The Benefits ‘Goldilocks Zone’

It seems that every day brings news of layoffs at marque companies. Even with these stories, the labor market remains tight. Savvy employers understand that a well-designed Employee Benefits Package is a key component in recruiting a talented workforce.

It’s no longer about “perks” or “fringe benefits.” Benefits comprise an increasing share of employee compensation. According to a recent Bureau of Labor statistics report, benefits account for approximately 30% of total rewards. It’s a huge investment.

Employees often take the benefit program into account when deciding where to apply. Many will accept a lower salary if the employer offers a robust package. Given the importance and expense, it’s critical to develop a benefits package that attracts and retains employees.

But how can an organization know if what they’re offering is competitive? Is it too little? Is it too much?
Or is it just right—is it in the “Goldilocks Zone”?

Benchmarking can help answer this question. By closely reviewing your program, you’ll gain insights into how you stack up to other employers. A good benchmarking tool provides the opportunity to compare your offerings against organizations in your industry, geography, structure and size. Armed with this information, you can make educated decisions about the design of your program.

Why benchmark?

Benefit design varies across industries and organizations. Knowing where you stand will help you standout.

1. Align your culture with your brand: Benchmarking provides insights into what it takes to be an employer of choice. You’ll determine if your program enhances or detracts from your image in the marketplace.
2. Keeps you competitive: Compare your benefits program against other organizations in your industry or region. By understanding your competitors’ offerings, you can ensure your program is competitive and attractive to top talent.
3. Employee Retention: Offering inspired options is a critical part of employee satisfaction and retention. Benchmarking can help you find the benefits that are most valued by your employees and adjust your program accordingly.
4. Strategic Planning: Benchmarking provides valuable insights into industry developments and best practices. This information can be used to inform strategic planning and decision-making related to your benefits program, helping you stay ahead of the curve.
5. Cost Control: Identify opportunities to control costs while still providing competitive benefits. By comparing your program to others, you can determine where you may be overspending or where you may need to invest more to remain competitive.
6. Compliance: Help ensure your benefits program meets legal and regulatory requirements. Using benchmarking data, it’s possible to identify areas where you’re falling short and take steps to come into compliance.

Is evaluating right for you?

Some might think that benchmarking is only meant for larger companies or certain industries. However,
organizations of any size or industry can reap the rewards of comparing their programs.

For example, I work with many employers in the hospitality space. Due to the fluctuations and structure of the workforce, hospitality employers are faced with balancing the needs of a diverse staff within a tight budget. Comparing against your peers can open possibilities for innovative and flexible plans.

Large national data sets provide information on standard health and welfare offerings and more diverse
benefits such as tuition reimbursement, PTO structures, retirement programs or voluntary plans. Localized or regional tools allow an organization such as a restaurant or independent hotel to compare their program on categories such as employee cost share, contributions, deductibles, and funding structures across their medical, dental, vision, prescription, disability and life insurance plans.

Getting Started

There are numerous reports available for free or at a nominal cost that provide an overview of the benefits landscape. But to have a real impact, particularly for mid-size and smaller entities, a flexible platform offering localized data sets is ideal.

Your benefits broker can be a tremendous resource and should have access to a benchmarking tool to develop a report tailored to your industry, location, size and plan structure. A well-designed report will not only present the data in a tabular format, but it will also offer insights via easy-to-understand charts and graphs.

Business leaders in the know recognize that employee benefits represent a big part of their operational budget. The development of a cost-effective program that attracts and retains a stable workforce rests on a bedrock of information. Quality benchmarking helps take the guesswork out of the process, so you can craft a package that contributes to the overall health of your workforce and organization. With this process, you’ll have a benefit program that’s just right for you.