Why is employee benefits benchmarking so important?

Why is benefits benchmarking so important?

Before we explain why benefits benchmarking is important, let’s define what benefits benchmarking is. Simply put, benefits benchmarking means finding out how your benefits offerings compare to those of other employers in your industry or in similar industries. In more specific terms, benefits benchmarking takes a look at total costs, cost-sharing measures, plan-designs, voluntary offerings and workers’ compensation as they relate to employee benefits.

Benchmark data helps to guide employers in three ways: retracting and retaining top talent, maximizing plan designs for financial gain and staying ahead of competition.

Using Benchmarks to Attract and Retain the Best People

When using a benefits package to strategically attract and retain the top talent in your industry, it is important to understand what the competition is offering their employees. Voluntary benefits, low-deductible health insurance plans, wellness programs and other employee benefits could mean the difference in which position a potential candidate applies for. In many industries, having the right people at the company can mean a world of difference in sales, revenue and profits. For example, if a top sales person in the area has two employers to choose from in terms of compensation level and one is offering better benefits than the other, the choice in who he or she goes to work for will be simple. Understanding what the competition is doing can make the difference in the employee pool available to you.

Using Benchmarks to Find Cost-Savings

Possibly one of the most important and cost-saving benefits of benchmarking employee benefits is finding out where your plans are unnecessarily rich or extraordinarily poor. If your high deductible plan has an extremely higher deductible than the benchmark, then it might be time to choose a plan with a lower deductible. On the other side of the coin, if your health insurance plan has an excessively low deductible, it may be time to find a cheaper plan and raise it. On the same token, if you are offering life insurance policies paid by the company that are over and above the benchmark in your industry, it may serve you to dial those back and offer another employer paid benefit. Benefits benchmarking can help you maximize your spending on employee benefits and offer the most attractive packages to potential and current employees.

Using Benchmarks to Stay Ahead of Competition

Trends in health insurance, dental, vision and other employee benefits are continuously changing from year to year. For example, in the past, there was a large preference in low-deductible plans by employees, whereas now high-deductible plans are preferred because of rate increases. Understanding these trends and offering benefits packages that are on par or in-line with the competition is important in staying competitive.

So how do you find out where your company falls on the benefits spectrum? Your broker should be able to offer you this information.

As the premier health insurance benefits broker in Virginia and Florida, we have a simple tool that can benchmark your employee benefits against others in your industry. To find out more, click here.