What to Look for When Measuring the Real ROI from Employee Benefits?

What to Look for When Measuring the Real ROI from Employee Benefits?

  May 02, 2024

SEB Marketing Team

Employee benefits are not just perks; they are strategic investments that yield significant returns for both employers and employees. Considering that benefits represent a significant aspect of the employee compensation package, measuring and maximizing return on investment (ROI) of benefits supports making more informed decisions that lead to improvements for both employers and employees alike. From attracting top talent to fostering engagement, and retention to creating an organizational culture, employee benefits play an important role in shaping the employer-employee relationship and driving long-term sustainability.

Both sides of Employee Benefits

Employee benefits, or non-wage compensation, included as part of the hiring process. For an employee, the benefits package is often an important factor in their decision-making process when considering job offers. Competitive benefits, such as health insurance, retirement plans, as well as sick leave, vacation and health and wellness programs enhance attractiveness and promote a positive work environment. Employees who feel supported by their benefits are more likely to be engaged, motivated, and loyal to their organization.

For employers, providing comprehensive benefits serves multiple strategic purposes such as recruiting and retaining top talent, increased productivity, and a positive organizational culture. By offering benefits that address diverse needs, such as healthcare, professional development, and work-life balance, employers can demonstrate their commitment to employee welfare and create a sense of loyalty and belonging among their workforce.

Essentially, employee benefits serve as a bridge between the needs and expectations of employees and the strategic objectives of employers, fostering a symbiotic relationship that contributes to organizational success and employee well-being.

Strategies for ROI of Employee Benefits

Although measuring the (ROI) of employee benefits can be challenging, employee satisfaction and their tenure in the company determines ROI. Use these three angles – Recruitment (Appeal to the candidate), Engagement (Satisfying current workforce needs), Retention (Keeping candidates) to determine ROI.

Recruitment – Appealing to the Candidate: Employee benefits serve as a powerful recruitment tool. Comprehensive benefits packages, including health insurance, retirement plans, and flexible work arrangements, signal a commitment to employee well-being and financial security making the organization more appealing to prospective candidates. By aligning benefits offerings with the needs and preferences of target demographics, employers can enhance their employer brand and position themselves as employers of choice in the eyes of job seekers.

Engagement- Satisfying Current Workforce Needs: Employee benefits are instrumental in satisfying the diverse needs and preferences of the current workforce, driving engagement, and job satisfaction. Benefits can enhance financial security and boost morale which have a positive impact productivity. Beyond traditional perks, such as paid time off and wellness programs, modern employees value benefits that support work-life balance, career development, and overall well-being. Flexible work arrangements, professional development opportunities, and mental health support services contribute to a positive work environment where employees feel valued, motivated, and invested in their roles. By continuously evolving benefits offerings to reflect changing workforce dynamics, employers can foster a culture of engagement and productivity.

Retention – Keeping Candidates Invested: Considering the current landscape of talent shortages, employers capable of retaining top talent stay competitive. Employee benefits support retaining top talent and reducing turnover costs for employers.

The ROI of employee benefits extends far beyond monetary value; it encompasses enhanced recruitment, engagement, and retention outcomes that drive organizational success. By adopting a strategic approach to benefits design and implementation, employers can create a workplace culture where employees feel valued, supported, and empowered to thrive. From attracting top talent to fostering long-term loyalty, employee benefits are a cornerstone of sustainable growth and prosperity for both employers and employees alike.

SEB is Canada’s leader in providing benefits administration solutions to over 400,000 plan members from Canadian companies. For more information, check out our solutions page here.