Benefits Benchmarking: How to Save Money and Increase Employee Satisfaction

At a glance

• The main takeaway: A top-tier employee benefits program is critical to retaining and attracting talented team members, yet it’s also important to keep costs under control.
• Impact on your business: An employee benefits benchmarking study can help your business attract and retain employees while boosting your bottom line and increasing efficiencies.
• Next steps: If you are interested in conducting an employee benefits benchmarking study but don’t know where to start, reach out to Aprio’s Employee Benefits Services team.

Schedule a consultation

The full story:

Today’s business landscape is more competitive and saturated than ever before, requiring owners and leaders to continuously seek ways to enhance efficiency, reduce costs, and improve employee satisfaction.

One powerful tool that can help businesses achieve these goals is employee benefits benchmarking. It is the first critical step business owners can take to build a competitive employee benefits program that both attracts and retains key employees for the long term.

When you systematically compare your own benefits against industry standards or best practices, you can more easily identify areas for improvement or gaps in your current benefits plan and ultimately boost your bottom line.

Here are seven specific ways an employee benchmarking study can give your business the competitive, cost-effective leg up it needs.

1. Analyze ROI to assess program effectiveness

By benchmarking your employee benefits to comparable companies and industries, you can gain a clearer understanding of how your program stacks up to the competition and even evaluate its return on investment (ROI). To properly assess ROI in an employee benchmarking study, key questions to ask yourself include:

• What are program participation rates among employees?
• Are certain benefits more well-received or utilized than others? Why?
• How does the program’s utilization rate compare to expectations?

Once you have determined the benefits program’s ROI, then you will be able to see where you are over- or underspending and can make adjustments as needed.

2. Better identify hidden cost-saving opportunities

Employee benefits benchmarking can help you pinpoint underutilized perks in your benefits plan, which could lead to greater cost savings. For instance, your benchmarking study may show that your employees aren’t utilizing the subsidized gym and wellness benefit you provide, which could trigger a host of follow-up questions about the efficacy of the program. Is the current program convenient for employees? Does it provide the types of perks your employees prefer in their fitness and wellness routine? This analysis can help you decide whether to keep the program or replace it with something that better fits your employees’ goals.

3. Spot important trends across employee demographics

Through a benchmarking study, business can see which benefits are better utilized among different employee demographics across the organization and even across the world, if the business is multinational. Good and solid data can illuminate patterns among your team members, specific to different ages, job titles, and regions of the country or globe. You can use this data to tailor and customize your benefits program to your employees’ specific needs instead of offering a one-size-fits-all solution.

4. Adapt to industry best practices when appropriate

Employee benefits benchmarking studies allow you to get an insider’s look at the types of benefits your competition is offering, which allows you to capitalize on best practices and adapt to new benefits trends that could increase employee satisfaction, attrition, and recruiting.

5. Optimize compensation and benefits

By comparing your compensation and benefits packages to industry standards, you can help ensure your business remains competitive in the job market while still controlling costs. Proactive measures taken from a benchmarking study could include adjusting salaries, offering flexible work arrangements, or enhancing benefits that are proven to increase employee satisfaction. For example, if your benchmarking study reveals that your competitors offer more attractive health benefits, you might opt to prioritize expanding and improving your own coverage to retain talent without overspending.

6. Encourage innovation and growth internally

Employee benefits benchmarking isn’t just about identifying how you could save more; the practice can also help foster a culture of innovation within your organization, especially within your HR team. By encouraging internal stakeholders to think critically about how your business stacks up against peers, you can motivate your HR and benefits team to develop new ideas and solutions that can lead to improved performance. This can translate to financial savings through increased market share and profitability.

Key employee benefits to analyze with a benchmarking study

Depending on what your business offers, this is a non-exhaustive list of employee benefits you should focus on evaluating with a benchmarking study:

• Health and medical plans: This may include group health, vision, and dental insurance coverage; tax-advantaged spending plans, such as the HSA or FSA; and ancillary health and wellness perks.
• Paid time off: This includes vacation and paid parental or caregiver leave.
• Financial incentive plans: This includes your bonus and compensation structures, retirement benefits, rewards and recognition offerings, and stock option programs.
• Other insurance coverage: This may include life, long-term, and disability insurance plans.
• Work arrangements: This includes remote and flexible work schedules, and even transportation subsidies.
• Educational development: This includes professional development, student loan repayment, and other stipends that foster continuing education.
• Family growth and assistance: This includes adoption and fertility treatment benefits, childcare subsidies, and other support.

The bottom line

Employee benefits benchmarking is a vital tool that businesses can use to improve their benefits programs while simultaneously finding ways to save money and increase efficiency. If you are interested in conducting an employee benefits benchmarking study but don’t know where to start, reach out to Aprio’s Employee Benefits Services team. Aprio works with industry leaders to build custom HR benefits that are flexible, affordable, and appealing to current and prospective team members.

Schedule a consultation with our team today.

Related Resources

Combating Workplace Burnout: 5 Creative Employee Benefits Solutions

Should Your Business Partner with a PEO?

Federal Employment Tax Issues When Engaging Independent Contractors