Benefits 101: A Guide to Employee Benefits Benchmarking + 13 Tips From HR Leaders

Consider the time spent introducing new benefits to your organization: months of reviewing your options, running cost-benefit analyses, evaluating vendors, campaigning for internal buy-in, setting budgets, implementing programs, and enrolling employees.

Now imagine the disappointment of going through all that only to discover your employees aren’t interested. Your new cost-effective benefits program has zero impact on recruitment and talent retention. 

Avoid this by creating an employee benefit benchmarking report, which reveals everything you need to know about who uses your benefits, how they use them, and what your organization could do better. 

This guide covers the benefits of benchmarking and shares insights on how to get started. We also offer tips from several HR leaders responsible for designing competitive benefits packages at their respective companies. 

What is employee benefits benchmarking?

Employee benefits benchmarking is a process that reveals how similar types of employers measure up against each other in terms of the benefits they offer. Benchmarking reports analyze by company size, industry, geography, job title, and experience. The more granular your data, the more valuable your insights. 

Why should I run a benchmark report?

There are many benefits to investing in benefits benchmarking. We’ve outlined a few below.

1. Evaluating ROI 

Return on investment (ROI) is the biggest question HR teams have about the benefits they offer. 

• Are employees using the benefits as expected? 
• What are the rates of participation? 
• Do employees enjoy the benefits on offer? 

Some benefits, like a wellness program, may have specific goals, such as reducing the company’s healthcare premiums. ROI can determine whether these goals have been successful and help HR teams build a budget for the following year. 

Beyond monetary ROI, employee engagement is another valuable metric. Although it’s historically been challenging to measure, organizations can gauge engagement using employee surveys and absence statistics. These data points may demonstrate links between mental stress, unhappiness, and sickness rates. By adjusting physical, mental, or financial wellness benefits, you can track whether these impact absenteeism. 

2. Cutting costs 

Using your ROI information, it’s easier to maximize the value of your benefits programs. For example, YorkHoist’s company leaders realized almost no one was using the benefit of a free company phone. Instead of wasting dollars on phones, the company added WiFi as a key pillar of their lifestyle spending account program. The result? Employees were able to cut the cost of using their phones while working from home. 

Optimization is key, says Rob Heir, VP of Total Rewards at Bright Health:

“We have to optimize. You're going to see a trend of reducing or eliminating underappreciated or underutilized programs so we can invest in other programs that employees value more. Do I know exactly what those will be? No, I don’t, but you look at your monitor list of the benefits that have been provided historically. What is being utilized, what’s not being utilized, and what are we being asked for? You’re always going to have your core benefits like retirement and healthcare, but those other benefits are probably going to evolve around that.”

Examining costs may also cause employers to think about current programs differently. For example, a hybrid employer could reevaluate expensive on-site perks like a cafeteria or geographical benefits focused on gyms or food establishments near the office. To increase participation, home office, food and grocery, and health and wellness stipends may deliver more spending freedom for remote and hybrid workers.

3. Finding new trends

Data highlights emerging patterns across your workforce. Some of these patterns may be general, but others may be centered on certain regions, age demographics, job titles, etc. 

For Michelle Kerr Stenzel, CHRO at Turnberry Solutions, this data is crucial in understanding what’s trending among other companies in her sector:

“We polled a lot of data points and got studies from our broker to help us know who we’re competing within our industry and sector. What are the max out-of-pockets? What are the deductibles? What are the employee costs of premiums per month? For us, we would look at professional services firms and technology companies and really make sure we’re competitive on those things I’d call core benefit offerings.”

4. Staying ahead of the competition 

A benefits benchmark report enables smaller organizations to stay ahead of the competition, even if they don’t have a large budget. These employers (including nonprofits or startups) can double down on characteristics like increased flexibility, great company culture, and creative benefits to position them as an employer of choice. 

How to get started with benefits benchmarking

Follow the steps below to design competitive employee benefits that will attract and retain top-tier talent. 

Analyze your existing benefits

Begin by benchmarking your current benefits. Basic categories include: 

• Health: Group health, vision, and dental insurance; HSA, FSA, or HRA plans; and any additional wellness and health benefits
• Financial: Compensation and bonus structure, retirement benefits, stock options, and rewards and recognition programs
• PTO: Vacation time and paid leave
• Insurance programs: Life, long-term disability, etc.
• Education: Professional development stipends, student loan repayment, etc. 
• Family assistance: Fertility and adoption benefits, childcare benefits, on-site lactation rooms, and more
• Work flexibility: Remote work, flexible schedules, job sharing, home office supplies, etc.
• Other perks: LSA programs, food and grocery, personal enrichment

Run employee benefits surveys 

An employee benefits survey gathers information about current programs and their effectiveness. The right mix of questions reveals employee satisfaction and gains insights into the benefits your employees seek. 

At LinkedIn, regular employee surveys are an opportunity to collect employee feedback and assess opportunities for improvement. For example, the company recently added a vacation spending category to their perks allowance program based on feedback from employees. Sr. Manager of Global Benefits Judy Mendoza explains the importance of collecting feedback:

“We listen to our employees because we want to make sure that we’re providing adequate feedback and response to those surveys.”

For inspiration, below are a few common questions you might include in your employee benefits survey. You can adjust these to reflect your company’s unique benefits. 

Likert scale questions 

Benefits surveys often include a Likert scale, with a list of statements accompanied by reply options ranging from “Strongly Agree” to “Strongly Disagree.”

• My employer’s [ ] benefits are generous. 
• I am satisfied with my employer’s [ ] benefits. 
• I understand the [ ] benefits offered by my employer.
• It is easy and straightforward to use my [ ] benefits. 
• My employer’s [ ] benefits allow me to choose which perks and services work best for me and my family.
• My employer’s [ ] benefits adequately meet my needs. 

Another popular format is to ask employees how they feel their benefits compare to other companies. Answers can follow this scale: Much better, Better, About the same, Worse, Much worse. 

• Do you consider your [ ] benefits better or worse than other employers? 

Numerical scale 

You can also ask employees to rate the personal value of certain benefits. Employees can answer using a scale of 1-10, with 1 being least important and 10 being most important.

• On a scale of 1-10, how important is [ ] benefit to you? 

Open text questions 

Open-ended questions provide a free text box for employees to express their opinions or concerns more openly. 

• What do you like the most about our current [ ] program?
• What do you like the least about our current [ ] program?
• What are your recommendations for improving our [ ] program?

Compare your data

Compare your benefits to others in the industry using these options:  

• Raw data sources: This is a highly manual option, but you can do a deep dive into sites like the Bureau of Labor Statistics. 
• Downloadable reports: Industry experts like SHRM or the Benepass Benchmarking Report do the legwork for you. 
• Professional providers: Many employers hire an industry expert or ask their broker to review benefits and compile the report.

When examining the results in the benchmark report, it’s important to remember that no organization can afford to offer all the benefits. Instead, use the data collected to explore which elements are most critical to your workforce and how to use them for maximum retention, employee engagement, and recruitment. 

13 expert tips for a competitive benefits strategy

Employee benefits is a subject that people leaders love to talk about. We’ve gathered some of their expert tips to kickstart your employee benefits benchmarking strategy: 

1. Listen to employees

“We do employee surveys on a regular cadence throughout the year. It’s important to hear employees and what their wishlists are. Make sure to prioritize those and say, ‘Okay, what is important to our employees? What are we seeing trending? What are other companies doing as well in this space?’ Then assess the financial viability from a company perspective.” - Judy Mendoza, Sr. Manager, Global Benefits at LinkedIn

2. Take employee demographics into account

“Consider this. Some organizations may offer a streaming subscription as a fun benefit or perk, which is lovely, but if you are a team of mostly parents, then flexible work hours could be considered far more valuable than a streaming subscription. This is why benefit benchmarking will always be developing. Teams change, people change, and society changes—what you offer as a benefit needs to change too.” - Alex Mastin, CEO and Founder at Home Grounds

3. Do your research

“I approach benefits benchmarking at my organization by first identifying the industry standards and best practices for benefits packages. I research what other companies in my industry are offering and what benefits are most valued by employees in the current job market. This helps me to understand what benefits are most important to potential hires and what can set my company apart from competitors.” - Luciano Colos, Founder and CEO at PitchGrade

4. Set short and long-term goals 

“It’s really important to set short- and long-term goals. While you may want to offer unlimited time off to your employees, that may not be the best financial solution for you at this point. Set yourself a target to revisit this initiative on an annual basis or whatever makes sense for you and your organization. Do what is attainable.” - Judy Mendoza, Sr. Manager, Global Benefits at LinkedIn 

5. Make it a year-long process

“Benefit planning tends to almost become more of a year-long activity where you’re doing your open enrollment in a very tight timeframe. Throughout the range of the year, you monitor how your benefits are being utilized, what’s going right and what’s going wrong. And then research and analyze external trends in the market that you may want to also evaluate or adopt.” - Rob Heir, VP, Total Rewards at Bright Health

6. Consider personalization

“I really dislike picking benefits for everybody’s lifestyle because you can’t help but think about what a certain population needs. Then you go for that, and you know you’re isolating other populations. People really expect personalization now.” - Anita Bahr, VP, HR at Millerbernd

7. Prioritize holistic well-being

“I have found that adopting a holistic strategy that prioritizes overall well-being is the secret to creating competitive benefits programs. Focusing only on standard perks like healthcare and retirement programs is no longer sufficient. The comprehensive benefits packages that support the physical, mental, and emotional well-being of today’s workers are in high demand. You can stand out from the competition and attract top talent by broadening the scope of rewards.” - Percy Grunwald, Co-Founder at Compare Banks

8. Embrace flexibility in benefits programs

“The most impactful step that HR leaders and employers can take to attract and retain top talent is to offer as much flexibility as possible within the scope of their business operations and services. A competitive, comprehensive, and equitable benefits program must address what parents and caregivers most need to balance work and family responsibilities—including flexibility in time off and leaves, flexible work schedules, and hybrid or remote work.” - Katrina Magdol, Fractional Chief HR Officer & Coach at Listen to Your Mothers

9. Communicate, communicate, communicate 

“Fluid communication with colleagues will be important and essential. It should not be limited to stating what benefits are being offered. Companies need to provide rationale for choosing the offerings or ‘the why’ and how it is going to create a win-win for the colleague and the company.” - Padma Thiruvengadam, CHRO & Board Advisor at Takeda, Lego Group

10. Experiment with your communication strategy

“Not only do we include education sessions as part of open enrollment, we send a monthly HR newsletter that talks about benefits to our employees. We’re always trying to plug little bite-size bits to employees, whether it’s in our town hall or our employee newsletter. Just like all employers, I haven’t solved the engagement problem and we’re always evaluating, “Is this the usage we would expect?” And tinkering our communication program based on that. You have to communicate with employees in a variety of ways, both formally and informally, and also in different mediums.” - Michelle Kerr Stenzel, CHRO at Turnberry Solutions 

11. Be flexible 

“People are looking for more and more flexibility, and that allows them to focus on what their priority is at the time. Are they focused on retirement? Are they focused on health benefits? Are they focused on flexible work? The more flexibility your package provides, it allows people to migrate to what’s important to them.” - Rob Heir, VP, Total Rewards at Bright Health

12. Go beyond cookie-cutter benefits

“I think generational gaps are having major impacts on benefits. I think maybe a couple of years ago we could have said, ‘These are your core benefit offerings.’ I feel like that space is evolving and employees are now wanting more than just your core medical, retirement, life, and disability, which is why LinkedIn and a lot of tech companies are focusing more on softer benefits because they attract talent and retain employees within your company. Employees want more than just your cookie-cutter normal type of offering.” - Judy Mendoza, Sr. Manager, Global Benefits at LinkedIn

13. Evaluate your benefits with a critical eye

“One of our five core values is inclusion, so we look at our benefits from that lens of, ‘Are our benefits really inclusive for all the ways that families come to be? Are our benefits really inclusive for all family structures or couple structures?’ We took a hard look at our benefits a couple of years ago with that in mind.” - Michelle Kerr Stenzel, CHRO at Turnberry Solutions

Benefits benchmarking FAQs

What key metrics should I consider when conducting benefits benchmarking?

The metrics you choose should correlate directly with the goals you want to achieve through benchmarking. Try tracking a variety of metrics, including:

• Overall benefits costs
• Employee contribution rates
• Benefits participation rates
• Utilization rates

Start by benchmarking initial metrics and tracking trends and changes over time to identify potential areas for improvement and make fact-based decisions. 

How often should I perform benefits benchmarking to stay competitive?

A good rule of thumb is to conduct benchmarking at least every year or when there are significant changes in the market or your company. This ensures your benefits package remains competitive and meets your employees’ needs. 

How can I compare the benefits my company offers to industry standards?

Obtain external benchmarking data from various sources such as industry associations, consulting firms, or third-party benefits providers. You can use this data to compare your company’s offerings with those of similar organizations regarding contribution options, coverage, and utilization rates. It may also be helpful to network and connect with HR pros in your industry to gather the latest insights on common benefits trends and practices.

Get a copy of our 2024 benchmarking guide

While there may be a wealth of information about traditional offerings like employee health insurance plans, perks such as LSAs are relatively new. Companies may struggle to understand what kinds of perks they should offer and how to build a benefits plan design for these emerging programs. 

That’s why we created the 2024 Benepass Benefits Benchmarking Report to help HR leaders craft perks programs that make the most sense for their businesses. The report breaks down how companies of all sizes create programs for wellness, LSA, WFH, professional enrichment, meals, and more, focusing on perks in the tech, healthcare and life sciences, retail, and financial services industries. 

The report also includes a deep dive into how employers design LSAs, which more companies are turning to when they want to provide maximum flexibility to their employees. Download the benchmarking report to get started.