The Engagement Trap: Why Companies Spend Billions on Benefits No One Uses

Every year, companies around the world spend hundreds of billions of dollars on employee benefits. They offer health plans, gym memberships, wellbeing apps, discount schemes, retirement packages, cycle-to-work programmes. It’s a sprawling space with glossy brochures, big claims and bigger price tags.

But there’s an unspoken truth beneath the surface.

Many of those benefits go unused. Not because people don’t care about their health or their families or their finances. But because the system designed to support them doesn’t help them find and use what’s actually relevant – at least not in a way that’s meaningful to the people it’s meant to serve.

Will Winter Smith has spent decades inside that system. As Reward Director at Halfords, he’s responsible for benefits strategy for more than 13,000 employees. Early in a conversation he had on our recent Friends with Benefits podcast, he drops a line that sounds like a throwaway:

“Engagement is key to everything that we do.”

But unlike most, he doesn’t leave it at that. What follows is a rare, frank admission about the gap between what companies offer and what employees actually value, and why, without a rethink, the way many organisations run their benefits today risks becoming a very expensive exercise in self-deception.

A growing gap between promise and reality

The benefits landscape runs on a kind of quiet consensus. Employers offer perks. Employees are expected to feel grateful. Uptake is presumed. Impact is assumed.

In reality, benefits are too often conceived as entitlements offered, not experiences delivered. They live on intranet pages, buried in onboarding packs, occasionally resurfacing as mass emails or internal campaign days. 

For many employees, benefits are experienced as a blurry mess…  they know they’re there, but they don’t really know what they are, how to use them, or whether they’ll actually work when they need them.

Private medical insurance is the most striking example. It has long been the centrepiece of corporate packages: a signal of care, a promise of speed. But the promise doesn’t hold up.

“Private medical has lost its way,” Will told us.

Instead of seamless access, employees are left navigating referrals, fine print, coverage limits and delays. The idea of simply calling a doctor and being seen quickly is, for many, out of reach.

This isn’t a quirk of one benefit. It’s a symptom of the widening gap between the narrative of benefits and the lived experience of them.

If a retailer spent millions on a product that barely sold, they’d pivot overnight. In benefits, that kind of failure is often invisible. The spend continues. The uptake doesn’t.

The cult of benchmarking

Part of the problem is structural. Corporate benefits strategies are built on benchmarking: the ritual of looking sideways rather than inward.

Benchmarking is presented as rigour. In practice, it’s conformity. One company offers dental coverage; another follows. Someone introduces a wellbeing app; within a year, everyone else has one too.

The result is a landscape of nearly identical benefit packages, all competing for the same limited employee attention, all assuming their mere existence is enough.

As David, Will’s host, puts it:

“Most organizations we talk to are benchmarking what everyone else is doing. You end up with all these same-same programs.”

No one pauses to ask whether these benefits are right for their people. Whether they’re being used. Whether they deliver anything beyond a line in an offer letter.

When benefits need a marketing plan

Will’s perspective diverges sharply here.

“Effectively, as reward professionals, we are retailing to our colleagues.”

It’s not cynicism, it’s clarity. Benefits are products competing for attention in a noisy world. 

A gym discount or a health app doesn’t just exist in a vacuum; it’s competing with everything else in someone’s life: bills, deadlines, childcare, fatigue, information overload.

If companies want employees to care, they have to give them a reason. That means marketing benefits with the same intentionality they market their products: understanding audiences, removing friction, creating desire.

Take something as simple as a cycle-to-work scheme. At Halfords, Will frames it this way:

“When I talk to my own colleagues about things like Cycle to Work – which is very relevant for Halfords – our ambition here is to sell bikes.”

If employees don’t see the value, the programme fails. The benefit doesn’t matter if no one notices or trusts it.

The friction of too much choice

Here lies another unspoken truth. In the corporate world, disengagement is often met with more benefits, not fewer.

A benefit doesn’t land? Add another. People aren’t engaging? Add an app. Someone’s heard another company has something new? Add that too.

The result is not abundance. It’s friction.

Employees are overwhelmed with a patchwork of offerings they can’t navigate. Rewards and benefits leaders are stuck administering a pile of underused products. And leadership teams convince themselves they’re doing something meaningful.

They’re not. In too many cases, they’re throwing benefits into a void.

No one understands that mess better than rewards and benefits leaders themselves – the people who are trying to stitch together legacy systems, budgets, and employee expectations every day.

Courage and subtraction

When Will talks about ROI, he’s unusually direct:

“If you’re not seeing utilization, especially for some benefits, you’re going to upset some people. But again, you design for most, not all. If it isn’t working and it’s expensive – stop it.”

This might sound obvious, but in most companies, this kind of decision rarely happens. Cutting a benefit means admitting it wasn’t working. It risks upsetting the small group who did use it. It invites awkward conversations with finance.

So the status quo wins. Underused benefits hang around like corporate relics – taking up space, taking up budget, serving almost no one.

Inertia has a price tag.

The AI distraction

In 2025, every business conversation seems to end with AI. Benefits are no exception.

Will has dabbled in chatbots and automation, but he’s clear-eyed:

“AI is like trying to teach a toddler origami. One minute you’re close to a swan – and then it decides it likes the boat and sticks with the boat.”

AI can make transactions smoother. It can answer FAQs. But it cannot, on its own, fix a broken value proposition. Automating a confusing benefits experience doesn’t make it better; it just makes the confusion faster.

There’s also the cultural friction. As Will notes, some people remain openly sceptical about letting a bot into sensitive conversations about their wellbeing. And that matters. Because benefits, unlike software updates, are not just systems. They’re promises.

A different way to think

None of this is a mystery. It’s just easier to ignore than to confront.

A serious rethink would start with some uncomfortable truths:

• More isn’t better. A long list of perks isn’t the same as a meaningful experience.
  
  
• Benchmarking isn't a strategy. Copying others creates mediocrity, not engagement.
  
  
• Benefits need marketing. If you wouldn’t sell a product that way, don’t sell a benefit that way.
  
  
• Killing things is healthy. If no one uses it, stop paying for it.
  
  
• Tech isn’t salvation. Tools help only when the fundamentals are sound.
  
  

This isn’t a call for austerity. It’s a call for honesty.

It’s also a reminder that benefits can work, powerfully, when they’re simple, human, and connected to what people actually need. The problem isn’t the concept of benefits. It’s the way too many organisations design, deliver and communicate them.

Why this matters

Benefits are not a rounding error. In many companies, they’re one of the largest investments after salaries. Yet too often the conversation around them is still dominated by provision rather than impact.

The engagement trap is real: organisations spend heavily on benefits but fail to build the trust, clarity, and usability required to make them matter. Employees tune out. Leaders convince themselves the fault lies elsewhere.

Will’s candour isn’t radical. It’s both refreshing, and rare. It exposes a system that has been quietly coasting on assumptions for years.

“Engagement is key to everything that we do.”

For once, it isn’t a cliché. It’s a rebuke.

Listen/Watch the full episode of Friends With Benefits