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The employee benefits you implemented several years ago may no longer be the most effective use of your benefit budget now. As demands change, it’s important for you as an employer to keep up with competition, as well as the changes in what your people want.
This is where employee benefits benchmarking comes into play. It’s a powerful tool all businesses should use. But what exactly is it? Why is it important? And how do you do it? We’ll answer all these questions and more in this guide.
Employee benefits benchmarking compares your benefits package to that of your sector and competitors. It provides an in-depth analysis of yours and your competition’s employee benefits, ensuring that your benefits are relevant and effective.
Whether you’re setting up benefits from scratch or reviewing existing ones, benchmarking is a powerful tool that shows:
71% of employees told us they’d change jobs for better pay and benefits, and 51% are ready to go within the next 12 months. Benchmarking ensures your package remains competitive enough to secure your top talent.
Nadeem Farid
Head Of Health And Wellbeing Benefits
Although not technically an employee benefit, salary does form part of your total reward package. With this in mind, it’s always a good idea to benchmark your employees’ salaries with your competition when carrying out this exercise.
Pay benchmarking will identify if you’re paying above or below the market average, which you can then adjust to remain competitive. Paying too little will look unappealing to prospective hires, and pay above the industry can allow you to cherry pick the best within your sector.
There are a number of important reasons to carry out benefits benchmarking, both for you and your team:
The most obvious benefit of benchmarking your employee benefits is that you can compare what you offer against your competitors. You can find any gaps in your package, or get confirmation that what you offer is pipping other businesses to the post. It can also show if you’re offering too much, or spending money on benefits that have become less popular.
Having this insight will help you to make relevant adjustments, which in turn could help to improve your offering. Or, you may find a unique selling point to shout about when recruiting.
Benchmarking forces you to review your existing benefits and look at their effectiveness. It’s not just about offering what your competitors do, it’s about providing a rewards package that employees really value.
You might be paying for a Corporate Health Cash Plan, but no one understands the benefits available to them. Or, you might have a Workplace Pension, but are missing out on big savings as a result of not incorporating salary sacrifice (often referred to as salary exchange).
You’ll see if your employees are actually using the benefits you provide. If they aren’t, you can then dig deeper:
Benchmarking can also help you to save money. By understanding the level of benefit competitors provide, you can adjust yours to meet the needs of your workforce. There are tweaks you can make to save money and still offer a competitive package.
Benefits show your team you appreciate them by offering something valuable – beyond just their paycheck. It’s a tangible way to demonstrate that you care about more than just their output at work.
Happy employees are more productive, which has a flywheel effect for your business performance. In fact, a study by Oxford University found that happy staff are 13% more productive than unhappy ones.
If you’re investing in employee benefits, they need to align with what employees actually want and value. Offering perks that your team really wants is the secret to positive engagement and better work performance.
If you were looking for a new role, out of the two example companies below, who would you choose to work for?
Different Company Benefits | Benefit Offered | Company A | Company B |
|---|---|---|
Salary | £35,000 | £35,000 |
❌ | ✅ | |
3% | 5% | |
❌ | ✅ | |
✅ | ✅ |
Both companies offer the same salary, but one offers much better benefits. As an employee, Company B is more appealing than Company A, as it offers a much more comprehensive rewards package.
By benchmarking your employee benefits, you can make sure that you remain a competitive player in your industry when it comes to retaining and attracting top talent.
You don’t need a big budget to make a big impact. In fact, flexibility matters most to employees, and it’s something that’s free to implement for the most part.
Your business is unique, so it’s best to get advice from a specialist (like our team at Drewberry) who’ll be able to advise which benefits are the best use of your budget.
Nadeem Farid
Head Of Health & Wellbeing Benefits
As an employer, knowing what’s going on in your industry can help with employee retention and hiring. If you adapt to new developments, you’ve got a chance to stay ahead of the competition.
You may find that benchmarking identifies patterns within the market: different industries might offer different benefits, depending on aspects like location and employee demographics. This information can help to add new benefits in line with industry demands.
There are a few things you need to weigh up before benchmarking employee benefits:
Gathering the benefits data to benchmark can take time, depending on the size of your business, the sector, and how many competitors you have. Check if you have the time and resources for the task, or whether you’re better off outsourcing your benchmarking.
The location of your business and your competitors can impact your data. For example, if you’re in North England and you’re benchmarking companies in London, the data isn’t reliable.
Discrepancies between what a small business and a large one can afford are common. Larger companies tend to have bigger budgets, so if you’re a small startup, you need to ensure you’re doing a fair comparison.
Your sector will influence how you benchmark your benefits. Those in niche industries will have a much smaller dataset for comparison. In this case, you’d need to broaden your benchmarking data, while still ensuring it’s relevant to your business.
Almost a third of employees say a poor benefits package makes them unhappy at work. If you want to keep best talent, your benefits package needs to outshine your competitors.
Jamie-Lee Smith
Employee Benefits Operations Manager
If you’re embarking on benchmarking by yourself, here’s how it works in six steps.
Decide what you actually want to measure. There are various areas within the employee benefits landscape – some of which might be more important to your business than others.
For example, if your priority is to lower business costs, you’ll want to see how much money your competitors are spending on their benefits.
Getting your employees involved with the benchmarking process will make things easier. Try sending an internal survey about their benefits and satisfaction. You can then use these insights to make informed changes to your benefits package.
One of the biggest pillars of benchmarking is to know who your competitors are. Make a note of the competitors that are already on your radar, and carry out research to find the ones you don’t. You can do this by:
Once you’ve found out who your competitors are, how do you discover what benefits they offer? Try checking out their job ads on websites like LinkedIn, Indeed, and Glassdoor. You can also read their website, and speak to industry specialists about their perks.
Keep your benchmarking goals in mind during this step. For cost-related goals, you’ll want to find out how much competitors spend on benefits. If it’s employee engagement you’re keeping an eye on, it’s worth seeing how employers communicate their benefits.
Now it’s time to put the employee benefits benchmarking data to good use. Do you need to add a new benefit? Can you reduce the amount you offer for Group Life Insurance? Whatever the outcome, benchmarking will enable you to make data-led decisions about how to improve your employee benefits.
If you do make changes to your benefits, it’s vital that you communicate these to your employees. Benchmarking can only go some way to making your rewards package effective. You also need to have a clear and consistent communication plan. You could offer everything your competitors do and more, but it means nothing if employees don’t know about it!
If all this sounds like a lot of work, that’s because it is! Setting up and maintaining your employee benefits requires a decent bit of admin, so it quickly becomes time consuming. We do the heavy lifting for you, giving you more time to focus on what matters.
We live and breathe employee benefits, doing this day in-day out for businesses just like yours. We look at the big picture, getting to know your unique workforce and benchmarking your offering against competitors.
We also have access to competitive rates for group insurance products. So give us a call on 02074425880 or email help@drewberry.co.uk to get started.
Now you know: employee benefits benchmarking is the best way to ensure your offering is competitive, and meets the needs of your people. Despite this, our latest benchmarking report found that nearly 40% of employers don’t do it.
If you’re one of them, you could be missing out on important opportunities, such as controlling costs, attracting and retaining top talent, and most importantly, a happier and more engaged workforce.
It’s not a quick task though, and that’s where we come in. As part of our benchmarking service, our team of specialists will:
Read more about our benchmarking service, or drop us a call on 02074425880 to speak to a specialist.
Employee benefits can be a headache. But our specialists do this day-in, day-out, offering first class service when you need it most. Here’s why you should talk to us:
