How to benchmark employee benefits
You’ve been tasked with reviewing your organisation’s employee benefits package and benchmarking it externally to see how you compare against the market. If you’re new to this process, it might seem a bit daunting. In this article, we share some ideas on how to gather external data for benefits benchmarking.
What is benefits benchmarking?
Benchmarking allows you to regularly review your benefits, ensuring they stay competitive, appealing to employees, and compliant with relevant laws and regulations.
1. Existing network
A good place to start is by asking members of your existing network for some help to compare your current employee benefits against those offered by other companies. You could use LinkedIn this this, but be cautious as some companies may have policies against sharing information online. Most of us connect with others in the same industry so it could prove useful to reach out to them individually to obtain some data relevant to your industry.
2. Online forums
Business or HR forums offer a wealth of knowledge from others who have sought answers to the same questions as you, so we suggest searching for similar topics first. If the results are outdated or do not provide the information you need then post a new thread. Before you post, think about what specifics you are looking for, e.g. are you looking to compare a single employee benefit like maternity pay, or compare against companies within the same sector? This way the results will be more meaningful than just asking anyone and everyone in HR what benefits they offer. It might take a little while to generate sufficient responses though.
3. Best Companies
If you don’t have the budget to spend on data services then a great website we recommend is Best Companies. This requires some work, but the website breaks companies down into categories, e.g. Best 100 Small Companies, Best 100 Mid Companies and Best 25 Big Companies or Best 25 Housing Associations. Within these categories you can view individual company profiles, which also includes accreditation profiles, which is where you can view their employee benefits data.
There is a list of benefits and the criteria which must be met to obtain this under each company, for example:
- Holidays – Companies offering a minimum of 25 days annual leave
- Dental Insurance – Dental insurance offer to all employees
- Gym – On-site gym or subsidised gym memberships
- Childcare – On-site nursery or vouchers
Unfortunately, this method doesn’t provide specifics, such as the exact number of days provided in the holiday allowance. However, it does provide an overview of what other companies and competitors are offering their employees.
Benchmarking employee benefits data
Collecting the data is the easy part; now it’s about using it meaningfully. When looking at benchmarking employee benefits data, aim to answer these three key questions:
- What is my company offering above and beyond the market?
- What is my company offering which is in line with the market?
- Where is my company lacking in comparison to the market?
When addressing these questions, compare your results to the overall market, companies within the same sector, and companies in a similar location. The last two comparisons are particularly important, as they align employee benefits with other strategic considerations. For example, if you are using your employee benefits package to attract and retain the best talent you can in order to gain a competitive advantage, you need to know where you stand in your market.
After benchmarking your employee benefits package, you might be tempted to immediately explore providers for additional benefits. However, the next step should involve conducting internal research and considering the demographics of your employees, as your competitors may have different demographic profiles. For example, benefits related to fitness, fertility, menopause, or heart health can be tailored based on risk and need. It’s essential to provide benefits that are relevant and valuable — a topic that could easily warrant its own article.
