Why employee benefits can’t be put on the backburner

Avantus takes a look at how reward leaders can make the business case for maintaining benefits in the face of tightening budgets.

If costs are increasing, it can feel like a prudent move to press pause on employee benefits. Budgets are tight, priorities are shifting and leadership teams are under pressure to manage cost and risk. But when benefits are delayed or deprioritised, the impact on the business often emerges quicker and more quietly than expected.

For reward leaders, this presents a familiar challenge. Early warning signs around engagement, wellbeing and retention are often visible long before they appear in financial results.

The issue is not identifying the risk but translating those signals into a case for action that resonates at executive level.

Employee benefits now sit at the centre of attraction, retention and workforce wellbeing. When decisions are postponed, organisations do not stand still, they fall behind.

Here is how reward leaders can make a clear, credible case for keeping benefits on the leadership agenda:

1. Make the risk visible

Employee expectations continue to evolve, regardless of economic pressure on their employer. With the cost of living still high and wellbeing firmly in focus, employees are reassessing what they need from work now, not next year.

Research shows that 89% of employers believe expectations of the workplace experience are changing, and 94% believe they have a responsibility to support employee health and wellbeing through benefits.

When benefits feel outdated, difficult to access or poorly communicated, engagement softens, loyalty weakens and attrition risk increases, eroding trust over time.
Reward takeaway: Benefits should be treated as a current business risk, not a future “nice to have”.

2. Show the real cost of attrition

Retention is one of the most expensive and disruptive challenges organisations face. In most cases, the cost of replacing experienced employees far exceeds the cost of strengthening their benefits.

UK employers typically invest around £4,000-£8,000 per employee each year on benefits beyond salary. By contrast, replacement costs are estimated at 30% of salary at a minimum, rising to as much as 200% for high performers. With the average UK salary at £37,400, this equates to £11,200-£74,900 per employee.

When pay growth is constrained, this gap becomes more critical.

Benefits are often one of the few remaining levers available to support employees through financial pressure, health concerns, caring responsibilities and changing life stages. Yet only around 54% of UK employees say they are satisfied with their benefits, and around one-third considered changing jobs in 2024, often citing flexibility and support as deciding factors.

Reward takeaway: Position benefits as a cost-control and retention lever, not a discretionary wellbeing initiative.

3. Protect competitiveness

The benefits market is moving quickly. In 2024, 77% of UK SMEs planned to review or overhaul their benefits to attract and retain talent and respond to economic pressure.

Candidates increasingly assess benefits alongside pay. Employers with rigid, outdated or poorly articulated offerings struggle to differentiate themselves in competitive skills markets.

Reward takeaway: Benefits are a core component of the employer value proposition. Delay increases recruitment cost and time-to-hire.

4. Improve financial control

This is often where conversations stall, when benefits meets finance.

Benefits are frequently viewed as a fixed or escalating cost. In practice, a more strategic approach can improve control.

Targeted benefit structures allow entitlement to vary by employee group, avoiding blanket provision and unnecessary spend. Clear governance reduces confusion and underutilisation, while predictable cost frameworks give finance teams greater confidence.

For finance leaders, this can mean:

More predictable monthly spend
Clearer entitlement control
Reduced waste from unused benefits
Flexibility as priorities change

Reward takeaway: Benefits should be positioned as a controllable investment, not an open-ended expense.

5. Act early to protect ROI

Benefits introduced reactively, in response to rising attrition, disengagement or burnout, rarely deliver full return on investment. Proactive decisions build credibility and consistency.

At the same time, even well-designed benefits underperform when employees do not understand or engage with them. Visibility and clarity often deliver greater impact than simply adding new options.

Reward takeaway: Early action and effective communication typically deliver stronger value at lower cost.

Reduce risk without overcommitting

When leaders are hesitant about investing in benefits, it is important to stress that progress does not require wholesale change. Instead, it depends on putting the right structure in place.

Early action can focus on reviewing existing provision with better data, identifying low-cost improvements, introducing flexibility where it will have most impact, and using technology to improve oversight and reduce manual effort. Taken together, these steps allow organisations to move forward in a controlled, low-risk way and avoid more significant issues later.

Six points reward leaders should reinforce to the decision makers in their organisations:

Inaction carries risk: Postponing decisions increases exposure to attrition, disengagement and loss of competitiveness.
Retention is a financial consideration: The cost of replacing experienced employees typically outweighs the cost of improving or refining benefits.
The market will not wait: Competitors continue to evolve their benefits offerings, widening the gap for those that delay.
Stronger benefits do not mean higher spend: With the right framework, benefits can be targeted, adjusted and governed more effectively.
Timing influences return on investment: Proactive decisions tend to deliver greater value than reactive responses made under pressure.
Understanding drives impact: Improving how benefits are communicated and accessed often delivers more value than introducing additional benefits.

Reframing benefits

In a sustained period of cost pressure, employee benefits are often treated as discretionary. In reality, they are central to managing retention risk, recruitment cost and productivity.

For reward leaders, the priority is reframing benefits in commercial terms and acting early. Incremental, well-governed decisions typically deliver stronger value than reactive intervention later.