Benefits benchmarking: why knowing what everyone else offers is only the starting point

The real shift is towards relevance

One of the clearest messages from the research is that reward is becoming more personal.

The days when a relatively standard package could be expected to suit everyone are fading. Employees have different financial circumstances, family situations, health needs and priorities at different stages of their lives.

This is one reason why employers continue to explore benefits such as fertility and menopause support, neurodiversity provision, financial education and more flexible forms of leave. The research also highlights a growing range of benefits designed around employee experience, including volunteering days, recognition programmes, birthday leave and holiday purchase arrangements.

Benchmarking data in pay and reward can help organisations spot these emerging trends early. It can show where the market is moving before a benefit becomes an established expectation.

But again, there is a difference between recognising a trend and following it without thinking.

For one workforce, enhanced family support may be a major differentiator. For another, financial wellbeing or additional annual leave may have much greater impact. A workforce with a high proportion of younger employees may value different things from one with many employees approaching retirement.

The benchmark gives you the context. Employee insight should help you make the decision.

Non-financial rewards deserve more attention

Benefits benchmarking should also go beyond insured benefits, allowances and salary sacrifice arrangements.

Our survey found that 83% of employers offer some form of non-monetary reward. Recognition programmes are the most common, offered by 50% of respondents, followed by special or additional leave and long-service awards.

This is important because, in tight budget environments, organisations can sometimes assume that improving reward means spending more money. It doesn’t have to.

Recognition, additional time off, flexibility and opportunities to contribute to causes employees care about can all add value to the employee experience. They will not replace fair pay, obviously, and employers should not pretend that a recognition platform makes up for an uncompetitive salary. But when used properly, non-financial rewards can strengthen engagement and make the overall employment experience feel more positive.

They can also be relatively affordable. Organisations should look beyond the traditional benefits package and identify ideas that might deliver genuine employee value without automatically creating a significant ongoing cost.

Flexible benefits: growing interest, but a reality check is needed

Flexible benefit schemes are a good example of why benchmarking employee benefits needs interpretation rather than simple comparison.

Only 19% of employers currently offer a flexible benefits scheme, although a further 18% are actively considering one, in line with a recent report by Employee Benefits. That suggests growing interest, but cautious adoption.

The attraction is clear. Flexible benefits allow employees to choose options that suit their own lives and circumstances. They can support a more diverse workforce, improve perceived relevance and potentially strengthen engagement, retention and the wider employee value proposition.

There can also be financial and administrative advantages, including opportunities for tax and National Insurance efficiencies and better management of reward spend.

But flexibility is not automatically simple. Employers report significant challenges around administration, compliance, managing multiple providers and employee communication. Low take-up can undermine the value of a scheme, while too much choice can create confusion. There is also a certain irony in flexible benefits becoming rigid when employees can only change their choices during fixed enrolment windows.

In other words, whilst flexible benefit schemes are gaining traction, it doesn’t necessarily mean it is right for every organisation. Sometimes a simpler approach – allowing holiday purchase, for example, or offering a carefully selected range of voluntary benefits – may deliver much of the value without all the complexity.

The best benchmark is not always the most generous one

Perhaps the most useful lesson from our research is that benefits are increasingly being judged on value, utilisation and impact.

Employers are reviewing benefits that have low take-up or rising costs and asking harder questions about return on investment. At the same time, survey respondents identified annual leave flexibility, health benefits, financial security and wellbeing support as among the areas delivering particularly strong perceived value.

The aim of benchmarking benefits should not be to have the most generous benefits package on paper. Nor should it be to sit exactly at the market median across every category.

The aim should be to understand the market well enough to make informed choices.

A good benefits strategy should combine external benchmarking with internal employee feedback, utilisation data, affordability and a clear understanding of the organisation's employee value proposition.

Because the most expensive benefit is not necessarily the one that costs the most. Sometimes it is the benefit nobody knows about, nobody understands or nobody uses.

The bottom line

Benefits benchmarking remains essential. In a competitive labour market, employers need to know what has become standard, where expectations are rising and how their reward package compares.

But benchmarking should be the starting point, not the strategy.

Our survey results show a market that is becoming broader, more personalised and more focused on employee wellbeing and experience. The challenge for employers is not simply to offer more. It is to offer the right things.

That means understanding what employees value, recognising that different people value different benefits, and being prepared to review benefits that no longer deliver.

The organisations that get this right will not necessarily have the longest benefits brochure. They will have a benefits package that employees understand, value and genuinely feel is designed with them in mind.