How competitive is your benefits package? You might think it's top-notch, but that only matters if your employees agree.
Employee benefits are a critical factor in talent retention. You can figure out how yours hold up with other companies' using an employee benefits benchmarking report.
What is employee benefits benchmarking?
Employee benefits benchmarking analyzes your employee benefits package compared to others. It compares companies of similar sizes in comparable industries to yours. Some reports break down the benefits data by geography, organizational role, and years of experience.
Most companies offer standard benefits like 401(k) matching and health insurance. But, according to insights from SHRM, a massive shift in employee benefits is underway. 78% of companies in the organization's recent survey indicated employee options for telework, and many expanded access to mental health services and student loan repayment programs.
This is in response to a cultural shift where we now see more employees calling the shots. It costs boatloads of money to hire and replace employees, and continuous staff turnover means fewer workers reach a point of autonomy.
When a company retains its employees, their knowledge and experience eventually become a major asset to the company. Employee retention is, therefore, essential to sustainable growth and long-term success.
How can you get more employees to stay? By giving them more of what they want.
Why benchmark employee benefits data?
Benefits aren't the only thing your employees care about. But for many, they're the most important.
In 2021, 43% of U.S. employees said they left their job because of inadequate benefits. This included the benefits they offered "not being good" as well as complete lack of specific ones they deemed important.
In spite of mass layoffs always making headlines, 70% of all job turnover in 2022 was completely voluntary. According to the most recent data from the Bureau of Labor Statistics, employees are leaving on their own accord.
The message is clear: Offer better employee benefits, and you'll have several quick wins in terms of employee retention.
But, in a competitive job market, agility is the trait that matters most. If you want to support your employees in a meaningful way and offer them the benefits they care about most, you need data.
For that, you need to open the dialogue with your current and prospective employees. Ask them what matters most to them in terms of benefits, then research the competition.
How to get started
Presumably, your total comp and benefits packages already have something. These days, many benefits are table stakes — you need to offer health benefits, retirement savings options, and PTO regardless.
If you want to retain employees, though, there are other benefits you need to consider. Which ones matter for your industry and current employees will vary.
Let's take a look at how it's done.
1. Look closely at your current benefits.
Like we said, you probably have something. The first step is to evaluate what that "something" is and how it stands up against the competition.
Basic categories include:
- Financial — Salary, wages, commission, bonuses, withholding, 401(k) match
- Healthcare — Health plans, dental, vision, health savings accounts (HSAs), flexible spending accounts (FSAs), lifestyle spending accounts (LSAs)
- Retirement — 401(k)s and IRAs
- Time off — Vacation, sick, and personal days. This paid leave benchmarking report from our friends at Cocoon shares trends across companies of different sizes and industries.
- Perks — Gym memberships, commuter assistance, professional development opportunities
- Other insurance programs — Life insurance, long-term disability
- Education assistance — Tuition reimbursement, student loan assistance
- Family planning and adoption — Adoption assistance, maternity/paternity leave, family stipends, child care benefits
- Health and wellness — Mental health resources and programs, fitness centers, ergonomics, yoga classes
- Flexibility — Remote work, hybrid options, job sharing, home office stipends
- Employee assistance — Financial counseling, legal services, career coaching
Get everything organized and track the whole package. Look at how much of each benefit you're offering (e.g., "How many days of PTO do we offer?").
It isn't enough to check a box just because you offer a benefit. By highlighting actual numerical values, you'll get a clearer picture of how your package compares to other employers'.
2. Run an employe benefits survey.
Before looking at how your benefits compare to different companies, asking your current employees is the best way to make fact-based decisions.
Your workforce isn't the same as others. Sure, there will be some overlap. But you want to tailor your benefits to the actual needs of your team.
Start off with a confidential employee benefits survey — it's a simple way to solicit feedback on what they like and what they'd like you to add, change or eliminate. You can also use the survey to assess how satisfied employees are with their current benefits package.
Be sure to frame questions in terms of the benefits data categories above. You'll need to collect this information to benchmark your benefits against other employers in your industry and size group.
Instead of asking, "Are you satisfied with your benefits?" you could ask something like, "How satisfied are you with the amount of vacation time our company offers?"
Then, you could follow up with "How does that compare to employers you've worked for in the past?"
You can also survey your employees by making "Agree/Disagree" statements. When employees read the statement, they can answer one of five choices: Strongly Agree, Agree, Neutral, Disagree, or Strongly Disagree.
Here are a few ideas for inspiration:
- I'm satisfied with my current health benefits package.
- Our company offers competitive retirement savings options.
- The time off policies our company offers meet my needs.
- I am happy with the flexibility my employer provides me.
- With my employer's benefits package, I can choose the employee perks and benefits that are most important to me and family.
- Enrolling in my employee benefits is easy.
3. Benchmark your benefit data.
With this information in hand, you can begin to compare your total comp and benefits package with other employers in your size group and industry.
- Start with raw data points. You'll get a good idea of what employees are looking for on a macro level and how effectively organizations meet those needs by looking on the Bureau of Labor Statistics, Glassdoor, and other sites that report employee benefits data.
- Look at industry reports. Organizations like SHRM and Mercer produce multiple annual surveys on employee benefits by size groups and industries. Include these benchmarks in your analysis to make sure you're not leaving any stone unturned.
- Leverage your network. We're willing to bet you aren't the only one focused on benefits in your industry. You'll be able to uncover secret market trends and stay abreast of new industry trends by attending webinars, joining LinkedIn groups, and talking with other HR professionals.
- Read others' content. Companies large and small post about how they approach benefits and what works for them. Keep an eye out for case studies and blog posts you can use as inspiration when building a competitive employee benefits package.
Again, all this employee data somewhat subjective. That's why your benchmarking report needs more than just industrywide figures.
4. Decide which benefits are most essential.
Keep in mind that no organization has the budget to offer everything. That's okay. You're better off looking at which elements your employees value most and how you can use them to maximize retention, productivity, employee engagement, and recruitment.
To pick the right benefits for your employees, take the following steps:
- Look at the data you collected from your survey to see what benefits are most important to your team. These are highest priority because they directly impact retention.
- Connect the dots between what your employees say and what your competitors offer. These are also important because they'll help you recruit top talent.
- Consider how much each benefit will cost (and who will pay for it) — remember that some benefits require more resources than others.
- Identify the options you can realistically afford and prioritize them accordingly.
- Come up with a plan and budget for implementing the benefits you choose.
- Communicate your plans to employees. Make sure they know what is available, how much it costs, and who pays for it.
5. Regularly review and reassess your benefits strategy.
Trust us, no business gets employee benefits perfectly the first time. If you want to stay ahead, you need a system for measuring success every quarter.
As you continuously improve your benefits offerings, you'll have historical data to report on, which means you'll have even more valuable info for your benchmark report. That's when you really start to align with your team.
This includes:
- Understanding enrollment levels — If, over time, more and more employees are taking advantage of the benefits you offer, you know you're on the right track.
- Performing exit interviews — Some employee turnover is guaranteed no matter what. But if you can pinpoint specifics about why an employee is leaving, you can use that info to make changes.
- Evaluating ROI — The biggest question for HR is whether or not participation rates and improved engagement justify the costs.
- Cutting costs — Some programs have concrete cost-cutting goals, such as a health and wellness stipend meant to reduce health insurance premiums.
- Finding new trends — Uncovering emerging patterns in your workforce and keeping up with the latest industry benefits changes can help you stay ahead of the curve. Some of these may be specific to job title, geographic location, or gender. Others might be industry-wide.
Offer the right benefits with Compt and report on them with ease
If you're offering benefits to your employees, you need software to handle the administration in a tax-compliant manner. Using software also gives you insight into ROI, enrollment, and employee satisfaction.
Compt's platform helps you do just that. With Compt, you can quickly set up and track usage of your company's custom benefits packages.
The Compt platform operates on a reimbursement model, which means employees can choose their own vendor in 25 different benefit categories, such as wellness and pet care. Integration with major payroll providers means that employees can get reimbursed for their purchases in their next paycheck with ease.
But don't take our word for it. See for yourself.