Written by Holly Hazelton

Holly Hazelton is a people-focused content and communications leader with more than 10 years of experience supporting HR, benefits, coaching, and people analytics audiences. She has shaped employee experience narratives and content strategies for Workhuman, Crunchr, and AceUp, helping leaders create workplaces where people feel seen, supported, and connected. She also founded a global ERG for working parents, reflecting her belief that human-centered storytelling drives stronger performance and belonging.

Connect with Holly on LinkedIn.

Across organizations, HR, Finance, and Total Rewards leaders continue to face a persistent question: how to evaluate the ROI of employee benefits in a way that feels credible to the business.

When these leaders talk candidly about employee benefits ROI, two important truths surface. First, ROI looks different across companies. Some teams prioritize cost control, others prioritize growth — and each requires a different lens. Second, tying benefits to exact dollar returns is inherently difficult. As one Director of Total Rewards put it, benefits ROI often feels like “fuzzy math,” especially when it’s framed as a precise dollar-for-dollar return.

This guide offers a practical framework for measuring the aspects of employee benefits ROI that are both credible and defensible, grounded in candid conversations the Compt team had with five HR and Total Rewards leaders who navigate these tradeoffs every day.

It is designed specifically for HR and Total Rewards leaders who need to make a clear, Finance-ready case for discretionary perks and lifestyle benefits. No complex tools, advanced modeling, or speculative assumptions required.

Executive summary: Measuring employee benefits ROI

When evaluating employee benefits ROI, focus on:

• Cost efficiency: Reduce vendors and unused spend
• Participation and utilization: Prove employees actually use the benefit
• Operational simplification: Save HR and Payroll teams time and headaches
• Directional business impact: Monitor retention and absenteeism trends

Finance leaders prefer trend data and measurable efficiency over speculative ROI claims.

What is employee benefits ROI?

Employee benefits ROI refers to the measurable business value generated relative to the cost of a benefits program, including cost savings, operational efficiency, participation, and directional workforce outcomes.

For HR practitioners and people leaders, employee benefits play a central role in how supported employees feel at work. According to Gartner, only 45% of employees believe their organization cares about their personal well-being. That means more than half of employees feel burned out, disengaged, or disconnected from company leadership.

The right well-being benefits influence outcomes like retention, productivity, and absenteeism, but those impacts rarely show up as clean line items on a balance sheet. The challenge, then, is translating those outcomes into an ROI story Finance can evaluate with confidence.

How to assess ROI on employee benefits programs

At its core, ROI helps assess whether the money invested in a program appears to deliver business value relative to its cost. HR teams can calculate ROI in two ways: anticipated or actual ROI.

Your basic ROI formula should look like this: 

ROI = (Total benefits – total investment) / total investment × 100

This formula is commonly used across HR initiatives, including benefits programs, but it’s best framed as a directional tool rather than a precise calculation. For this guide, we’ll focus on how to use it to measure employee benefits ROI on stipends and Lifestyle Spending Accounts (LSAs).

What do CFOs care about when it comes to employee perks and benefits?

When CFOs evaluate employee perks and discretionary benefits, they typically focus on five core questions:

1. Cost control: Is spend predictable and defensible?
2. Waste reduction: Are we paying for benefits employees actually use?
3. Operational efficiency: Does this reduce unnecessary vendors, manual processing, or administrative headaches and overhead?
4. Risk exposure: Are tax handling and compliance clear and consistent?
5. Competitive positioning: Does this help us attract and retain talent without escalating costs?

Unlike HR, CFOs rarely evaluate benefits based on sentiment alone. They want to see structured reporting, participation data, utilization rates, and evidence that the program is either replacing existing costs or reducing future risk (such as turnover).

This is why participation, utilization, and vendor consolidation often matter more in ROI conversations than abstract engagement scores.

6 ways to measure the ROI of LSAs and stipends

Wondering which metrics help finance prove ROI when you replace point-solution perks with a single lifestyle benefits wallet?

These six metrics reflect the most practical ways HR and Finance teams assess employee benefits ROI on discretionary perks and lifestyle benefits, ordered from the most concrete and easiest to defend to more directional signals that add context over time.

1. Cost efficiency

Cost efficiency is the most straightforward way to talk about employee benefits ROI with Finance because it aligns well with what they already care about: reducing waste and improving budget predictability.

Look for signs that your lifestyle benefits program helps you:

• Reduce waste from unused perks, breakage, one-off swag purchases, or “set it and forget it” benefits
• Retire underused tools or overlapping vendor programs; consolidate invoices
• Improve budget visibility and forecasting
• Free up HR time for higher-impact work by reducing manual processing and tax guesswork

For many CFOs, predictability matters more than raw cost reduction. A stable, forecastable benefits line item is often preferable to volatile discretionary spend.

You can also quantify time savings from streamlined processes. For example, if your team spends hours each month tracking which benefits are taxable vs. nontaxable, log that time, multiply it by your internal hourly cost, and track the reduction after centralizing administration. That becomes a concrete, defensible ROI input.

What this may look like in practice: 

• Replace 5-12 perk vendors with one clean stipend budget.
• Result: Fewer invoices. One payroll integration. One set of policy rules.
  • CFO summary: Consolidation reduces administrative burden, saves us time, and improves budget predictability.

According to Compt’s 2026 Annual Lifestyle Benefits Benchmark Report, small companies (fewer than 100 employees) invest an average of $1,675 per employee on stipends. That’s more than double what large enterprises spend. This means cost efficiency is even more important for smaller teams.

Once you’ve framed efficiency, the next most CFO-friendly ROI argument is risk: What happens if your benefits fall behind the market?

2. Competitive positioning and benefits FOMO

Competitive positioning is one of the clearest ways to frame employee benefits ROI. If your benefits don’t meet market expectations, the cost shows up fast: roles become harder to fill, fewer candidates accept offers, and you experience higher attrition from previously dedicated employees. 

Beyond this, nothing activates the executive team’s emotional brain more than hearing competitors are outcompeting them, and it often results in swift approvals for your request.

Start by identifying the employers you compete with for the same talent, then compare their benefits offerings against your own package. If they offer benefits that you don’t, pressure-test whether your employees (and candidates) actually care about those perks.

Competitive benchmarks show what candidates expect, while your own employees reveal what truly makes a difference for them.

These patterns also explain why flexible, multicategory benefits like stipends and LSAs tend to outperform narrow, vendor-based perks: they help you stay competitive without constantly adding another tool.

Once you’ve established that a benefit is competitive, Finance will ask the next obvious question: Are employees actually using it?

3. Participation rates

Participation rate reflects how many employees use a benefit in a given time period. It’s often the simplest way to show whether a program is reaching your workforce at all.

To calculate participation, divide the number of employees who used the benefit during a specific period by your total number of employees.

For example:

• 500 employees
• 50 use the benefit each month 
• 50 / 500 = 10% participation

Depending on the benefit you’re reviewing, 10% might be great — but it also might be low. For a benefit like tuition reimbursement, that may be high enough. However, for programs focused on wellness initiatives, it would be considered low. It’s important to keep the specific fringe benefit’s goal in mind, as well as look for industry benchmarks to know if/where there is room for improvement.

Here’s what this may look like before and after LSA launch:

• Participation rate: 32% before LSA launch →  91%+ (Compt benchmark) after. 
• Higher adoption across all demographics and departments.
  • CFO summary: High participation indicates the benefit is relevant and not wasted spend.

Tools to measure participation:

• A simple spreadsheet
• HRIS reimbursement data
• Industry benchmarks for similar employers
• Compt’s Current Team Engagement YTD report, which shows the percentage of employees who have used their stipend at least once this year

Participation tells you who is using the benefit. Utilization tells you whether the money you allocated is actually being spent.

4. Utilization rates 

Utilization rates are most useful for stipends and LSAs because employee spending amounts are fixed. Utilization shows how much of your allocated benefits budget employees actually use.

• Participation = how many employees engage with a benefit
• Utilization = how much of the allocated dollars are actually spent

A simple utilization formula looks like this:

Utilization rate = actual amount spent / total amount available

Example:

• $150,000 allocated for an annual wellness stipend (500 employees × $300 per year)
• $98,000 reimbursed to employees
• $98,000 / $150,000 = 65% utilization

This means employees used 65% of the dollars the company set aside for wellness.

Utilization can also be seasonal or situational. You might find that:

• Wellness categories are consistently used more than narrower perks like tuition reimbursement because they support a wider range of employees.
• Caregiving or family support categories see higher usage during specific seasons.
• Food or commuter categories rise during return-to-office periods.
  • CFO summary: Category spend shows what employees value and how benefits support real-life needs.

Where to find utilization data:

• Manual category tagging
• HRIS exports
• Compt’s Stipend Usage Month Over Month report, which provides a quick snapshot of trends

Once you have participation and utilization, Finance will usually ask for the harder question: what business outcomes do these benefits influence?

5. Business outcomes

Beyond sentiment and usage data, Finance typically looks for signals tied to business performance. Lifestyle benefits can influence outcomes such as absenteeism, retention and turnover, productivity, and performance indicators, but it is important to treat these as directional, not purely attributable.

Start by pulling business metrics you likely already track, including:

• Absenteeism trends
• Turnover and retention rates
• Performance and pulse survey results
• One-on-one manager feedback and recurring performance review themes
• Team-level productivity indicators your organization already uses

The goal is not to claim a single benefit caused a specific outcome. Instead, connect the dots between usage, employee feedback, and directional movement in the metrics that matter to your business.

Directional patterns HR teams sometimes observe:

• Customer Support turnover: 18% before launch → 12% after launch. 
• Engineering turnover: 9% before launch → 6% after launch.
• Greatest improvements among caregivers and early career talent (demographic insights).
  • CFO summary: If retention improves among high-cost roles, replacement costs may decrease over time.*

*While these are great numbers to have available, keep in mind that some CFOs might consider them fuzzy math. Factors that can impact turnover vary widely, from improved manager training to greater clarity on company goals to the company simply performing better.

That said, even when benefits influence these outcomes, Finance still needs to understand whether the program is efficient relative to its cost. This is why participation, utilization, and cost efficiency should sit at the center of your ROI story.

Finally, layer in engagement data to add context: it helps explain why participation and outcomes may be moving.

6. Employee engagement

Employee engagement is one of the most common metrics leaders review when evaluating benefits, but it is best used as supporting evidence rather than the foundation of your ROI story. Engagement data can strengthen your narrative when it aligns with participation, utilization, and cost efficiency trends.

Here’s a simple way to measure it:

• Pull a baseline engagement score from your HRIS or quarterly employee surveys (e.g., eNPS).
• Add a simple pulse-check question to your next survey (e.g., “Do you feel supported by our fringe/discretionary/perks benefits?”).
• Compare before-and-after results following the launch of your LSA.
• Look for trends across teams or demographics.
• Review related metrics, such as retention and turnover rates, and use exit feedback to understand what’s driving employee departures. 

If you see an engagement lift after launching a lifestyle stipend or LSA, call it out as a corroborating signal — especially when it matches what you see in participation and utilization.

What an engagement shift may look like:

• Pulse survey question: “Do you feel supported by our benefits?”
  • Pre-LSA responses: 46% yes
  • Six months after launch: 72% yes
    • CFO summary: Higher engagement signals stronger productivity, morale, and day-to-day performance.

Of course, you can track any of these metrics manually in Excel, but you can save a tremendous amount of admin time and headaches by simplifying these processes in a single system like Compt. 

Curious about how to use this type of data to evaluate the effectiveness of your benefits? Check out the Compt guide, “When to Reevaluate Your Employee Benefits: 6 Signs Your Program Needs a Refresh.”

Which benefit categories see the highest ROI?

The employee benefits categories that see the highest ROI are those that combine broad participation, predictable spend, and measurable operational efficiency.

In Compt’s 2026 benchmark data, all-inclusive LSAs reached 91%+ participation across customer programs — significantly higher than most single-category vendor perks.

Not all employee benefits deliver the same measurable impact. Some categories consistently outperform others by driving higher participation, more efficient spend, and clearer links to business outcomes. These high-ROI categories have one thing in common: they support real-life needs, not one-size-fits-all perks.

Learn more in our:

• What Is a Lifestyle Spending Account (LSA)? 2026 Employee Benefits Guide
• Ultimate List of Employee Stipend Statistics (2026): Adoption, Funding, Participation, and Usage
• 2026 Annual Lifestyle Benefits Benchmark Report

Why these categories outperform one-size-fits-all vendors

High-ROI benefits categories tend to share three traits:

1. Flexibility: More employees can use them.
2. Relevance: They solve immediate, real-life needs.
3. Ease of use: Low friction makes participation more likely.

Because no two employees are the same, flexible lifestyle benefits tend to deliver stronger and more measurable ROI than narrow, vendor-based perks.

From a Finance perspective, these categories outperform others because they reduce waste, consolidate vendors, and make participation and spend easy to track.

When low usage signals it’s time to consolidate perks

Utilization data doesn’t just show what’s working — it also highlights when a benefits strategy needs to change. Low usage is one of the clearest indicators that it’s time to move toward a unified LSA or multicategory stipend. When employees barely touch their perks, it often signals a deeper disconnect between benefits design and employee needs.

What low usage usually means:

• Misalignment: The perk doesn’t reflect employee needs or values.
• Waste: Dollars sit unused quarter after quarter.
• Platform fatigue: Too many tools and hoops to jump through.
• Admin drag: HR maintains multiple vendors with limited impact.
• Opaque data: Finance lacks clear visibility into usage and spend.

By centralizing all lifestyle perks into one predictable line item, HR can reduce waste and simplify its benefits structure. According to Compt’s 2026 Annual Benchmark Report, 64% of companies now offer all-inclusive LSAs for these reasons: to reduce vendor sprawl, increase utilization, and simplify reporting.

With this model, usage rises (Compt customers average 91%+ participation), spend becomes more predictable, and Finance gains a more centralized view of participation, investment, and category-level usage.

How Compt makes employee benefits ROI easier to see

Measuring employee benefits ROI can be simple. When you focus on the fundamentals like cost efficiency, competitive positioning, participation, utilization, business impact, and engagement, you get a clear view of what is working and what employees genuinely value. 

LSAs naturally make participation and cost efficiency easier to track. Compt simplifies this further by centralizing reporting, reducing manual work, and improving visibility into how employees use their stipends. HR leaders can then use platform insights (such as participation, category-level usage, and the simple fact of having all your lifestyle benefits in one place) to support ROI conversations with Finance.

Ready to see how this looks in practice? Request a Compt demo today.

FAQs: ROI of lifestyle benefits and discretionary perks 

Below are the most common questions CFOs and HR leaders ask when evaluating employee benefits ROI.