Benefits as Essential Tool for Improving Employee Engagement
Pretium study finds benefits policies are increasingly important in driving employee engagement
Pretium Benefits & Employment Conditions Study (“the Study”) indicated benefits strategy has become an integral part in enhancing the value proposition of staff engagement, attraction and retention. When reviewing benefits policies and levels, the key considerations are:
· Improving employee engagement – this is the most important consideration since increasing awareness and understanding of benefits can improve employee perception of benefits value
· Attraction and retention – appropriate design of benefits programs to cater for employees’ needs at various levels. This could be an effective attraction and retention tool in talent competition, which is an angle that companies tend to easily over look
· Cost optimization - benefits are significant investment but cost optimization is neither the primary nor the only consideration. Companies are trying to strike a balance between optimizing benefits offering and managing costs
Among the companies surveyed, 53% of them indicated benefits cost accounts for less than 10% of their total payroll and 35% of the companies said the cost ranges from 10% to 20% of the total payroll. As the HR budget is always tight, it is a challenging task of how the 10%+ benefits budget should be prioritized and spent among the competing benefits demands to strike a balance between employer of choice versus cost effectiveness. Some companies are assessing employees’ perceived value of different benefits or employment conditions, while others are benchmarking the benefits competitiveness and potential gap to identify where the dollars should be spent. Analyzing the demographics of the employee population, identifying the market gap and referring to the perceived value of different benefit items will give insights to whether the budget should be spent on time-off benefits, insurance benefits that protect employees and their family members, or on retirement benefits that provide future financial security, etc.
More than 60% of the companies surveyed have plans in changing benefit programs or employment conditions, which is another signal indicating benefits are high on the HR priorities. Owing to rising medical costs, medical benefits (for instance, outpatient and hospitalization benefits upgrade and introduction of health management programs) top the agenda on benefits changes. There has also been increasing emphasis on work-life balance and employee education when making benefits changes. Obviously, the aging population weighs in the need to top up employer voluntary contribution to Mandatory Provident Fund. Again, this highlights the need for HR to prioritize among different benefits items and employment conditions to maximize the benefits dollars which is critical to improving employee engagement.
Cost is not the number one driver in selecting benefits providers. Service is the primary consideration which includes service provided to both the HR department and the employees directly. Service excellence is reflected from seamless delivery of the claim and administration processes, which is especially important for different types of medical and other insurances. With growing emphasis on self-service which enables employees to deal with the vendors or insurance companies directly for claim reimbursement or enquiries, system capability of the vendor becomes more important compared with the brand of the benefits providers.