Is your employee benefits program as competitive as it can be? Are you paying too much, or are you offering incentives that truly help to retain employees over time? What are industry leaders and/or your competitors doing with their benefit plans—and how does yours compare?
According to the 2015 Unum Benefits Buyers’ Study, 78 percent of employees carefully consider the benefits package in determining whether or not to accept a job offer. If your company isn’t privy to benchmarking data surrounding your benefits program, it’s likely you don’t have all the necessary information to make informed decisions about optimizing your program, and making it as attractive to current and potential employees as it could be. Benchmarking can help you do that; in fact, we believe benchmarking your benefit plan is essential for many reasons.
What is Employee Benefits Benchmarking?
Essentially, employee benefits benchmarking is the practice of comparing benefits offered by your company to those of similar employers in similar industries and similar geographies. Variables that can be benchmarked are numerous and range from plan deductibles, out-of-pocket maximums, employee contributions and much more.
Once data is collected and analyzed, you and your employee benefits broker or benefits consultant can collectively make smart decisions about benefit levels and specific plan offerings.
What are the Benefits of Employee Benefits Plan Benchmarking for Your Business?
- Enhancing Talent Acquisition Strategies: Employee benefits are a key component of an overall compensation equation these days. As employers may compete over the same talent in some talent pools, it’s vital, therefore, that you understand the specific level of benefits that are needed to compete for qualified employees.
- Keeping Health Care Costs in Check: It goes without saying that health insurance represents a significant expense for businesses today. It’s critical you ensure that your employee benefit spend is as efficient as it can be. Benchmarking your plan against those of industry leaders and competitors can yield valuable insight in this regard.
- Providing Verifiable Insight on What Your Health Costs Should Be: It may seem counterintuitive, but shopping the market doesn’t necessarily yield the lowest employee benefit plan costs. Instead, benchmarking helps you understand what those costs should be based on quantifiable industry data. With information in hand, you can understand what an acceptable price should be, and then determine how your current costs compare with those benchmarks. You’ll also need to put that information in its proper context. For example, you should understand if and how your company’s demographics differ from the benchmarks, or whether your claims rate is significantly higher or lower than those benchmarks.
- Determining Employee Benefit Plan Return on Investment (ROI): Solid benchmarking data can help you see whether your business’ employee benefits spend is paying off in terms of retaining valued employees and keeping morale high. If the data suggests otherwise, you have the knowledge in hand to pursue other strategies of accomplishing those goals—without overspending on employee benefits.
- Delivering Market Intelligence Beyond Employee Benefit Data: Through the process of benchmarking, you may learn about companies that you didn’t know about, or consider direct competitors.
- Maximizing Employee Productivity: Benchmarking and productivity may not seem directly correlated, but according to Gallup’s most recent employee engagement data, 87 percent of employees do not feel engaged at work—and the most common reasons cited are low salaries and limited benefits. If your benefit program meets or exceeds its benchmarks, and you communicate that effectively to employees, there’s a good chance they’ll feel more engaged, and by extension, more productive.
Once your employee benefits advisor analyzes the benchmark data and discusses it with you, you’ll be in a good position to set a target price for your employee benefits plan before you go to market.
How Often Should Your Business Benchmark its Employee Benefit Plan?
The answer really depends. Some businesses benchmark every few years. Others, meanwhile, benchmark to measure their employee benefit plan’s effectiveness in light of specific needs or events, such as the launch of a new division, or an acquisition.
Marsh & McLennan Offers Industry-Leading Benchmarking Through Mercer’s National Survey of Employer-Sponsored Health Plans
Established in 1986, Mercer’s National Survey of Employer-Sponsored Health Plans is the nation’s largest, most authoritative annual survey on the topic of health and benefits.
The survey has long been a preeminent source of timely, reliable health benefit information, used by employers, policymakers, the health care industry and the media. Unlike other surveys conducted by benefit professionals, Mercer’s survey is statistically representative focused squarely on the strategic issues that matter most to employer health plan sponsors of all U.S. health plans with 10 or more employees — which means we can provide precise health plan benchmark data for employer groups based on industry, size and location.
- Most Participants – Nearly 2,500 employers participated in 2017, far more than most other health benefits surveys.
- Highest Standards – Designed by statisticians at Research Triangle Institute, the survey uses scientific sampling and weighting methodologies.
- Sharpest Focus – Mercer’s health benefit experts frame the questions so you get the data you need.
How Can This Benefit Your Business?
Marsh & McLennan Agency provides benchmarking results from the survey to its clients to assist in reviewing existing benefit plan design and strategies. Future planning and goal-setting can also be fortified with this valuable benchmarking tool.
To learn more about benchmarking capabilities available to your business, please contact Megan Baker, Manager of Client Services for the Cleveland Market of Marsh & McLennan Agency, formerly Benefits Resource Group. Marsh & McLennan partners with privately held businesses, individuals and public companies that seek solutions that go beyond traditional employee benefits services to help them better manage their bottom line. You may contact Megan by phone at 216-520-5000 or by email at Megan.firstname.lastname@example.org.
Disclaimer: This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change.