Ready to Benchmark?
In today’s competitive workforce environment, employee benefits packages play an increasingly important role in attracting and retaining employees.1 At the same time, more states are passing paid family and medical leave (PFML) laws, employers are offering additional or modified types of paid and unpaid leave to remain relevant, and employees want to maintain the level of flexibility they became accustomed to during the pandemic.
To stay abreast of these emerging trends and the overall package for health and productivity that employers are offering, benchmarking has become more critical than ever. So, how do you get started or refresh your benchmarking efforts to ensure your offering is competitive, compliant, and cost-effective?
Approach
Benchmarking can mean different things to different people. But at its core, benchmarking is a process to measure or compare a company against certain indicators, industry standards, or best practices. It can be used for strategic management to evaluate a program and develop a framework to improve it.
For integrated absence management (IAM) programs, benchmarking often starts with reviewing plan and policy structure(s). It then moves on to evaluating processes and protocols. It continues by assessing program outcomes, such as incidence and duration, at least annually over time.
Plan and Policy Focus
To begin, consider the plans and policies that will be included in your evaluation. Most IAM benchmarking focuses on short-term disability (STD), long-term disability (LTD), and the federal Family and Medical Leave Act (FMLA). It might also weave in PFML, parental, or other company leaves; paid time off; or workers’ compensation policies. Plan and policy features to compare vary but usually include eligibility, waiting period, benefit amount, and duration of leave.
Preparation
The next step is to define your objectives for benchmarking. Think about what you want to accomplish and why, the problems you want to solve or questions you want to answer. For example, you might want to know what the most common plan design is and how it differs by industry, geography, or company size so that you can explain how your program could be more competitive to attract and retain employees.
Then, decide how you will gather the data and information you need to make the comparison. Plan and policy details may be included in your employee handbook or in separate policy documents. They might also (or alternatively) reside on your company website or intranet for employees to download.
What Comes Next?
Once your objectives are set and you have plan and policy documents in hand, you will be ready to compare your programs with others. As an example, a large hospital conducted a benchmarking exercise to understand how its STD plan compared with the plans of healthcare organizations of the same size. The team learned its benefit amount was overly generous and could be reduced from 100% pay for 26-weeks to a tiered 100% to 60% level, still be competitive, and generate savings of 6% on average.
In the next issue of @Work magazine, we will outline how you can use your information to effectively benchmark your IAM plans and policies to make the business case for change.
References
- Mohammed, Omar. More Companies Extend Parental Leave to Hold, Attract Talent. Newsweek. Nov. 3, 2023. Retrieved from https://bit.ly/3vkMjUT
