4 tips for implementing a thoughtful benefits strategy — and getting a strong ROI
As more employers turn to robust total rewards strategies to attract and retain workers, deciding which benefits to offer can be a struggle. From child care assistance to tuition reimbursement to fertility benefits, figuring out which offerings will work best for employees — and pay off for the company — takes some work.
But there are a few ways HR can tackle the benefits dilemma, according to benefits pros.
1. Listen to employees
Understanding what employees want — and which benefits they will use — comes down to doing some legwork, according to Erika Duncan, a human capital consultant at UHY, an accounting and advisory firm.
Duncan recommends employers regularly survey employees either through engagement surveys or focus groups to gauge participation and interest. Exit interviews, although a lagging indicator, also can provide insight. Beyond that, employers can turn to benchmarking data on salaries and benefits others in their industry offer.
While wellness programs, such as smoking cessation programs, fitness classes and mental health workshops, generally track participation rates, when it comes to healthcare benefits, the data are more robust, Duncan said. Employers can analyze claims and reimbursement records and see exactly how offerings are being used and at what cost.
“Using a combination of those methods is the best way to get a comprehensive understanding of both how your employees are engaging with the benefits, as well as how they're perceived,” Duncan said.
Because employee needs are constantly evolving, employers need to continue to gather data to “refine and innovate their HR benefit strategies, ensuring they remain relevant and responsive,” a spokesperson for Forbes Advisor said.
Forbes Advisor’s most recent report on Workplace Trends by Generation, released in August, identified flexible work options, mental health resources and upskilling opportunities as the top benefits U.S. workers reported wanting access to in 2023.
2. Be flexible
While flexible time off and hybrid working arrangements aren’t considered traditional benefits, they are something employees are looking for and can be “paramount to a retention and recruitment strategy,” Duncan said.
Employers also can get creative with their offerings. Some employers allow workers to bring their pets to work or offer pet insurance. Others provide student loan repayment and stipends that can be used for conferences, workshops and certifications.
“That’s something that's a differentiator,” Duncan said about professional development opportunities. “If you're engaged in a program or a degree or a certification, you're probably not going to leave a company that's paid for it.”
For every $1 spent on leadership development, companies see a return on investment of $7, according to a recent report by leadership development platform BetterManager and research firm The Fossicker Group. Those savings come from increased revenue and sales, higher employee retention and lower recruiting costs, the report found.
Not every benefit is going to work for every employee, but that doesn’t mean those benefits aren’t worthwhile, said Duncan, who sees broad offerings in the diversity, belonging and inclusion space.
“Most companies from a cultural sense are trying to be sensitive to meeting employees where they're at,” Duncan said.
For example, employers can recognize domestic partnerships in benefits coverage, offer fertility benefits, provide long-term coverage for workers with long COVID, expand telemedicine services and broaden the definition of family leave.
An advantage of having a diverse offering is that few people are going to use every benefit, but different subsets of employees will find a benefit that works for them, she said.
3. Provide access
When determining which benefits to offer, employers also should consider access. Enrollment in a program or the use of a benefit can come down to access, Duncan advised.
“A lot of people don't think through how to make it accessible for all employees,” Duncan said.
If a company has three shifts, only offering a service from 9 a.m. to 5 p.m. on weekdays won’t be accessible for all employees, she said.
“There's a lot of room for creativity, not just in the benefits offered, but in the way in which we look at how to communicate and educate people about them,” Duncan said. “The biggest thing is to make sure the education is there for what’s offered.”
Part of that can be rebranding what’s already offered. For example, many companies have a set dollar amount per employee allocated for professional development, but only managers might know, Duncan said. Instead, being transparent with employees about what is available and being flexible about how they spend that investment can pay off in recruitment and retention efforts, Duncan said.
4. Measure effectiveness
Gauging the return on investment of benefits can be challenging, Duncan said.
Apart from benchmarking and using compensation surveys, companies can retrospectively look at the effects of offering new benefits. But they can’t do it all at once, she said.
“You ideally need to be laser focused on what you want to measure and then look for a way to do it, which is different from saying I'm going to measure all my benefits at one time,” Duncan said. “It needs to be a bit more methodical.”
For example, if an employer introduced a wellness program, it can see if use of the employee assistance program is down. Or if it started offering parental leave, HR can look to see if there was reduced absenteeism among workers, improved scheduling and higher retention rates.
The company also can identify problems, then use benefits to solve them. If the employer experienced high turnover in one category — a demographic, a department or among those working for a certain leader — it can provide new benefits targeted to attract and retain those workers.
“The cost of retention and recruitment is typically the offset,” Duncan said.