The conversation around employee benefits has shifted. Three or four years ago, businesses prioritized aggressive growth at all costs. Now, leaders know that’s not what they—or investors—want. Companies are no longer throwing money at perks. Instead, they’re reassessing their investments to ensure maximum value for both employees and the organization. The focus is on sustainable growth, operational efficiency, and getting the most out of every dollar spent to benefit both the employees and the business.

Newfront works with companies every day to solve these challenges. Here’s the strategic guidance we share with people leaders looking to optimize their benefits budget.

Evaluating the ROI for Benefits

I often advise Newfront clients to start by evaluating the return on investment (ROI) of their benefits packages. Are employees actually using these programs, and are they delivering measurable value? A simple utilization report can help reveal whether a benefit is worth the spend. From there, the decision is straightforward. If the program is working, optimize it. If it’s not, cut it and replace it with something more impactful.

Traditional employee engagement surveys offer important insights, but a data-driven, real-time approach can be even more effective. What are employees (and their data) already telling you? Is your tech stack capturing the right signals in terms of utilization, relevance, ease of use, and quality? At Newfront, our AI-powered benefits assistant, Benji, continuously gathers and surfaces employee feedback, including data on what issues employees and their families are facing, helping leaders pinpoint whether their benefits program is working as intended.

The Role of Benchmarking
Benchmarking is essential, but it’s not just about collecting data. It’s about interpreting that data in the right context. Benefits decisions can’t be made with a broad brush. Different industries—and even segments within industries—face vastly different economic realities. For example, in tech, AI companies may be aggressively investing in benefits to attract talent, while many older tech organizations are being more cautious with spend. The right strategy depends on your specific cycle, market, workforce, and business goals.

Instead of evaluating benefits in silos, consider total rewards as a single cost structure. Compensation, benefits, and retirement contributions all factor into the bigger picture. At Newfront, we advise clients to analyze their total rewards holistically, using benchmarks to inform smarter, more strategic decisions. One way to do that is through tools like Pave, which gives organizations a clear view of total rewards market intelligence across benefits and compensation.

Tackling Underutilization
During the evaluation process, people leaders may uncover underutilized benefits—programs employees don’t know about, don’t see as relevant, or have difficulty accessing. When that happens, it’s time to reassess communication strategies. Are employees aware of what’s available? Do they have a clear path to utilization and assurance that it will provide the support they need?

Beyond communication, this is also an opportunity to rethink the “one-size-fits-all” approach to benefits offerings. Some companies do best with major carriers, but need to double down on employee education. Others may find unbundling benefits and offering more tailored options makes the most sense. With that said, the increased flexibility means more oversight, management, and government, so the trade-offs must be carefully weighed.

Point Solutions and Self-Funding: When They Help and When They Hinder
Organizations may also identify gaps in their benefits offerings. For some, point solutions can address that, providing specialized resources for unique employee needs. However, point solutions shouldn’t be considered a silver bullet.

When do point solutions make sense? If a carrier’s offering falls short—such as carriers who provide inadequate mental health coverage—organizations may see better outcomes by layering in a more focused solution. However, in recent years, over-reliance on these vendors has complicated the employee benefits landscape. Many organizations went all-in on point solutions, thinking customization was the best (or only) answer. In reality, true success comes from integrating benefits into a unified experience for the employer and employee.

Likewise, self-funding, a benefits strategy where employers pay for their employee healthcare costs directly, has been on the rise as companies seek flexibility and cost savings. But while some employers save money with this approach, there’s no guarantee. Even for companies willing to take on the risk of self-funding, the potential advantages come with tradeoffs, as it does for point solutions. Companies considering this route must understand what they’re taking on. Unbundled arrangements require careful oversight, infrastructure, and active management. 

Self-Funding Case Studies

• Newfront saved a publicly-held client 24% ($1M annually) by transitioning to self-funding while still enhancing coverage by adding a new infertility benefit to the plan. Read the full case study for details.

• Think only large employers benefit from self-funding? Think again. For a California tech company with around 300 employees, Newfront identified high dialysis costs and implemented a targeted solution, saving more than $200K annually—8% of their medical claims. Read the full case study for details.

Making a Case to the C-suite about Changes
At Newfront, we often spend months working with people teams to develop the right strategy for optimizing benefits. Then, people leaders get just 45 minutes to present their findings and recommendations to the C-suite.

Therefore, simplifying recommendations and proving the path forward is key. Remember that you have to go back to first base to explain the journey. With that in mind, start early, define your rigorous process, and then document and pull out the best pieces. Simplify recommendations, back them with strong data, and focus on the path forward—this makes decisions easy for leadership.

In Summary
As we look to the rest of 2025 and beyond, it’s clear that benefits strategies must balance cost efficiency with employee experience. Companies that take a data-backed, holistic approach will position themselves for success. Now is the time to reassess, consolidate where it makes sense, and ensure your benefits program aligns with both financial realities and your workforce’s needs.