Employee Benefits Benchmarking: Are You Offering Enough?

How do you stack up against the competition?

It’s one of the most important considerations of every successful business. External factors such as products, services, and pricing are integral to a competitive advantage, but internal elements such as company culture, employee engagement, and retention are equally crucial.

Benefits benchmarking is a novel idea for attracting and retaining top talent. By comparing your benefits offerings and perks to the competition, your company can uncover multiple ways to improve employee relations, cut costs, and boost return on investment.

What Is Employee Benefits Benchmarking?

Employee benefits benchmarking is a data-driven process by which businesses evaluate their benefits programs compared to similar companies in their industry. This provides an objective comprehension of the company’s current state, the ability to identify benefits trends, and, ultimately, an opportunity to improve employee retention and employee satisfaction.

Due to the information required for a formal and holistic assessment, most organizations pair with third-party providers to gather data for employee benefits benchmarking reports. Depending on your company size, this can be an expensive endeavor; shop around to find a reputable, affordable partner to maximize cost benefits.

The Core Ideas of Benefits Benchmarking

When you’re willing to accept your business shortcomings and successes in tandem, overall improvement is sure to follow. Moreover, competitive edge is the most crucial part of benefits benchmarking.

However, gaining an objective perspective of your company’s benefits and how they relate to employee health, mental health, and engagement is cumbersome and time-consuming. That’s just the idea that benefits benchmarking aims to solve.

With a proper benchmarking program, you can set goals, tweak your benefits strategy, refine your risk management approach, or revamp your benefits plan design. Armed with this information, you can create a roadmap to internal improvements from the outside looking in.

Internal Benefits Benchmarking

Employee benefits benchmarking is also known as external benchmarking. However, companies can also conduct internal benefits benchmarking to assess their operating practices. Though external benchmarking is far more comprehensive, internal benchmarking can determine waste and inefficiencies at a fraction of the cost — making it ideal for mid-size and small businesses with fewer financial resources.

Companies can compare their figures and balance sheets to expectations to gather information for internal benchmarks. This is especially helpful for determining shortfalls in branch and departmental performance, product line sales, internal programs, and promotional activities.

Combined with external employee benefits benchmarking, internal benchmarking provides metrics your business can use to assess its overall wellness and make fact-based decisions for the future.

What To Include in Your Benefits Benchmarking

A benefits benchmarking report cannot be arbitrary. You need to gather specific details from other organizations based on several factors. Considerations for comparative companies include:

• Company size
• Industry-specific facets
• Geography and cost of living
• Employee experience
• Job titles

Including these aspects provides a more accurate assessment. Once you have the list compiled, work with human resources to help with the comparison. Make sure to compare these topics to your employee benefits package when completing your benchmarking:

• Health benefits package, including dental/vision/health insurance, HSA/FSA plans, wellness programs, open enrollment periods
• Retirement benefits such as a 401(k), retirement plan matching, life insurance
• Long-term disability benefits
• Food allowances and stipends

• Overall benefits costs
• Commuting, vehicle, and gas stipends
• Perks such as daycare, gym memberships, free lunches, and other programs
• Employee rewards and recognition programs (peer recognition, spot awards, etc.)
• Parental leave and family assistance
• Paid time off and sick leave
• Hybrid, flex, and remote work arrangements
• Onboarding processes for remote and onsite workers
• Customization and personalization of benefits and the right to choose

This list should give you a well-rounded approach to a benefits benchmarking report, but feel free to include any other perks or benefits you offer — or ones that other companies offer that you don’t.

What Are the Advantages of Employee Benefits Benchmarking?

Competitive advantage is perhaps the foremost reason why many companies undergo an employee benchmarking benefits initiative. However, benchmarking can also provide a number of other benefits vital to business success. If your company struggles with any of these aspects or needs a deeper dive, benchmarking offers the information and comparison data you need.

Identify Benefits Trends

Employee benefits change over time thanks to a variety of factors. For example, remote work before COVID was in the extreme minority; Now, it’s relatively ubiquitous and an expected perk/benefit for many potential employees.

A benefits benchmarking report enables you to identify and adopt these trends sooner. Even the companies with the best benefits keep on top of these trends to increase employee loyalty and satisfaction.

If your employee benefits are behind the times, benefits benchmarking enables you to identify new trends and decide how to apply them to your benefits package.

Size Up Expectations

Benefits expectations often correlate to the latest trends. When Company A and Company B offer a particular benefit but Company C doesn’t, A and B have the advantage of employee attraction and retention.

A crucial part of your benefits benchmarking involves these expectations. Once you have the information and data about trending or expected benefits you don’t offer, surveying your employees can unveil their expectations. If your staff isn’t happy with the status quo, you can add specific benefits to measure up to the competition.

Determine Return on Investment

Employee benefits aren’t cheap. According to the U.S. Bureau of Labor Statistics, companies spend the equivalent of 45% of total wages on employee benefits. For example, if your payroll is $1 million, you will likely pay an additional $450,000 in benefits and perks.

Due to the high benefits costs, you want to ensure you get something for your money. Benefits benchmarking can ascertain the average participation rate in employee benefits, perks, and programs and how your staff compares. An internal benefits benchmarking report may also uncover if your employees are using their benefits as expected and if they’re valuable.

Determining return on investment internally and externally may also reduce costs, especially for underused or unnecessary perks and benefits.

Assemble a More Competitive Employee Benefits Package

Employee benefits benchmarking can reveal problematic areas and glaring omissions in your benefits package. You can add and subtract benefits to mimic or exceed your rivals through benchmarking.

Combined with current benefits trends, benchmarking may allow you to become a proactive innovator instead of a reactive laggard. This can entice talented new employees while retaining your best and most productive workers.

Find Unknown Competition

Most businesses conduct a SWOT analysis or similar examination of rival companies in their industry or niche. However, smaller startups or companies that expand into your area may fall under the radar. Benefits benchmarking discovers these new threats and enables you to strategize against them.

Become the Harbinger of Change

Even the best companies have periods of stagnation, primarily if the status quo and strategy have worked well in the past. In a dynamic business world, this will only take you so far. You need to change as trends ebb and flow.

If you want to promote change, benefits benchmarking is a strong start toward improving company culture, job satisfaction, and employee engagement. These three aspects can profoundly affect your company from the top down, unlocking true potential and improving morale.

How To Employ Employee Benefits Benchmarking at Your Business

Though you can hire an outside company to conduct benefits benchmarking, being involved in the process enables you to understand at the deepest levels. Doing part of the benchmarking yourself — at least internally — can also reduce the costs and time involved. To start your employee benefits benchmarking, apply a few of these tips.

• Examine your current employee benefits: You can’t readily compare your employee benefits to those of other companies without first examining what your company offers. Take an in-depth look at your health plan, retirement, related perks, and the employee participation rate in each.
• Anonymously survey your employees about benefits: Employee feedback offers valuable insight into all facets of your business, including benefits. Use 1-10 rated and open-ended questions to discover how much your employees enjoy their benefits and what you could include to improve them. It’s also an opportunity to learn which companies your employees revere regarding benefits.
• Compare your benefits to the competition: Whether you choose an internal or external route for benefits benchmarking, unbiased and objective comparisons are crucial to success. Go into your benchmarking report with an open mind and consider it an improvement opportunity — one that can genuinely benefit your employees and your company moving forward.

Become the Benchmark With Help From Hoppier

Employee recognition, spot awards, and other rewards for achievement are a vital part of company culture and employee engagement. If your benefits benchmarking shows you trail your rivals in this area, Hoppier can help you bring it up to standard.

Hoppier gift cards provide a quick, simple way to reward your employees no matter where they work, whether you’re offering praise, celebrating a milestone, or just thanking them for a job well done.

While this gesture won’t solve all your competitive woes, it’s a step in the right direction. With new goals, ambition, a rigorous plan, and gift cards for employees, you can become the benchmark every company strives to emulate.

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