The untapped ROI of workplace benefits: Why it’s worth the investment

 

Written in partnership with YFS Magazine.

 

Small businesses can overcome limited budgets with strategic benefits. Instead of being just an expense, a wise investment in benefits delivers hiring advantages, reduces turnover, boosts productivity, supports financial well-being for both employees and employers, and may deliver tax advantages to your business’ bottom line.

 

Measuring the ROI of workplace benefits can be complex, with no universal formula. The key is aligning benefits with business goals, encouraging ongoing participation, and tracking results to maximize value.

 

This article examines how carefully planned benefits can strengthen your bottom line, providing practical ways to turn benefits into tools for small business growth.

 

With an effective strategy, benefits can solve challenges and elevate small businesses. Recent data from Bank of America notes that 1 in 4 workers would consider leaving due to poor benefits. Competitive offerings help small companies cut costly turnover and inefficiency.

 

Many businesses view benefits as a necessity, but Mircea Dima, CEO of AlgoCademy, realized their ROI after losing employees to companies with better perks. By adding health insurance, professional development budgets, and flexible PTO, he cut turnover significantly:

 

“It is costing us $35,000 to replace a software engineer in recruitment, onboarding, and lost productivity. The total benefits package we have at present is $8,400 a year per employee. The mathematics is simple.” His experience highlights long-term savings and a competitive edge. “Our benefits program has […] become our most powerful recruiting tool that has enabled us to [compete] with companies that offer a 20 percent upper base salary,” he explains. Dima stresses that benefits should be part of the “total cost of ownership.”

 

Stephanie Heathman, CEO of The HR Innovator Group, states, “The truth is that turnover is far more expensive than thoughtfully designed benefits.”

 

Recruiting and onboarding sometimes run up to 30% of salary costs. Lisa Cummings, EVP at Cummings & Cummings Law, shares, “A well-structured retirement plan and health coverage package reduces turnover, which directly lowers recruiting and onboarding costs that can easily reach 20 to 30 percent of an employee’s annual salary. That savings flows straight to the bottom line and allows capital to be reinvested in growth initiatives.”

 

Focusing on retention, Maurina Venturelli, Head of Go-to-Market at OpStart, says, “Replacing a $75K employee costs about $45K in recruitment, training, and productivity loss. Our 401(k) costs us $2,400 per employee annually. That’s a 19x return just on retention, before counting the productivity gains from people who actually want to be there.”

 

Key takeaways:

• Strategic benefits reduce turnover and hiring costs.
• They boost retention and engagement.
• A strong program makes the workforce more stable and motivated.

 

Designed well, workplace benefits can boost ROI, cut costs, and support team performance.

 

Smart benefits programs go beyond saving costs—they help your company grow, attract stronger candidates, and drive innovation. Benefits should reflect what employees truly value.

 

Regular evaluation keeps benefits relevant and effective. Rather than investing in less-used perks, shift resources as needs change.

 

Yaniv Masjedi, CMO at Nextiva, advocates a data-driven approach: “We reallocated funds from underused benefits to professional development reimbursements tied to critical skill sets and succession planning. This data-driven shift led to a 27% drop in turnover for key roles, an 18% increase in internal promotions, and a 22% rise in employee engagement—all driving measurable productivity gains within the same year.”

 

Sara Green-Hamann, CEO of Tallwood Human Resources Consulting, advises, “The key to increasing ROI for small businesses with small budgets is to focus on benefits that meet employees’ real needs and not the needs employers think the employees want or need, while reducing hidden costs such as absenteeism, engagement, and turnover.”

 

Travis Bloomfield, CEO of Provisio Partners, took this approach: “We give employees $2,000 annually for Salesforce certifications and training. This costs us roughly 40% less than comparable health stipends, but the impact is measurable: certified employees bill 23% higher rates and stay 18 months longer on average.”

 

Strategies to maximize value:

• Align benefits with company goals: Match offerings to business and employee priorities.
• Support skill growth: Invest in benefits that help employees gain critical skills.
• Measure participation: Track usage data and adjust programs accordingly.
• Invest for highest impact: Focus on benefits that promote retention and engagement.

 

Communication matters—if employees aren’t aware or don’t understand their options, even great benefits won’t drive value. Programs must be simple and accessible.

 

High-quality workplace benefits don’t have to be expensive. Small investments with the right approach can deliver much greater returns.

 

Eryk Piatkowski, owner of Kitchen & Bath Direct, shares, “We switched from traditional health insurance to a high-deductible plan with HSA matching three years ago, cutting our premium costs by 35% while actually improving employee satisfaction.” By contributing $1,200 to tax-free HSAs and saving $2,800 on premiums, the company saved $1,600 annually per employee while helping staff build savings.

 

Solutions like HSAs and professional development reimbursements lower costs and boost satisfaction at the same time.

 

Modernizing benefits transforms them from overhead to a true business investment. Mina Daryoushfar, CEO at Rug Source, put a profit-sharing model in place for key roles: “By transitioning key roles to profit-sharing positions, we not only improved customer satisfaction from 87% to 94% in just eight months but also reduced our return rate by half, saving over $35,000 annually in combined costs and efficiencies.”

 

Tax incentives, such as those from the SECURE 2.0 Act, offer even more value. Maurina Venturelli, Head of GTM at OpStart, notes, “We helped a 30-person startup calculate $23,000 in potential credits, turning their benefits program into a profit center rather than just an expense.”

 

With the right plan, benefits don’t just support employees—they become transformative for business health.

 

Workplace benefits are an investment in your team and your business’s long-term success. Are your benefits working as hard as your team? By aligning programs with company objectives and encouraging participation, you unlock their full potential.

 

Regular review and adjustment ensures continued impact. With this approach, you’ll create benefits that retain talent, boost productivity, and help your small business thrive. Now is the time to evaluate your benefits program and unlock its potential.