By Jennifer Schaefer, MBA, ChFC, CLU, RHU, REBC, SHRM-SCP
Founder & CEO, JS Benefits Group | Forbes Business Council Contributor | Co-Host, Executive Leaders Radio
Growing a business requires constant attention to revenue, profitability, talent acquisition, and operational efficiency. CEOs monitor financial performance, evaluate new opportunities, and make decisions designed to position their companies for long-term success.
But there is one area that can quietly fall behind as a company expands: its employee benefits strategy.
A benefits program that worked well when a business had 40 employees may no longer make sense when the workforce reaches 150 or 300. The company’s financial resources have changed. Its workforce has evolved. Employee expectations may be different, and healthcare costs may have become a much larger expense.
Yet many employers continue using the same benefits structure they established years earlier.
The problem isn’t necessarily that their benefits are inadequate. It is that the strategy may no longer reflect the business they have become.
Growth Changes What Employees Need
When a company is small, benefits decisions are often relatively straightforward. Leadership may know employees personally, understand their immediate needs, and make decisions quickly.
As the organization grows, that changes.
Employees may represent multiple generations, different family structures, and varying healthcare needs. Some may prioritize lower payroll deductions, while others may place greater importance on provider networks, prescription coverage, or predictable out-of-pocket expenses.
A single benefits approach may not serve everyone equally well.
This creates an important challenge for leadership: How can an employer provide meaningful benefits without allowing costs to grow beyond what the business can sustainably support?
The answer starts with understanding the workforce rather than simply renewing the existing insurance plan.
Employers should periodically evaluate whether their current coverage, contribution structure, and available plan options remain appropriate for their employees.
A thoughtful employee benefits strategy connects those decisions to the company’s financial objectives, workforce needs, and long-term growth plans.
The goal is not to add benefits simply because the organization has grown. It is to make sure the benefits investment continues to deliver value.
The Cost of Keeping the Same Strategy
One of the most common mistakes growing companies make is assuming that the benefits program that worked last year will continue to work next year.
That assumption can become expensive.
Healthcare costs change. Employee demographics evolve. Insurance markets shift. A company’s financial priorities may also look very different after several years of growth.
When employers fail to reevaluate their programs, they may continue paying for a structure that no longer fits their circumstances.
Consider a company that has grown from 60 employees to 200. Its original health plan may have been selected because it was simple to administer and offered predictable premiums.
Those considerations still matter.
However, leadership should now be asking additional questions.
Has the company’s claims experience changed? Are employees satisfied with their coverage? Is the current plan design competitive? Are employer contributions sustainable? Are there other funding arrangements worth evaluating?
Without those conversations, the organization may be making a significant financial commitment based on decisions made when the business was much smaller.
Growth should trigger a fresh evaluation, not an automatic continuation of the status quo.
Healthcare Costs Require More Than Budgeting
Healthcare is a major expense for many employers, and managing it effectively requires more than setting an annual budget.
Leadership needs to understand what is driving spending and whether the current approach remains appropriate.
A renewal increase is one piece of information. It does not necessarily explain the underlying reasons for the increase or identify the best response.
Depending on the employer’s circumstances, relevant considerations may include claims experience, prescription spending, plan design, employee contributions, provider networks, and administrative expenses.
Employers should also understand the relationship between healthcare spending and the overall compensation package.
Reducing employer costs by shifting too much expense to employees may create affordability problems. On the other hand, continuing to absorb every increase without evaluating alternatives can put unnecessary pressure on the company’s finances.
Neither approach should be automatic.
Effective healthcare cost management requires employers to examine the available information, understand the tradeoffs, and make decisions that support both financial sustainability and employee needs.
That process should happen throughout the year rather than being compressed into the weeks before a renewal deadline.
Reevaluate How the Health Plan Is Funded
Another consideration for growing businesses is whether their existing health insurance funding arrangement still makes sense.
Many employers begin with fully insured coverage because it offers a familiar structure and predictable monthly premiums.
That may remain the right choice as the company grows.
However, some employers may benefit from evaluating alternative arrangements, including level-funded or self-funded health plans.
These approaches have different financial structures, risks, and administrative considerations. Their suitability depends on factors such as the employer’s size, claims experience, financial resources, risk tolerance, and available plan options.
There is no universal solution, and an alternative funding arrangement should never be selected simply because another company uses it.
The important point is that growing employers should understand their options.
A company that has expanded significantly since its original health plan was established may have opportunities worth exploring. Alternatively, its circumstances may make the existing arrangement the most appropriate choice.
The decision should be based on a careful evaluation rather than habit.
Benefits Are Part of the Employee Value Proposition
Financial considerations are only one side of the equation.
Employee benefits also influence how people perceive their employer.
Companies invest considerable resources in recruiting and retaining talented employees. Compensation matters, but employees also consider health coverage, retirement benefits, paid time off, workplace flexibility, and the overall experience of working for an organization.
As companies grow, maintaining a competitive employee experience becomes increasingly important.
A benefits package does not have to be the most expensive in the market to be effective. It does, however, need to make sense for the workforce it serves.
Employees should be able to understand their coverage, evaluate their options, and access the information they need to make informed decisions.
Communication is particularly important during periods of growth. New employees may be unfamiliar with the company’s benefits, while existing employees may need help understanding changes to their coverage.
Employers should not assume that providing a benefit automatically means employees understand or appreciate its value.
Education and ongoing support help bridge that gap.
The CEO, CFO, and HR Leader Need to Work Together
Employee benefits decisions are sometimes treated as an administrative responsibility delegated entirely to human resources.
For a growing organization, that approach can leave important considerations disconnected.
The CFO needs to understand the financial implications of the benefits program. The HR leader needs to understand employee needs, recruitment challenges, and retention objectives. The CEO needs to ensure the overall approach supports the company’s broader business strategy.
These perspectives should inform the same conversation.
For example, a plan change that reduces employer spending may look attractive financially. But if it creates substantial affordability challenges for employees, leadership should understand those consequences before making a decision.
Similarly, adding benefits to improve recruitment may be worthwhile, but the organization needs to evaluate whether the investment is sustainable over time.
The objective is not to maximize benefits spending or minimize it at all costs.
It is to determine how the company can allocate its resources intelligently while maintaining a competitive employee value proposition.
That requires collaboration between leadership, HR, finance, and a benefits advisor who understands the organization’s objectives.
Make Benefits Planning Part of the Growth Plan
Employee benefits should evolve alongside the business.
When developing annual budgets and growth plans, employers should consider how projected hiring, workforce demographics, compensation decisions, and healthcare costs will affect the benefits program.
This is particularly important for companies anticipating substantial hiring, entering new markets, or expanding into additional states.
A growing workforce can introduce new administrative requirements, different employee needs, and greater complexity in managing coverage.
Planning ahead gives leadership more time to evaluate options instead of making decisions under pressure.
It also creates an opportunity to review benefits administration, enrollment technology, employee education, and compliance processes before existing systems become difficult to manage.
The objective is to build a benefits program that can support the organization as it grows rather than forcing the business to continually work around an outdated structure.
Growth Should Trigger Better Questions
There is no single employee benefits strategy that works for every company.
The right approach depends on the organization’s size, financial position, workforce, industry, and long-term objectives.
But every growing employer should periodically ask whether its current program still makes sense.
Are healthcare costs sustainable?
Are employees receiving meaningful value from their coverage?
Does the plan design reflect the needs of the current workforce?
Have alternative funding arrangements been evaluated?
Is the company communicating its benefits effectively?
Are leadership decisions about healthcare aligned with the organization’s broader business goals?
These questions can reveal opportunities that might otherwise go unnoticed.
More importantly, they move benefits planning away from a reactive administrative exercise and toward a deliberate business process.
The Bottom Line
Business growth creates opportunities, but it also changes the decisions leaders need to make.
Employee benefits should not remain frozen in the structure established when the company was smaller. As the workforce evolves and financial priorities change, employers need to revisit their assumptions, evaluate their options, and determine whether their existing approach continues to serve the business.
That does not mean changing plans every year or spending more money.
It means making informed decisions based on the company’s current circumstances rather than relying on choices made years earlier.
The strongest benefits programs are not necessarily the most expensive or the most complicated. They are the ones designed around the needs of the business and its people.
For CEOs, the lesson is straightforward: When your business grows, your benefits strategy should grow with it.
About the Author
Jennifer Schaefer, MBA, ChFC, CLU, RHU, REBC, SHRM-SCP, is the Founder and CEO of JS Benefits Group, an employee benefits consulting firm helping employers develop competitive benefits programs, manage healthcare costs, and make informed decisions about their workforce.
Jennifer is a Forbes Business Council Contributor and Co-Host of Executive Leaders Radio. Her work focuses on employee benefits strategy, group health insurance, healthcare cost management, alternative funding arrangements, and the future of work.
