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Employee benefits are one of the largest investments organizations make in their people. Yet, simply offering a strong benefits package doesn’t guarantee a strong return on that investment.
The organizations that get the best return on their benefits spend understand that benefits are more than a line item on the budget. They are a tool for attracting and retaining talent, supporting employee wellbeing, improving engagement, and helping people stay productive.
The key is making sure employees understand, value, and actually use the benefits available to them.
Start With What Employees Actually Need
One of the biggest mistakes employers can make is designing benefits around assumptions rather than employee needs.
Workforces are increasingly diverse in age, family situation, financial circumstances, health needs, and career stage. A benefit that is highly valuable to one employee may be irrelevant to another. Regular employee surveys, utilization data, focus groups, and feedback from HR teams can help identify where benefits are delivering value and where there are gaps.
Instead of asking only, “What benefits should we offer?” employers should also ask:
- What benefits do employees value most?
- Which benefits are underused?
- Why aren’t employees using them?
- What challenges are employees trying to solve?
- Where are employees paying for solutions outside the workplace?
Look Beyond the Cost of the Benefit
Benefits ROI shouldn’t be measured solely by how much a program costs. The bigger question is what the organization receives in return. For example, a benefits program may contribute to lower turnover, fewer unplanned absences, stronger employee engagement, or improved productivity. Those outcomes can be significantly more valuable than the cost of the benefit itself.
Consider the potential cost of replacing a valued employee. Recruiting, onboarding, training, lost productivity, and the time required for a new employee to become fully effective can add up quickly. If a well-designed benefits strategy helps retain even a small number of employees, the resulting savings may substantially offset the investment.
Make Benefits Easy to Understand
A benefit employees don’t understand is a benefit they may never use.
Benefits can be complicated. Employees may struggle to understand insurance options, retirement plans, wellness programs, voluntary benefits, leave policies, or other offerings. When information is buried in a handbook or presented once during open enrollment, employees can easily miss its value.
Effective benefits communication should be:
- Simple: Explain benefits in clear, everyday language.
- Timely: Provide information when employees are most likely to need it.
- Accessible: Make information easy to find throughout the year.
- Relevant: Tailor communications to different employee needs and life stages.
Communication shouldn’t be treated as an annual event. Benefits should remain visible and relevant throughout the employee experience.
Measure Utilization and Outcomes
You can’t improve benefits ROI if you don’t measure it. Employers should regularly review metrics such as enrollment, participation, utilization, employee satisfaction, turnover, absenteeism, and healthcare spending.
For example, if an employee assistance program has low participation, the answer isn’t necessarily to eliminate it. Low usage could indicate that employees don’t know about the program, don’t understand how confidential it is, or don’t know when they should use it.
Similarly, high utilization isn’t automatically a sign that a program is successful. Employers should consider whether the benefit is producing the outcomes it was intended to achieve. The goal is to move from measuring benefit activity to measuring business impact.
Optimize Your Existing Benefits Before Adding More
More benefits don’t necessarily mean better benefits.
Before adding another program, employers should evaluate whether existing offerings are being fully utilized. A benefits package can become unnecessarily expensive and confusing when new programs are continually added without evaluating older ones.
A periodic benefits audit can identify:
- Programs with consistently low participation.
- Overlapping or redundant offerings.
- Benefits that employees don’t understand.
- Opportunities to improve employee communication.
- Programs that no longer align with workforce needs.
Sometimes the best way to improve ROI isn’t to spend more–it’s to make better use of what you already have.
Treat Benefits as Part of Your Talent Strategy
Benefits shouldn’t operate in isolation from recruiting, retention, culture, and employee experience. Candidates evaluate the entire employment package when deciding where to work. Employees also consider benefits when deciding whether to stay. A competitive benefits package can help answer an important employee question: “Why should I build my career here?”
The strongest approach combines four elements: Understand your employees. Communicate effectively. Measure results. Optimize benefits.
Getting the best ROI from benefits isn’t simply about reducing costs or adding more programs. It’s about making strategic decisions about where benefits dollars can have the greatest impact.