How Do Employee Benefits Translate Into ROI?

Companies generally acknowledge there is a significant return on investment for employee benefits. Health benefits, for example, reduce absenteeism, which can in turn help increase productivity. The problem is it is difficult to quantify exactly how much the return on investment is because there are many factors that contribute to the outcome.

It’s almost impossible to show how a single factor impacts the overall cost. A company may be able to determine if it is saving money compared to competitors and a cost trend, but it is more difficult to isolate a definite cause for that savings when it comes to benefits, and equally difficult to determine if that savings is improving productivity.

Nevertheless, the difficulty in pinning down exact numbers does not stop company leadership from demanding hard numbers showing the value of company benefits. It is just difficult to produce those numbers. There are so-called benefits ROI calculators, but there too it is difficult to find valid numbers to plug into the calculator.

The bottom line is most human resource professionals firmly believe employee benefits produce engaged, healthy and productive workers, in addition to helping with recruitment and retention. But again, they really cannot prove it.

But the important thing to remember is that even though it may be hard to measure, it does not mean it has no value.

Research on Benefits

Research on benefits has yielded mixed results as well. A 2016 study of health benefits by the Journal of Occupational and Environmental Medicine showed that companies with these benefits had a 235 percent stock gain over six years, compared to 159 percent for companies that did not have these benefits. Another study showed that companies with good wellness programs retained employees better than companies with poor wellness programs. Yet another study showed wellness programs really don’t have that much of an effect on health costs, and it takes five years just to break even.

What is clear, however, is employees value benefits a great deal. In fact, benefits are among the top three things that contribute to job satisfaction, according to employees.

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