Employers are under constant pressure to create benefits packages that not only meet employee expectations, but also deliver measurable returns on investment (ROI). But justifying the value of these programs can be challenging, especially as employees's benefits expectations in 2024 are higher than ever.
So, what can you do to optimize your benefits strategy? In our sponsored Harvard Business Review Analytic Services report, "Boost Competitiveness by Leveraging Global Benefits and Total Rewards," we surveyed leaders at 214 global companies to understand what tools and strategies they're using to keep employees informed and engaged with their benefit programs.
Based on those findings, we've outlined the top four strategies companies use to reduce costs and increase employee engagement.
Let's dive in!
1. Optimize Benefits with Data-Driven Insights
To ensure a strong ROI within their benefits programs, companies must collect and use their data to make more informed decisions. For instance, our report found that 28% of the global organizations we spoke with improved their benefits offerings by gathering employee feedback.
Data-driven approaches can help HR teams improve ROI by understanding which benefits are valued by employees and which are underutilized.
Mark Kelly, Global Head of Benefits and Wellbeing at Boston Consulting Group, noted, "Our ROI [revolves] around how people feel about our overall employee value proposition. We want to be seen as an employer of choice, and benefits play quite a significant role in that."
By analyzing employee feedback and utilizing data, organizations can then tailor their benefits to better meet the needs of their workforce. This ensures that resources are only being spent on the programs that matter most, reducing unnecessary costs.
2. Offer More Personalized Benefits
Studies have found that companies that offer personalized benefits packages experience a 23% increase in profitability driven by higher levels of employee engagement. Similarly, 58% of companies in our report said their recent HR changes were aimed at improving employee engagement and satisfaction.
A more targeted approach not only boosts employee satisfaction and engagement but also directly influences retention and productivity, which are key factors in maximizing an organization's financial return on investment.
"When we talk about benefits and compensation, it's really about total compensation—what's everything that you're offering as an organization?" said Sebastian Reiche, professor at IESE Business School. "Pay is very much motivating, but people are motivated by many other things, and that has a bearing on how you design your entire compensation system."
3. Communicate the Full Value of Your Benefits
Even the most comprehensive benefits programs can fail to deliver ROI if employees don't fully understand the value of what is being offered. In fact, our report found that 46% of employees are unaware of the full value of their compensation package. This lack of awareness can lead to underutilized benefits, diminishing your offering's perceived value and general employee engagement.
"Across the industry, we've often focused on making sure that we feel packages are competitive, but often that's not being made [clear] to the people that are benefiting from them," said Mark Kelly.
To maximize ROI, businesses must invest in clear, consistent communication strategies that educate employees on the full scope of their benefits packages. The goal should be to ensure that employees know what benefits are available and how to use them. Clear communication can lead to higher engagement, which, in turn, drives satisfaction and retention, leading to better financial performance.
4. Use Technology to Integrate and Simplify Benefits
One of the biggest hurdles in securing the ROI of your benefits program is how difficult it can be to manage complex systems and large amounts of employee data. In fact, our report found that 39% of respondents said their current digital platforms don't share data effectively, leading to siloed information that can reduce their ability to manage costs effectively.
"Having a clunky manual process does not meet [employee] needs or cut it anymore. With this kind of [integrated] system, you're able to give people that white glove experience, and have a seamless, frictionless experience for employees," said Lydia Wright, Senior Manager, Global Benefits at Atlassian.
Investing in technology that streamlines benefits administration, data collection, and communication can make a significant difference. When data moves seamlessly between systems, organizations can gain a clearer idea of how benefits are being used and how they contribute to business objectives.
These insights then allow for better resource allocation, improved employee satisfaction, and a financial justification for continued investment in your benefits programs.
Next steps
To maximize the ROI of your employee benefits programs, it's essential to focus on data-driven insights, personalized offerings, and clear communication strategies. Additionally, integrating a benefits and total rewards platform can simplify benefits management, allowing organizations to reduce costs while boosting engagement.
For more insights on how to optimize your benefits strategy and increase engagement, download our sponsored Harvard Business Review Analytic Services report: "Boost Competitiveness by Leveraging Global Benefits and Total Rewards."
