Employee benefits play an important role in attracting and retaining talent. Whether it's private healthcare, flexible working arrangements, wellbeing allowances or extra annual leave, benefits help shape how people feel about working for your organisation.
However, while many businesses spend considerable time deciding which benefits to introduce, fewer think carefully about what happens if they need to take them away. In the current climate of rising costs and tighter budgets, that question is becoming increasingly important.
Why Taking Benefits Away Feels Different
From an employee's perspective, a benefit often stops feeling like a perk after a while and starts feeling like part of the overall employment package.
That's why removing a benefit can feel very different from never offering it in the first place. Even if the financial value is relatively small, employees may view the decision as a reduction in what they receive from their employer.
Psychologists often refer to this as "loss aversion" - people tend to feel the pain of losing something more strongly than the satisfaction of gaining it in the first place. In the workplace, that can translate into disappointment, frustration and reduced trust.
The Hidden Cost of Cost-Cutting
Many organisations are currently reviewing benefits as part of wider cost-control measures. Private medical insurance is one example. On paper, removing it may generate substantial savings.
The challenge is that employers rarely see the full impact immediately.
Most employees won't openly complain. There may be a few conversations around the office, some comments on internal channels and a period of adjustment. From a leadership perspective, it can be tempting to conclude that the change has been accepted.
But that doesn't mean there has been no damage.
Employees often process these decisions quietly. They may feel less valued, become less engaged or start questioning the organisation's commitment to its people. Some may decide to explore future opportunities once the market improves, even if they remain somewhat visibly productive in the short term.
The KPMG Example
A recent example comes from KPMG, which has announced it is removing its popular "summer Friday" benefit. The initiative allowed many employees to finish work at lunchtime on Fridays during the summer months.
The decision reportedly generated disappointment among staff, particularly because the benefit had become a valued part of working life. While business leaders may have legitimate reasons for making such changes, the reaction highlights how quickly a well-established benefit can become embedded in employee expectations.
The lesson is not necessarily that benefits should never be removed. Rather, it demonstrates how carefully these decisions need to be managed and communicated.
Think Long-Term Before Introducing New Benefits
Before launching a new employee benefit, it's worth asking a simple question: could you realistically maintain this for the next three to five years? If the answer is uncertain, it may be better to introduce something more modest but sustainable. Employees generally value consistency.
Consider your ‘perk exit strategy’ – how will you remove this benefit in due course, if you need to? What could be offered in its place? How can you communicate it effectively? Can a time limit be applied up front, so employees never assimilate it into their long-term package psychologically?
Benefits Are About Trust as Much as Value
Ultimately, employee benefits are about more than money. They are signals about how an organisation values its people.
When a benefit is removed, employees often interpret that decision through the lens of trust, culture and leadership rather than simply financial value.
Organisations need to take a long-term, strategic approach to employee benefits from before they are introduced and throughout their lifespan, to enable engaged and motivated teams.
Work with us to build workplace strategies that support long-term retention and engagement.