Are you staying competitive in the employment marketplace by offering the benefits everyone else does? Do you stand out? Can you still attract top talent even if you drop an expensive benefits program? The process of comparing your benefits programs to other employers in your field is called benchmarking, and it’s a hugely important and helpful effort that too few employers undertake.
According to a 2018 report from the Society for Human Resource Management (SHRM), “The vast majority of organizations offer health care coverage to full-time employees (99%).” In addition to general health care coverage, 90% of surveyed employers offer specialized benefits, like vision insurance, whereas only 26% offer more specialized laser-based vision correction coverage. Organizations that use benefits strategically see improved performance over those that do not. For example, benefits have been correlated with increased:
● Company performance (58% vs. 34%)
● Effectiveness in recruitment (19% vs. 8%)
● Employee retention (72% vs. 59%)
On its own, those stats may be mildly interesting, but they become crucial when you realize they have implications for your recruiting efforts. Take for example, vision benefits. Dr. Gene Sherman explains, “By offering enhanced vision plan designs, benefits administrators provide employees with additional options that make this benefit more appealing, potentially motivating employees to use the benefit more regularly for preventive care.”
In short, if you fail to offer the benefits that other employers do, you may see good candidates slip away.
Here’s how to benchmark your benefits in two easy steps.
This step can be deceptively difficult. Obviously, you want to benchmark any benefits you currently offer, but you also need to benchmark benefits you may be missing. Identify certain trends for benefits, such as low- versus high- deductible plans. Benefits can evolve into new forms — think 401(k) plans replacing pensions as preferred retirement programs — and you want to make sure you’re keeping pace with the market. Here are some basic areas you’ll want to look into:
● Health: health, dental and vision insurance programs plus wellness programs.
● Financial: retirement, stock options, bonus structure, other financial rewards or incentives.
● Protection: life, disability and long-term care insurance coverage programs.
● Education: tuition reimbursement, leadership development, career training programs.
Update your own list as needed once you start doing research (the next step) if you notice that other companies in your industry are starting to offer different or unusual benefits.
Step two is research and information gathering. Armed with your list of what you want to compare, you now need to procure industry-wide statistics on what benefits are being offered and, ideally, how they’re being received by employees. You have several options here.
● Raw Data Sources: Do a deep-dive into publicly available data yourself, including government sites like the Bureau of Labor Statistics (and any state or local equivalent) and industry-wide informational sites like salary.com, glassdoor.com, and careerbuilder.com.
● Utilize Industry Source Partners: Benefits providers and industry associations will also issue their own independent reports (like the SHRM survey referenced above). You can learn not only what benefits are offered but glimpse into participation rates, plan performance, employee matching, plan fees, and more.
● Go to a Professional Provider: Another choice is to hire a reputable HR provider who can perform a custom benefits review for your organization and prepare a report customized to your situation. The advantages of this approach are:
o Someone else can gather the data for you;
o The comparison will be tailored to you; and
o The report will provide both the context and analysis you need to know where you stand — and what you need to do next.
CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.