In today’s race for top talent, your benefits package can be the deal-maker or potentially a deal-breaker. According to the 2024 SHRM Employee Benefits Survey, 97% of employers offer some form of health plan coverage, making it clear that competitive benefits are now the norm.
Benefits benchmarking helps you meet industry standards and stay competitive. By benchmarking your benefits against industry standards, you can uncover gaps, strengthen your offerings, and stay competitive in a crowded talent market.
Step 1: Define Your Benefits Benchmarking Framework
Before examining data, it’s important to establish a clear benchmarking framework. This includes identifying the goals of your analysis, selecting the right peer group for comparison, and determining which benefits to evaluate. A well-defined framework shows that your benchmarking efforts are focused, relevant, and actionable.
Set Clear Objectives
One of the first steps in defining your benchmarking framework is setting clear, measurable objectives. Are you aiming to align your benefits with industry standards, improve employee satisfaction, or uncover cost inefficiencies? Establishing specific goals will keep your benchmarking focused and purposeful. Clear objectives will provide a solid foundation for a successful benchmarking strategy, whether refining existing benefits or developing new offerings.
Choose Your Comparison Points
Selecting the right benefits to benchmark is important for meaningful analysis. Start by identifying the most essential areas that impact your workforce, such as health insurance, retirement plans, and paid time off. Next, choose competitor groups or industry peers that reflect similar company sizes, industries, or geographic regions.
This helps make your comparison relevant and provides insights that can improve your benefits offerings. A targeted approach to comparison points will make your benchmarking process more impactful.
Step 2: Collect and Organize Your Data
Once you’ve defined your framework and chosen your comparison points, the next step is to gather the necessary data. This involves collecting information on your benefits offerings and obtaining relevant industry benchmarks. Organizing this data will make it easier to analyze and identify trends, gaps, and opportunities for improvement. Accurate, well-structured data is essential to a successful benchmarking process.
Gather Internal Information
Start by thoroughly documenting your current benefits offerings across all categories, including health insurance, retirement plans, wellness programs, and more. Record the associated costs for each benefit, such as premiums, employer contributions, and administrative fees.
In addition, track utilization rates to understand how often employees take advantage of each benefit. The internal data provides a detailed view of your benefits and is the foundation for meaningful comparisons with industry benchmarks.
Source External Data
Access external resources such as industry surveys, market reports, and competitor data to build a well-rounded comparison database. These sources provide valuable insights into the benefits offerings, costs, and practices of organizations similar to yours. By gathering up-to-date, relevant information, you can create a more accurate and meaningful benchmark that reflects the latest trends and standards within your industry.
Step 3: Analyze and Take Action
Now that you’ve gathered and organized internal and external data, it’s time to analyze. This step involves comparing your benefits offerings against industry benchmarks to identify gaps, inefficiencies, and improvement opportunities.
Once the analysis is complete, the next part is taking action. There are several ways to approach this, such as adjusting your benefits structure, reforming your costs, or enhancing offerings. This is where data-driven decisions can lead to meaningful changes in your employee benefits strategy.
Identify Gaps and Opportunities
Compare your current benefits offerings with the industry benchmarks to identify areas where you may be falling short or areas where you excel. Compare your benefits package to competitors’ benefits to identify gaps. For example, do competitors offer more health coverage or flexible retirement plans? Similarly, assess opportunities for competitive advantage, such as introducing sought-after perks to make your benefits package stand out to current and prospective employees.
Develop Implementation Strategy
After you’ve identified gaps and opportunities, it’s time to develop an implementation strategy. Create a prioritized action plan that addresses the most urgent areas for improvement, such as enhancing specific benefits or reducing costs.
Consider factors such as budget constraints, employee needs, and timing when prioritizing actions. A clear, well-defined plan will help guide the implementation process and confirm that changes are made efficiently and effectively to optimize your benefits program.
Start Your Benefits Benchmarking Project With New City
Benefits benchmarking is a powerful tool for providing employees with benefits that remain competitive and aligned with industry standards. By defining a clear framework, gathering and analyzing data, and developing an action plan, you can make strategic improvements that enhance your benefits program.
For professional guidance and support throughout your benefits benchmarking process, contact our employee benefits consulting team today. Let us help you build a more effective and competitive benefits strategy.