Advice

Employee benefits: chances are, you’re not measuring ROI

2 Apr 2019 By Advertising feature

A joint report by LCP and the CIPD has found that only 26 per cent of organisations assess the value of their spend on employee benefits

LCP’s joint report with the CIPD has revealed that only 26 per cent of organisations assess the value of their spend on benefits (including pensions).
 
This suggests that many organisations might just be spending money on benefits because that’s what everyone else is doing. 
 
HR professionals have expressed that they want to begin harnessing data so they can measure the return on investment (ROI) of their benefit spend. However, many of them are not doing this. In some cases, ROI is not being calculated because the time needed to measure the required data is viewed as a cost. 
But it’s up to HR professionals to explain to their board that without ROI you cannot assess whether the benefits you’re offering are helping your organisation.
 
There are many ways that you can measure ROI. The most popular choices are the take-up of staff benefits and employee feedback. 
 
HR professionals need to establish what they want from their benefits –  identifying your organisation’s metrics for value. Existing benefits should then be compared with these objectives and expenditure calculated. 
 
Except for salary sacrifice savings, efficiency and benefits cost-savings, it is often difficult to measure financial ROI. So why not focus on non-financial measures, such as the extent to which your organisation is perceived as an employer of choice?
 
If you want to use data to measure ROI, then you need to be clear about what ‘engaged’ means within your organisation and what data best reflects this. Instead of relying on surveys, you could use production line units or billing hours.
 
ROI measures in this area need to evolve and change over time based on the organisation’s needs and pressures. In this way, they’ll give the board the information they care about: whether benefits are helping to increase profits, improve productivity and make savings.

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