How to Measure the ROI of Employee Benefits -and Why It Matters More Than Ever

We’ve all heard it before: “Our people are our greatest asset.” But if that’s true, then why do so many companies still treat employee benefits like a line item instead of a growth strategy?

The truth is, benefits aren’t just about checking boxes for compliance or looking competitive on job postings. They’re a reflection of how much your organization actually values its people, and they can directly impact productivity, retention, and engagement.

The challenge? Most leaders have no real way to measure whether their benefits are paying off.

Let’s fix that.

Start with the “why” behind your benefits

Before you even pull data, ask yourself: what’s the goal of your benefits program?

• Are you trying to reduce turnover?

• Improve morale?

• Attract hard-to-find talent?

• Support employee wellness to reduce absenteeism?

If you don’t know your why, you can’t measure your ROI.

For example, if your goal is retention, you’ll want to measure things like turnover rates before and after new benefits are introduced. If your goal is engagement, you’ll look at participation rates and employee sentiment data instead.

1. Track engagement and utilization

The first metric that matters: are people actually using the benefits you’re offering?

I’ve seen companies spend thousands on “perk” programs that sound great on paper but go untouched because employees don’t even know they exist or don’t find them useful.

Pull usage data from your benefits providers and look at what’s resonating. Maybe your wellness stipend is a hit but your EAP program barely gets used. That’s valuable insight.

If employees aren’t engaging, don’t assume they don’t care—assume they might not understand the value. That’s a communication problem, not a benefit problem.

2. Compare turnover and retention rates

This one’s huge. When you invest in benefits that meet employees’ real needs—like mental health support, childcare assistance, or flexible scheduling—you’ll often see a measurable drop in turnover.

Track your turnover data quarterly or annually and compare it before and after major benefit changes. Even a small decrease in turnover can represent huge savings. Replacing an employee can cost anywhere from 50% to 200% of their annual salary, depending on the role.

If your turnover drops 10% after rolling out new benefits, that’s ROI you can calculate.

3. Link productivity and performance

This is where it gets interesting. Benefits that support well-being tend to boost energy, focus, and collaboration.

To see if that’s happening in your organization, look at KPIs tied to productivity, project completion rates, absenteeism, or even engagement survey results around motivation and burnout.

If your wellness programs, flexible work options, or career development initiatives line up with improvements in these areas, you’re looking at real return.

4. Ask your people directly

You can’t measure ROI without asking the people it’s supposed to impact.

Pulse surveys, stay interviews, and open feedback sessions will tell you what’s working, what’s confusing, and what’s missing. You might find out that employees love the benefits but hate how complicated it is to access them—or that your most valued perk isn’t the one you think it is.

Numbers matter, but context is everything.

5. Calculate and communicate the ROI

Here’s the part most companies skip. Once you have data, actually quantify it.

Let’s say you launched a new benefits program that cost $50,000 and reduced turnover by 5%. If your average cost per turnover event is $20,000, and you saved ten employees from leaving, that’s $200,000 in savings. Subtract your investment, and you’ve got a $150,000 return.

That’s not just a feel-good HR story, that’s a financial win.

And don’t keep that information hidden in an HR report. Share it with leadership, managers, and employees. Let people see that the company’s investment in well-being is working.

6. Keep evolving your strategy

The ROI of benefits isn’t static. What worked three years ago might not resonate today.

Generational needs shift, work-life balance expectations evolve, and life itself gets unpredictable. The key is staying curious, collecting data often, and adjusting based on what your employees actually value.

The bottom line

Measuring ROI isn’t about proving HR’s worth—it’s about proving that your people are worth investing in.

When you treat benefits as a business strategy, not a budget line, you don’t just attract great talent—you keep them, motivate them, and inspire them to do their best work.

At Tallwood, we’ve seen this firsthand: when companies invest in benefits that align with employee needs, engagement goes up, turnover goes down, and the entire culture gets stronger.

If you’re ready to find out what your benefits are really doing for your business, let’s talk.