to retain older staff.
Retaining older staff
are now actively hiring older workers.
Hiring older workers
are now actively recruiting people returning from a career break.
Career break recruitment
37%
31%
40%
The Employment Rights Bill is prompting employers to adapt their approaches to flexible working, workforce protections and equality.
Failing to comply with the regulation could pose serious corporate risk to an organisation’s reputation.
The shifting policy landscape
Working with, not against, employers will be essential if the Government is to ease pressures on businesses while improving outcomes for employees.
As the number of people who are economically inactive due to long-term sickness has grown from 2.2 million at the start of 2020 to 2.7 million in 2025, employers are also concerned about factors impacting the availability of their existing workforce. Nearly three-quarters (73%) are concerned about increasing rates of poor mental health and 68% about increasing rates of long-term sickness.
In response, many employers have adjusted remuneration and benefits to improve retention:
84% have raised salaries in the past year
69% have enhanced healthcare provision
66% have increased pension contributions
81% have expanded the amount of training offered to mid-level and senior staff
With traditional talent pipelines under pressure, employers may need to explore alternative approaches to recruitment and retention to support long-term growth.
say they would be at risk of insolvency
of employers say they would freeze hiring
in favour of tax breaks for private medical insurance
More than ever, employee benefits need to create cost-effective employee value. And the Government has a role to play in this. As long NHS waiting lists persist, 68% of HR directors say tax breaks for private medical insurance (PMI) would benefit their businesses.
After increases in employer National Insurance contributions, many organisations are reviewing how they allocate costs across their business to deliver the greatest value. This comes through strongly in our research, with many employers concerned that a future increase in employer pension contributions could pose a serious cost risk for many.
This comes at a time when talent is already in its shortest supply, and while the correlation of AI adoption and workplaces is not yet clear, it raises concerns about the use of AI to cut staff rather than to strengthen capability.
Even though job losses have taken place, many HR directors believe AI could strengthen their organisation's appeal as an employer. Over a third (36%) said successful AI implementation would provide a significant competitive advantage in attracting talent, compared with just 15% who felt recruiting younger workers would deliver the same benefit.
Even as AI becomes more embedded, human-in-the-loop (HITL) remains essential for oversight and decision-making. But with traditional career pathways narrowing, the risk is not just skills gaps today, but a shortage of future leaders. Investing in adapting and evolving roles in line with AI will be key to long-term resilience.
AI adoption spans organisations of all sizes and sectors. Seven in ten (71%) organisations have increased investment in AI/automation and six in ten (62%) have trained their workforce on AI. And AI is already tightening the labour force. Our research confirms that, due to AI adoption:
AI adoption
have made senior staff redundant
%
15
%
17
have made junior staff redundant
have made mid-level staff redundant
18
%
Paul Leandro | Head of People Risk
AI must be an enabler and not employed at the expense of a talented, multi-skilled workforce.
%
35
of employees said that their employer doesn't offer PMI, but they would want to use it; the same for benefits like access to a 24/7 online GP (37%).
of employers said they had increased investment in healthcare - a lower priority than salaries and embedding values/purpose.
69
%
As employers focus on retention, where are they investing to achieve this?
Employer priorities for employee investment
Employer preparedness and gaps
While HR directors have prioritised increased investment in salaries (84%), values and purpose (81%) rank a close second. As the pandemic lead to increases in home working, employees spent less time in the office environment experiencing their employer’s values firsthand. Therefore, this investment may be designed to demonstrate a tangible, differentiating purpose that builds understanding and retention.
Although healthcare (69%), DEI (68%), and pensions (66%) received increased investment, they ranked lower down the list of priorities, raising concerns of a misalignment between companies' actions and employees’ actual needs.
Lower priority
Employee salaries
Higher priority
Embedding values/purpose
Junior staff training
Higher priority
Lower priority
Private healthcare
Investment in DEI
Percentage of pension contribution
84
%
81
%
81
%
66
%
68
%
69
%
Our previous research found that just 32% of employers agreed they had a duty of care to their employees. That figure has since nearly doubled to 59%, demonstrating a belief in greater responsibility to their employees.
Employers’ duty of care towards employees
More employers also recognise the relationship between employees’ happiness and productivity as this measure has increased from 70% to 82%.
Yet, while employers are clearer on their responsibilities towards employees, just one in six (15%) feel that retaining their existing workforce would give them a major competitive advantage as an employer of choice.
Poor (or no) measurement of key employer metrics is holding back loyalty
Without the right data, employers may struggle to align their actions with employee needs and priorities. To better understand this, we asked employers what workforce data they collect and where potential gaps remain.
Employees’ job satisfaction is tracked by two in three organisations (66%). Perhaps worryingly, it’s the only employee metric that over 50% of the respondents say they measure. Overall, metrics focusing on business-control measures dominate. Workload is measured by 46% of employers, while employee turnover is measured by 42% and absence rates by 39%.
More meaningful measures of what motivates and matters to employees are measured by far fewer organisations. Happiness is measured by just 36%; the same percentage also measure employee stress levels. Just one in six (16%) measure their Employee Net Promoter Score (eNPS), the standard industry measure of loyalty and satisfaction.
Despite benefits’ importance to employees – and employers’ high level of investment in them – usage is poorly tracked. While two in three (66%) employers increased their pension contributions, just one in three (34%) measure their employees’ pension engagement levels – and just 30% measure usage of benefits overall.
Nick Clynes | Client Relationship Manager
As a business observer, this data is concerning. It demonstrates fundamental gaps in employee data. As a result, employers are simply unable to see their own retention risks, or areas where costs might easily be optimised.
Time is running out for companies that aren’t compliant
Research shows most organisations have already adopted policies aligned with the proposed measures under the Employment Rights Bill - but some are lagging. While the final details of measures are still being developed, it’s a positive step that so many employers have already taken steps to strengthen workplace policies and employee protections.
are offering workers on low or zero-hour contracts a predictable working pattern.
67%
are offering employees parental leave from day one.
82%
are taking all reasonable steps to prevent sexual harassment in the workplace.
86%
don't offer bereavement leave to all employees (a further 20% aren't sure).
14%
16%
22%
aren't offering employees parental leave from day one (a further 20% aren't sure).
aren’t currently offering a whistleblowing system (a further 23% aren’t sure they do).
Our research shows that employers are increasingly recognising the importance of retaining and growing existing talent, as both UK and international talent pools decline. This section sets out our recommendations for improved outcomes for employers’ retention and recruitment drives, combining findings from this research and our wider experience with UK employers of all sizes and structures.
Retention through data-driven enablement
Strategies for success
Expand and diversify talent pipelines
Map your workforce DNA
Communicating AI as an enabler
%
Fewer than
Anticipate and implement policy impacts
Using this data to identify where investments are adding value and where costs could be optimised, based on employee preferences and needs.
Tracking the effectiveness and application of training, alongside promotion levels and career progression.
Close
of employers see success in AI as the biggest competitive advantage as an employer of choice.
36
%
When applying AI in their organisation, employers should consider:
Gathering data on productivity and retention at all levels of seniority, enabling evaluation of the true impact of AI across the workplace.
Redefining entry-level roles – not just skilling people in the use of AI for your business, but building experience, knowledge of the business and developing them for more demanding, complex positions in the long term.
Creating an internal culture of education on AI – dispelling myths, discussing benefits to employees and showing how they can get more involved or improve their day-to-day.
Close
Beyond providing a competitive advantage, AI is fast becoming a baseline expectation. Employers that embrace AI effectively may be better placed to attract, retain and develop talent, while those that do not risk losing ground to competitors.
Communicating AI as an enabler and competitive advantage
of employers are concerned by shrinking availability of domestic talent.
63
%
Drive increased retention (and referrals) by understanding and prioritising what matters most to individual employees (work time and workplace flexibility, benefits, training) - it often won’t be just compensation.
Invest in overseas talent (where costs and visa permissions allow). Extend role parameters to capable talent outside of the degree-qualified pool.
Review recruitment parameters to include more older workers, and those returning from a career break and those with non-linear career paths - a practice adopted by 31% and 40%, respectively, of employers in our research.
Close
Expand and diversify talent pipelines
With talent pools tightening and employers concerned about the shrinking supply of domestic talent, broadening who and how you hire becomes a strategic necessity. Shift from degree-first screening to skills-based assessment, bring in experienced returners and older workers, and open routes for non-linear careers – then reinforce this with benefits and flexibility that convert candidates into committed joiners.
Create competitive positioning for recruitment by benchmarking your benefits, workplace flexibility, training programmes (and more) against competitors.
employers said that if their auto-enrolment contributions rose, they would have to reduce other benefits.
1
in
Review measures in the Employment Rights Bill, identify gaps and consider implementing them pro-actively, positioning your business as an employer of choice. Most employers already have many in place.
Identify resulting internal trade-offs that won’t adversely impact employee satisfaction or retention.
Model the cost and business impact of a potential increase to employer pension contributions, minimum wage hikes or benefits restrictions
Close
Policy shifts can reshape workforce economics overnight. Scenario-test employer pension contribution increases, minimum wage uplifts and compliance requirements, then sequence changes to protect satisfaction and retention.
Where feasible, implement best-practice measures early and communicate clearly – turning compliance from a cost centre into part of your employer value proposition while reducing risk and avoiding disruptive, last-minute adjustments.
Anticipate and implement policy impacts proactively
3
Businesses have responded by increasing salaries, training, benefits and employee flexibility to support retention, but this also raises concerns over the long-term needs of a business.
There’s a risk this is being done without first gathering the fundamental data on what employees want and need – and without measuring the impact across the basic employee and business metrics.
Our research shows that employers are placing greater emphasis on retaining and attracting talent as access to skilled workers becomes more constrained.
Conclusion
The Generation Game
The Balancing Act
The Employee Equation
Agree (2025)
Agree (2023)
100%
75%
50%
25%
0%
Disagree
Agree
Agree
A workplace should be more like a team than a family
A workplace has no duty of care to its employees
Employee happiness is critical to productivity
Team building is more important than socialising
A focus on retention has led to a fall in performance
Treating employees fairly improves performance in the long-run
Employees don't understand what it takes to run a business
Employee demands are usually unrealistic
The pace of change means it's impossible to plan for the long-term future
Balance of power between employees and employers favours employees
0%
20%
40%
60%
Disagree (2023)
Disagree (2025)
Balance of power between employees and employers favours employees
The pace of change means it's impossible to plan for the long-term future
Employee demands are usually unrealistic
Employees don't understand what it takes to run a business
Treating employees fairly improves performance in the long-run
A focus on retention has led to a fall in performance
Team building is more important than socialising
Employee happiness is critical to productivity
A workplace has no duty of care to its employees
A workplace should be more like a team than a family
Disagree
Click to read our recommendations
Click to read our recommendations
Click to read our recommendations
Click to read our recommendations
31
%
17
%
68
%
Get in touch with our experts and find out how we can help you to retain your talent.
Head of People Risk
Paul Leandro
Head of Benefits Consulting
David Collington
Client Relationship Manager
Nick Clynes
Head of Employer Consulting
Nick Griggs
Strategies for success
Employer preparedness
Talent challenges
Strategies for success
Employer preparedness
Talent challenges
Strategies for success
Employer preparedness
Talent challenges
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Howden Employee Benefits & Wellbeing Limited is part of the Howden Group. Registered in England and Wales under company number 2248238, with its registered office at One Creechurch Place, London EC3A 5AF. Authorised and regulated by the Financial Conduct Authority (Financial Services Register No. 312841). The Financial Services Register can be accessed through www.fca.org.uk.
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