How to calculate a return on employee benefits | Incentive&Motivation

How to calculate a return on employee benefits | Incentive&Motivation

How to calculate a return on employee benefits How much does it cost to provide employee benefits and how do you calculate a return on employee

How to calculate a return on employee benefits

How much does it cost to provide employee benefits and how do you calculate a return on employee benefits when you’re busy? Do employee benefits ‘work’? And how do you know whether to keep doing what you’re doing?

It’s these questions your MD no doubt asks regularly when they have a bee in their bonnet. And any rewards manager worth their salt wants a snappy answer that veers away from vagaries. But how can you calculate a return on employee benefits efficiently?  Whilst you see the tangible benefits. happy employees, fewer exit interviews, it’s hard to get a number on it. On top of that pressure, it’s not just a HR focus anymore.
“With total pay falling in real terms, employers and employees up and down the country are feeling the squeeze. Employee benefits are no longer just an HR focus, they’re a business imperative.” – Mark Scanlon, Chief Executive Officer of Personal Group

If you’re a small business, it’s critical to include the costs of benefits in addition to the base pay rate for accurate costing. Employee benefits – sometimes called fringe benefits – such as medical, dental and vision insurance, premiums, training and tuition reimbursement, life insurance contributions and other company-paid perks all add up.

Methods of calculating the ROI of employee benefits

1. Retention
Apart from reduced absences, it is repeatedly shown that companies recognised for the standard of their employee benefits packages enjoy a lower rate of voluntary staff turnover. In many fields of business and industry at this time, this becomes an increasingly important factor. Businesses have recently been citing difficulties in finding suitable candidates to fill vacancies where specific skill sets are required across a range of different manufacturing, industrial, care and other workplaces. The return on investment of simply holding on to talented and skilful individuals is now a marker of note.

2. NPS

There’s the NPS and the eNPS. (Note – we did ask the founders of the eNPS for an interview – but they were very elusive and then declined! Please send flowers and tissues!) However, in the interests of passing on useful tips – rolling out the classic ‘would you recommend working here to your best friend?’ question could bring back some ROI stats in terms of your ability to impress your employees.  Whether you go digital with an app or look at an Employee Satisfaction Survey in a more traditional sense, it can be a great way to measure a return.
3. Employee benefits calculators
When you want to calculate – turn to the data. That might not be ‘tit for tat’. As Steven Parish says:
Rather than ask, what is the “return on equity” from a particular benefit, shouldn’t the question be, what is the “return on employee”? It’s not a return on an investment; it’s a return on an individual

A great reminder for us all. But when it comes to actual figures to calculate a return on employee benefits- you might want to turn to Personal Group, a leading employee benefits provider which recently launched a brand new, one of a kind employee services ROI calculator on its website which calculates how much money a company and its employees can save by implementing a best-in-kind employee services programme. Personal Group are indeed vested in employee benefits working – their own research shows that an employee benefits platform could save a company with 1000 employees more than £125,000 per year – but when the figures are there in the cold light of day (accounted for using retention rate, absence rate and employee volume) you get a clear figure of Total Annual Savings you could be making,

This is a great bit of kit for business leaders and shows businesses how much their individual employees can save, as well as the impact that implementing an employee benefits programme will have on recruitment, retention, absenteeism and productivity. Together, this will allow management to make an informed decision which is best for both the business and staff. Try it out today: www.personalgroup.com/roi-calculator

 4. Internal savings

As well as proving the effects on employees, when you need to calculate a return on employee benefits why not try and show benefits internally? You might have reduced admin load. Perhaps you have more insight using the platform on spending habits. Maybe your learnings on email marketing internally have influenced your external marketing team. Controlling costs, reducing risks or making improvements on your previous benefits packages are all valuable and worthwhile goals.

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Incentive and Motivation offers the latest news in employee benefits, rewards, incentive programmes and recognition. Discover the best employee engagement platforms, learn about communicating your incentives or the latest tech in the HR space.

 

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