Most Employers Don’t Know Where They Stand Without Benefits Benchmarking

Most companies set benefits the same way each year: They take the previous year’s plan, add whatever the renewal requires and move on. There’s no comparison to what similar employers nearby are offering, and no check against what candidates are seeing in competing offer letters.

Without benchmarking, you don’t really know whether your package attracts candidates or turns them away. You could be overpaying for a plan that still lags the market or sitting on a strong offering without realizing it’s a selling point.

What Is Benefits Benchmarking?

Benefits benchmarking is the comparison of your benefits offerings, including plan design elements and how other employers cut costs, against similar employers matched by industry, size and region.

A thorough analysis typically covers:

• Medical plan design, including deductibles, premiums and employer contribution percentage
• Dental and vision coverage
• PTO policy
• Retirement match
• Voluntary benefits such as life, disability and accident coverage
• Wellness and mental health programs
• Parental leave
• Remote and hybrid flexibility

Why Location-specific Benchmarking Matters

Benefits that look competitive on paper can still fall short locally. Cost of living, nearby labor markets and regional competition for talent all affect what “competitive” means, so a package benchmarked against national data can miss the mark. What works in one region may not hold up in another, even within the same state.

The Cost of Skipping It

Skipping benchmarking carries real, compounding costs:

• Adverse selection in hiring—A below-market package that goes unchecked tends to attract candidates who couldn’t get a better offer elsewhere.
• Retention leakage—Every employee who leaves for better benefits costs you in recruiting, onboarding and lost productivity while a replacement gets up to speed.
• Employee perception gap—Employees compare notes and see other job offers, so they already know how your benefits compare.

Warning Signs Your Benefits Are Falling Behind

A few signals tend to show up before the problem becomes obvious:

• Rising decline rates on job offers
• Exit interviews mentioning benefits or flexibility
• Rising voluntary turnover concentrated in specific roles or tenure bands
• Broker renewal conversations focused only on cost, with no mention of market competitiveness

Find Out Where You Stand

Lyceum Insurance Services provides benefits benchmarking as a service, comparing your current package against local and industry data so you know where you stand and where to make improvements.

Our team offers the annual Employee Benefits Benchmark Summary, which offers crucial information on how employers use benefits to attract and retain top talent.

Reach out today, and we’ll analyze your current benefits package against the Frederick and Montgomery County market.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.