Best Metrics: Average Benefits

Offering benefits to your employees is a great additive to mix in with the salary you offer your employees. It lets your employees know they're valued and can invoke loyalty and appreciation in your employees. Nothing, however, is free and all benefits end up costing your company something. Being able to view what you offer your employees compared to what your competitors might be offering theirs, enables you to decide what the "standard" is, how much is too much, or whether you need to be offering more. 

• KPI: Average Benefits
• DEFINITION:  The perks that you offer to the talent that you hire into your company

SIGNIFICANCE

Average Benefits, as a financial metric, encapsulates the array of perks and entitlements offered by employers to their workforce. While certain benefits are mandated by law, such as health insurance and retirement plans, others are discretionary and serve as a means of demonstrating appreciation for employees' contributions and fostering a positive work environment.

RECOMMENDATION

By utilizing comparative analytics, CPAs might find that their clients' Average Benefits fall short compared to competitors, they may recommend conducting a thorough cost-benefit analysis of each benefit offered. This analysis can help identify areas where expenses outweigh the perceived value to employees, enabling strategic adjustments to the benefits plan to better align with both employee needs and the organization's financial goals. Additionally, CPAs may suggest exploring alternative benefit options or negotiating better terms with providers to optimize the value proposition for employees while controlling costs.

SPECIFIC INDUSTRIES

The importance of tracking Average Benefits can be significant across various industries, particularly those where employee benefits play a crucial role in attracting and retaining talent. Here are three industries where monitoring Average Benefits as a financial metric is typically essential:

1. Finance and Insurance Industry: Given the competitive nature of the finance and insurance sectors, offering attractive benefits packages is vital for talent acquisition and retention. (NAICS Code: 52 - Finance and Insurance)

2. Information Technology (IT) Services Industry: In the fast-paced and talent-driven IT services sector, competitive benefits packages are often key to attracting skilled professionals and maintaining a productive workforce. (NAICS Code: 5415 - Computer Systems Design and Related Services)

3. Healthcare and Social Assistance Industry: With high demand for skilled healthcare professionals and caregivers, providing comprehensive benefits is crucial for healthcare organizations to remain competitive and retain staff. (NAICS Code: 62 - Health Care and Social Assistance)

In these industries, where talent is in high demand and turnover can be costly, closely monitoring and optimizing Average Benefits can contribute to employee satisfaction, productivity, and overall organizational success.

Companies are generating more data than ever before, but most of it just sits there. Getting good insights from it is often too hard, too costly or just takes too much time. That's too bad because the benefits of being data-driven are substantial. (See The ROI of Big Data, Analytics & Benchmarking for more.) Part of the reason we developed our Big Data, analytics and benchmarking software was to solve this problem so CEOs and senior managers could get the data-driven insights they need to leverage strengths, strengthen weaknesses, identify threats and exploit opportunities. This series of blog posts examines the individual performance metrics that make up that analysis.

For more information on the value of measuring financial ratios, read here.