Business

Saturday November 14, 2009

Value of perks lost on workforce

By DANNY YAP


OVER 40% of employers think their employees do not appreciate the value of benefits given to them, according to the 2009 Asia Pacific Benefits Trends Survey conducted by Watson Wyatt.

The leading global consulting firm focuses on human capital and financial management.

The survey was conducted between July and September and covered over 15,000 organisations across 12 countries in the Asia-Pacific.

It highlighted a significant gap between the value of benefits provided by employers and its perceived value by employees.

Watson Wyatt (Singapore) Pte Ltd practice leader (benefits consulting) Mark Whatley says this problem represented a key challenge employers face in the design, implementation and communication of their benefits programme.

“Given the gap in the value of the benefits provided and the perceived value by employees, there is substantial wastage in the benefits component of the total compensation budget.

“Hence, companies that are managing costs only by containing salaries could be completely missing the mark,” he says.

Whatley says employees deserve a benefits package that works just as hard as they do.

“Paid vacation time, investment programmes, service recognition and retirement plans are integral to the collection of outstanding benefits that companies should offer to deserving employees,” he says.

The survey also revealed that over one-third of the companies in Asia-Pacific had not reviewed their benefits strategy in the last 12 months.

This number varies across countries in the region. For instance, close to half the companies in Thailand and China have not reviewed their benefits strategy.

In contrast, companies in Hong Kong were more vigilant with only a quarter of the companies not having done so.

These findings have grave implications for companies on several levels – cost, employee engagement, and attraction and retention of talent. The issue is compounded by the financial crisis.

“Cost-cutting measures are already under way in many businesses, regardless of size. Those that are managing well are the ones that are exercising prudence in all areas of their operations,” Whatley says.

Watson Wyatt (Malaysia) Sdn Bhd country manager Vivek Nath says the human resource function is facing intense pressure to deliver more value to the company on a tighter budget, but employee benefits have always been an important component of the employment package.

Says Whatley: “Employee benefits make up 20% to 40% of the total reward package. During dynamic economic times, it is crucial that employers review their benefits strategy and ensure that every “benefit dollar” will contribute effectively to the employee value proposition.

“This is to ensure appropriate return-on-investment.”

He says the research also showed an increasing interest in adopting employee choice programmes or flexible benefits.

“Of the companies surveyed, 6% are in the process of implementing such programmes and 15% are considering implementing them,” Whatley says.

According to Watson Wyatt (Singapore) Pte Ltd director Zainuddin Jawadwala, a flexible benefit scheme empowers employees to pick and choose how they want to utilise their benefit dollars, and to potentially overcome the limitations of a fixed benefits plan.

“It provides better control over costs, improves employee perception of benefits and, hence, contributes toward furthering employees’ total reward satisfaction and engagement,” he says.

He adds that it is time companies that are offering fixed benefits explore the flexible benefits approach as it has strong merits and advantages in helping employers build a more engaged workforce.

On remuneration, Nath says 2008 was a boom year for talent, and remuneration rose on average 6.5%, compared with the previous year.

“This year will be a slow year for salary increments, about 3% to 4%. We anticipate a slight upswing in remuneration to about 4% to 5% next year,” Nath says, adding that remuneration increases for employees were in tandem with the economic recovery.

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