When it comes to employee benefits, the latest research reveals that HR leaders struggle to gain buy-in from executive and finance departments. It’s safe to assume that when there are budget constraints or economic uncertainty, investing in employee benefits and wellness initiatives is often not prioritized. However, such investments can have a very positive ROI.
A lot of HR leaders feel like their finance team is a barrier to implementing the right benefits, typically due to tight budgets and lack of a clear investment thesis or ROI.
"As CFO at Dialogue, I look for a few key things in a benefits or well-being provider for our workforce."
What employee benefits can help us attract and retain more talent?
As a fast-growing company, Dialogue is constantly recruiting new talent. Costs of recruitment can be high, especially in tight labour markets and for top talent. As a management team, we look at how we can make Dialogue more attractive.
Offering competitive benefits that employees care about helps our talent and culture team recruit new members, and reduces our recruitment costs. Similarly, offering benefits can help retain our talent by addressing their well-being needs and fostering a positive well-being culture. This, in turn, reduces recruitment costs that would have otherwise arisen if employee retention were weaker.
Can a benefit program help reduce other costs in the organization?
Absenteeism has significant repercussions on productivity and workforce management. When employees need to constantly take sick days, are less productive due to mental or physical health issues, or take leaves of absence for health reasons, the costs (both direct and indirect) related to these are enormous. In fact, 45% of disability costs are related to mental health concerns.
Providing the right benefits can help support employee health, reducing some of these costs and creating significant ROI. In other words, in addition to looking at the cost of the benefit itself, I also consider the cost of not providing the benefit, as investing in the right employee benefits can help reduce costs elsewhere in the business.
What do I look for when HR teams propose a new well-being investment?
To realize the full potential of a benefit program and reduce the costs mentioned above, the benefit needs to be something that employees will value and use. Unless employees use the benefit, it’s just an additional cost.
For a benefit to generate a good ROI, it has to be something that is easy for employees to use and well communicated. I look for evidence that employees will actually use the benefit when making investment decisions.
Why should finance leaders care about employee well-being?
When employees are healthy, they are more likely to be productive and engaged in their work. This can lead to increased efficiency and output. Dialogue prides itself on its ability to be agile. If employees are not productive due to mental or physical health concerns, it can slow the pace of execution, and significantly impact our ability to deliver on our objectives. Improving employee well-being helps us ensure maximum business performance.
Employee turnover is a significant expense, both in terms of lost productivity and recruitment costs. Companies that prioritize employee well-being are likely to have lower turnover rates. When employees feel valued and supported, they are more likely to stay with the company for the long term. This can save the company recruitment and training costs.
Lower healthcare costs
The financial impact of sick employees extends to direct expenses like sick pay and productivity loss, as well as indirect costs such as increased healthcare premiums and administrative expenses. Measuring ROI for wellness programs involves tracking reduced absenteeism, analyzing healthcare claims data, and considering cost savings from avoiding long-term disability leaves.
These investments yield benefits beyond healthcare cost reduction, including improved productivity, employee retention, and organizational performance. For instance, even saving one employee from going on long-term disability leave or shortening their leave duration can lead to significant savings.
How can finance leaders support employee well-being?
Budget for employee benefits
They should allocate sufficient funds to cover benefits such as health insurance, retirement plans, and wellness programs. Often, these investments can be self-funding and budget-neutral over time as they reduce costs elsewhere in the business (reduced absenteeism, reduced presenteeism, better productivity, reduced recruitment costs, etc.)
Conduct cost-benefit analysis
This analysis can help determine ROI and justify the cost of the benefits, and show their impact on the company's bottom line. Ask your HR department and benefits providers for measures of outcomes from investments in these programs.
Collaborate with HR
This ensures that employee benefits are aligned with the company's strategic goals and budget. They should collaborate on the design and implementation of benefit programs, and regularly evaluate their effectiveness.
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