Why employee benefits are becoming essential for NZ business risk management

Employee Benefits as a Strategic Risk Management Tool

Over the past 12 months, through our interactions with clients and business leaders across New Zealand, Lockton People Solutions has observed a significant shift in how organisations are approaching Employee Benefits.

While People and HR teams have historically led purchasing and placement decisions, there is a trend towards greater involvement from senior executives, including CEOs, COOs, and especially CFOs, especially when shaping new Employee Benefit programmes.

This change reflects a broader strategic shift: Employee Benefits are now recognised not only as employee wellbeing initiatives but also as a core risk management strategy with the potential to help support workforce stability and mitigate business continuity risk.

What is driving this change?

Two key forces are converging:

1. A tighter labour market

Hiring has become more costly and time‑consuming. Replacing or backfilling skilled roles takes longer, amplifying the business impact of employee absence.

2. Rising operational risk due to increased absence

Higher absence rates are placing pressure on organisations, especially those already running at capacity.

This challenge is even more apparent across regional New Zealand, where talent attraction is harder, teams are smaller, and individual roles carry broader responsibilities.

In this context, workforce management is no longer simply a HR priority but has also become an enterprise risk issue with direct implications for revenue, reputation, and service performance.

This is driving organisations to view Employee Benefits differently as practical tools to reduce downtime, accelerate access to care, and support faster, safer return‑to‑work outcomes.

But even the best Employee Benefits programme can only deliver value if employees understand it, trust it, and use it.

Which brings us to the next challenge.

Delivering Employee Benefits with impact

A well‑designed Employee Benefits plan on paper does not guarantee strong outcomes in practice.

If employees are unaware of the support available or unsure how to access it, the organisation may never realise the return on its investment.

Low utilisation can also create competitive risk, as organisations that activate their benefit programmes effectively are better positioned to retain key talent and safeguard business continuity.

Communication is the critical enabler

In our experience, communication is often the single most significant factor in determining the effectiveness of an Employee Benefits programme.

When communication is infrequent, overly detailed, or generic, employees can miss key information or disengage altogether.

However, when employees clearly understand what’s available and can access it easily, they are often far more likely to seek help early.

This can lead to shorter periods away from work, improved workforce reliability, and reduced business continuity risk.

Making the most of available services

A “set and forget” approach is another common reason why Employee Benefits underperform.

Once a programme is launched, ongoing activation is essential. Without it, employees may not make full use of the benefits provided.

This is especially important given how much value New Zealand Health and Life Insurers now build into their products.

In recent years, New Zealand Health and Life Insurers have steadily added more practical support services to their products, such as early‑intervention pathways, GP access, mental health help, and everyday wellbeing resources.

These additional services have the potential to improve outcomes materially, but their value is realised only when employees are aware of them and feel supported and confident in using them.

Leaders may dramatically improve utilisation by making access to benefits part of the everyday workflow.

This means ensuring employees know exactly where to find support, giving managers the tools to guide people toward help early, and removing unnecessary steps that slow down or complicate the process.

When access feels intuitive and straightforward, Employee Benefit services can become part of how the organisation works rather than an optional extra, and the benefits flow through to workforce stability and service continuity.

Measurement that guides better decisions

Employee Benefit programmes remain effective only when they remain aligned with both employee needs and organisational priorities.

To achieve this, leaders need a steady flow of insight, not just once a year, but consistently over time.

This means understanding how employees are using the programme, how they feel about the support available to them, and what impact the benefits are having on absence, return‑to‑work outcomes, and overall workforce stability.

Applying this information to adjust programme design, improve communication, and focus investment on benefits with the most significant impact can help ensure Employee Benefits become a reliable and effective element of the organisation’s broader risk‑management framework.

The strategic takeaway

The expanding senior leadership involvement in the decision-making process reflects the reality that an effective Employee Benefits programme is one of the most under-utilised yet powerful risk management tools available to organisations.

When well‑designed, clearly communicated, and integrated into everyday operations, they have the potential to significantly strengthen workforce stability and support consistent service delivery.

If you’d like to explore how Lockton can support your organisation in achieving its risk management objectives through an effective Employee Benefits programme, please get in touch.

The contents of this publication are provided for general information only. Lockton arranges the insurance and is not the insurer. While the content contributors have taken reasonable care in compiling the information presented, we do not warrant that the information is correct. It is not intended to be interpreted as advice on which you should rely and may not necessarily be suitable for you. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication.