LONDON, 22 September 2025 – A new report from Lockton, the world’s largest independent insurance broker, ‘From gut-feel to data-driven: Overcoming blind spots in SME benefits strategy’, reveals that seven out of 10 (69%) of SME (small and medium-sized enterprises) leaders are now using AI tools like ChatGPT to shape their employee benefits strategy.
But instead of boosting strategic confidence, this reliance on technology is closely tied to feelings of guilt and uncertainty. 77% of frequent AI users admit to feeling guilty about whether their benefits strategy is doing enough to support their team - either “all the time” or “sometimes.”
AI closely linked with confidence drops
What’s more, 40% of AI users believe their benefits package needs significant improvement, compared with just 9% of leaders who have never used AI.
This pattern suggests that technology is often being used as a safety net; a quick fix in the absence of time, resources or expert advice. Despite the high stakes, only 12% of respondents had sought guidance from a broker or trusted adviser, although 39% cited this as the type of support that would give them confidence.
Meanwhile, decisions are frequently shaped by personal experience and reactive problem-solving rather than strategic planning. 75% admit that decisions relating to employee benefits are influenced more by personal or leadership experience, rather than staff feedback or performance data.
“AI isn’t the problem,” said Stewart Waddy, Head of SME Consulting & Production at Lockton. “SMEs want to do right by their employees, but this also creates pressure to get things right. Without clear guidance, leaders will continue to carry the burden alone – risking decisions that are reactive, inconsistent, or clouded by guilt.”
“From working with our SME clients, we’ve seen first-hand that with the right support they can build effective, long-term strategies. Right now, though, many are leaning on AI as a digital safety net but it can only do so much. What feels like efficiency can easily deliver short-term fixes that fail to address employees’ real needs. It can’t replace the tailored advice and planning needed to build benefits strategies that truly support employees and their businesses.”
Despite good intentions, many SMEs struggle to turn care into strategy. While 94% of SME leaders feel somewhat comfortable responding to employee requests, only 46% feel very confident in their long-term benefits strategy. Just 39% feel able to act independently without external guidance, citing conflicting advice (31%), time pressures (31%), and fear of making mistakes (29%) as preventing them from making proactive decisions.
A way forward for SMEs
The research also points to a way forward. With targeted support, SMEs can compete effectively on benefits despite smaller budgets. Staff feedback (61%), practical tools (41%), and trusted advisers (39%), were all cited as key factors that could help SME leaders act with clarity and confidence.
Crucially, 61% of respondents believe that, with the right guidance, they can deliver benefits that match or exceed the offering of larger corporates.
“Providing compelling, inclusive employee benefits doesn’t have to be about spend,” Waddy added. “It’s about strategy, alignment, and visibility. SMEs are nimble - unlike larger corporates, they can move quickly to build proactive strategies that adapt to their people’s needs. If they succeed, they won’t just avoid wasted spend, they will build workplaces where benefits genuinely deliver on their promise of showing people they are valued.”
NOTES TO EDITORS
Methodology The research was conducted by Censuswide between June and July 2025, surveying 1000 senior decision makers responsible for employee benefits at UK small and medium-sized enterprises (SMEs, defined as organisations with 10–250 employees).
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