Employee benefits packages are essential in retaining and attracting talent and fostering employee satisfaction. Recent studies have shown that 80% of employees would opt for additional benefits instead of a pay raise, and 70% of American workers' decision to accept or decline a job offer hinges on the company-provided benefits. These statistics underscore the value employees place on benefits, making it a top priority for your organization to offer the best packages possible.
Building and offering an appealing employee benefits package is an ongoing process. With costs on the rise and employees' needs and wants constantly evolving, your HR department must regularly evaluate and assess your benefits to ensure they are financially favorable for the company and provide value to potential and current employees. This blog will discuss:
- The importance of an employee benefits analysis
- How to analyze your company's employee benefits
- How to conduct a competitive benefits analysis
The importance of an employee benefits analysis
An employee benefits analysis involves evaluating and analyzing what benefits your organization offers its employees. These benefits may include health insurance, bonuses, paid time off, professional development opportunities, and wellness programs. Conducting a benefits analysis enables your company to:
- Identify opportunities for improvement
- Assess if the current benefits package meets employees' needs and preferences
- Compare current offerings to other companies
- Analyze and manage costs
- Evaluate employee utilization
- Ensure compliance with industry standards and relevant laws and regulations
Regular analysis lets you stay current on trends and benchmark your company’s benefits package against industry standards and competitors. It also ensures that your company offers a well-designed benefits package that can meet the diverse needs of your workforce and contribute to their overall well-being. Moreover, the benefits package should align with your company’s strategic goals, values, and, most importantly, budget.
What is an employee benefit?
An employee benefit is a form of compensation or perk beyond employees' regular salary or wages. The benefits you offer will depend on factors such as your business type, industry, location, and local laws.
Some common examples of employee benefits include insurance plans (such as health, dental, vision, and life coverage), opportunities for professional development, paid time off, and retirement savings plans. By providing these benefits, your company can attract and retain talented employees while ensuring employee engagement, wellness, and productivity.
How to analyze your company's employee benefits
Reviewing your employee benefits will provide insight into what benefits are currently offered, which benefits your employees are using, and more. Some steps to help you through this process include:
- Take an inventory of current benefits
- Calculate the cost of each benefit
- Assess benefit utilization rates
- Evaluate employee satisfaction
Review current benefits
Taking an inventory of current benefits will provide a clear overview of your company's perks. This is also an opportunity to identify the coverage levels or scope of options available for each benefit. For instance, health insurance can be broken down by plan type, deductible, and more. To start analyzing your employee benefits, you should begin by reviewing any documentation that outlines what's available to employees and at what stage of their employment.
You can categorize your employee benefits package into two types: standard benefits and additional perks. Standard benefits include health insurance, parental leave, and disability insurance. Additional perks could include pet insurance, wellness programs, professional development programs, and dental and vision insurance.
Calculate the benefit costs
Once you have become familiar with your organization's benefits, it is vital to determine the average benefits cost per employee and the total annual cost of the benefits program. With the rising cost of benefits, it's important to regularly assess these expenses against your company's budget.
You can find the cost of benefits per employee by dividing the total benefits cost by the number of employees. Another option is to reference an online resource or platform-based employee cost calculator to determine these costs. These calculators require information such as the employee's hourly wage or salary, insurance costs, and annual contribution for additional perks. After obtaining these figures, you can determine the financial impact of the compensation and benefits package and how it compares to industry benchmarks.
Assess benefit utilization rates
It is important to know which benefits your employees are using to better understand the effectiveness of your benefits package. This information can provide insights into your employees' needs and preferences and help you identify opportunities to eliminate rarely used benefits. For instance, if your company offers transportation benefits, but most of your employees choose to work remotely, it may be time to reconsider this perk.
The benefit utilization rate refers to the percentage of employees who opt for and utilize a specific benefit offered by your company. This number can be calculated and compared with industry standards to determine whether the benefit is being overused or underused. This analysis can then help you identify the need for any modifications to the benefit package.
Survey your employees
Employee surveys and satisfaction scores can provide valuable insights into the success of a benefits program. By gathering feedback from employees, you can determine their level of interest in current benefits, such as coverage options and ease of use, as well as their overall satisfaction with each benefit or perk offered.
This provides an opportunity to identify any areas of improvement and obtain suggestions for new benefits that can be added to the package in the future. Ultimately, these findings can help the company retain talent and appeal to prospective job candidates.
Benchmark your employee benefits
Employee benefits are a crucial aspect of attracting and retaining top talent. To assess the competitiveness of your organization's benefits package, you can conduct employee benefits benchmarking. This involves analyzing industry data to determine how your benefits compare to those of similar-sized companies in your industry regarding plan designs and costs. For example, CBIZ's Annual Employee Benefits Benchmark Report is an excellent resource that compiles insights and statistics regarding employee benefits plan costs, health plan designs, and employee engagement and wellbeing, which can offer valuable visibility into industry trends.
You can also consult resources like industry reports, Glassdoor, LinkedIn, job postings, and company websites to stay current with benefits trends. Conducting this analysis can help identify new market trends, discover areas for improvement, and inform future strategies.
Turn your insights into action
When assessing your employee benefits package, it's essential to consider the data you've gathered on costs, utilization rates, and your competitors, along with the needs and preferences of your employees. There is no one-size-fits-all solution for companies and employees, so you should select benefits that make financial sense for your organization, that your employees will utilize, and will help you attract top talent. Once you have made these changes, be sure to communicate them effectively to your workforce.
Conducting an analysis of employee benefits can provide numerous advantages to both your workforce and your company's financial situation. By assessing the quality of the benefits you offer, you can have a significant impact on your organization's future success in recruitment, retention, and cost-effectiveness.
