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Table of Contents
Executive summary..............................................................2
Key findings .........................................................................3
About the survey ..................................................................3
Top HR challenges ..............................................................4
Benefits strategy ..................................................................5
Benefits provision.................................................................7
Key drivers of benefits provision ..........................................8
Is higher benefits spending by an employer valued more
by employees? .....................................................................9
Reporting to employees on their benefits ..........................10
Administration of benefits ..................................................11
Benefits design - flexible or traditional? .............................12
Conclusion .........................................................................13
Featured Figures
Figure 1: Top HR challenges .............................................................. 4
Figure 2: Corporate benefits strategy ................................................. 5
Figure 3: Last review of benefits strategy .......................................... 6
Figure 4: Type of benefits design........................................................ 7
Figure 5: Most popular benefits .......................................................... 7
Figure 6: Top drivers of benefits provision .......................................... 8
Figure 7: Spending on benefits as a percentage of payroll................. 9
Figure 8: Spending on benefits versus value ...................................... 9
Figure 9: Benefits communication to employees .............................. 10
Figure 10: Value attached by type of reporting................................. 10
Figure 11: Administration of benefits ................................................ 11
Figure 12: Flexible versus traditional benefits .................................. 12
Executive summary
The economic turbulence of the past year has driven organisations across
the globe to make short and long term cut-backs in almost every aspect of
their operating costs. In many cases, the single biggest business cost is
people: salaries and benefits. Most organisations have responded by
implementing salary freezes or containing salary growth. On the other
hand, growth in benefit costs remains in the double digits and shows no
signs of easing, particularly with medical costs continuing to rise. Despite
the investment made by organisations in benefits programmes, Watson
Wyatts research shows that a large number of employees still do not
understand or fully value their benefits programmes.
Key findings
Controlling cost is the biggest and most widely cited HR
challenge.
One-third of firms surveyed do not have a benefits strategy in
place, but 83 percent of those who have feel that the benefits
provided are effective in meeting the needs of their
employees.
Despite a tough economic environment, more than one-third of
the companies have not reviewed their benefits strategy in the
last 12 months
Traditional benefits dominate but one-third are exploring
flexible benefits.
40 percent of the respondents spend over 20 percent of their
payroll on employee benefits. However, the variation across
countries surveyed is significant.
Over one-third of the employees do not value benefits
sufficiently, irrespective of what employers spend.
Only half the respondents have a benefit communication
programme in place.
Top HR challenges
The survey showed that Controlling
Cost is the key HR challenge as cited
by HR professionals. This can be
understood in the light of tighter
corporate budgets brought about by
the financial crisis. Amongst the
eleven challenges outlined in the
survey which included challenges
like attraction and retention,
organisational transformation,
improving communication,
implementing flexible benefits, risk
management etc Controlling Cost
emerged the most widely cited
challenge 64 percent of the
respondents cite it as one of their top
three challenges - with 37 percent of
those respondents naming it biggest.
% of responses
13%
50%
40%
14%
15%
3rd Biggest
30%
20%
16%
2nd Biggest
20%
22%
37%
10%
19%
13%
0%
Controlling Cost
Improving Performance
Management
Biggest
Benefits strategy
An employee benefits programme has three key objectives: to
attract, retain and engage an organisations employees. It is thus
important for companies to have a good understanding of the
objectives that benefits provision should meet. A well-laid out
benefits strategy can play an instrumental role in achieving these
objectives.
The benefits trends survey results show that 34 percent of the
respondents do not yet have a corporate benefits strategy in
place. This is an alarming result especially in the aftermath of the
recent economic crisis. The survey also finds that of the
employers who have a benefits strategy in place, 83 percent
believe that their benefits strategy is effective in meeting the
needs of the employees. Looking at variations across countries,
the survey reveals that China and India stand out as countries
with the highest percentage of respondents having a corporate
benefits strategy in place - 84 and 79 percent respectively. In
contrast to this, almost 45 percent of the firms in the sample in
Thailand and Vietnam do not have a benefits strategy.
According to the results, 54 percent of the respondents say that
their benefits strategy is determined locally or with local inputs,
while 33 percent say that it is determined globally or with global
inputs. However, the proportion of companies where benefits
strategies are determined globally is slightly higher in India, China
and the Philippines, for about 40 percent of the companies. Our
survey also suggests that the effectiveness of the benefits
strategy does not seem to be affected by where it is determined.
No 34%
Yes 66%
38 percent of companies
surveyed have not
reviewed their benefits
strategy in last 12 months.
27%
6-12 months
35%
25%
12-24 months
More than 24 months
13%
0%
10%
20%
30%
40%
% of responses
Benefits provision
Traditional benefits dominate but flexible benefits schemes are
also gaining favour. This holds true for employers across all
countries. Organisations generally offer a wide range of benefits
to meet the needs of their employees. Medical screening, life
insurance provision, additional annual leave, pension schemes
and dental checkups are among the most common benefits
provided in the region. Our survey respondents suggest that
private medical insurance and additional annual leave are the
most popular benefits with employees.
As different benefits provisions serve different needs of
employees, employers are taking steps to make sure that there
are enough benefits available to cater to the needs of a diverse
workforce. Employers across the region are planning to
implement or further increase the provision of benefits.
Retirement schemes, medical screening, additional annual leave,
life insurance and company car feature among the benefits that
companies plan to introduce in the near future.
73%
Flexible Benefits
17%
Considering Flex
15%
10%
Implementing Flex
6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
% of responses
Employee Opinion
10%
12%
Costs (implementation)
16%
14%
15%
14%
28%
Costs (Ongoing)
13%
6%
37%
0%
25%
20%
40%
13%
60%
80%
% of responses
Biggest
2nd Biggest
3rd Biggest
Over 20%
10-20%
Less
than 10%
Asia Pacific
40
35
25
Philippines
80
16
China
56
20
24
Malaysia
42
47
11
Thailand
40
27
33
India
35
26
39
Hong Kong
22
49
30
Vietnam
61
30
*The figures above may not total to 100 due to rounding off
60%
54%
48%
48%
40%
33%
33%
26%
21%
20%
10%
8%
7%
6%
5%
0%
Over 20%
10-20%
< 10%
Reporting to employees on
their benefits
Watson Wyatts WorkAsiaTM research
reveals that the provision of benefitsrelated information boosts overall
employee satisfaction with the benefits
package. Benefits satisfaction itself is
positively correlated with employee
engagement. Thus, it is important for
firms to create an environment that
includes a clear dissemination of
information and clarity around the
benefits provided.
% resp o n ses
70%
60%
50%
36%
40%
30%
33%
21%
20%
10%
49%
44%
10%
10%
9%
2%
14%
4%
0%
Yes, web-based
Highly value them
No
Don't Value
Administration of benefits
There is still significant opportunity for organisations to improve
the efficiency of benefit administration and reduce the overall
administrative burden and cost. 70 percent of the companies in
the survey administer benefits in-house and the administration is
mostly paper-based. 19 percent use third party administrators.
Use of outsourced HR support is much lower with only 7 percent
of employers using it.
Third Party/
Outsourced
Vietnam
92
Malaysia
76
20
Thailand
74
17
Hong Kong
66
26
China
55
41
Philippines
54
30
India
50
42
Traditional benefits
68%
62%
40%
23%
32%
42%
Regard benefits as
'effective' or 'very effective'
88%
79%
Report to employees
55%
37%
Conclusion
Despite the significant spend on benefits across Asia Pacific, not
all organisations have a benefits strategy and many have not
reviewed their strategy for some time. About half the
organisations surveyed do not provide communication
programmes around the total employee reward; few allow
employees to choose the benefits that they value the most and
therefore, not surprisingly, the total investment is still not well
appreciated by employees.
If we compare firms that are providing a flexible benefits scheme
with those that are providing traditional benefits, we find that it is
more common for firms that provide flexible benefits to have a
well defined corporate benefits strategy in place and
communicate information on benefits to their employees.
Additionally, a greater proportion of these firms have reviewed
their benefits strategy in the last six months and are more positive
about the effectiveness of benefits provided. The organisations
that have taken this action, and made adjustments to suit the
2009 and 2010 business climate will fare better, both in cost
savings and employee attraction, retention and engagement
leading to a better competitive edge.
locations
ASIA-PACIFIC Bangkok Beijing Bengaluru Delhi Guangzhou
Hanoi Ho Chi Minh Hong Kong Jakarta Kolkata Kuala Lumpur
Manila Melbourne Mumbai Seoul Shanghai Shenzen
Singapore Sydney Taipei Tokyo Wuhan
EUROPE Amsterdam Apeldoorn Birmingham Bristol Brussels
Budapest Dublin Dsseldorf Edinburgh Eindhoven Frankfurt
Leeds Levallois-Perret Lisbon London Madrid Manchester
Milan Munich Nieuwegein Paris Purmerend Ratingen Redhill
Reigate Rome Rotterdam Stockholm Vienna Welwyn
Wiesbaden Woerden Zrich
LATIN AMERICA Bogot Buenos Aires Mexico City
Montevideo San Juan Santiago So Paolo
NORTH AMERICA Atlanta Berwyn, Pa Boston Calgary
Charlotte Chicago Cincinnati Cleveland Columbus Dallas
Denver Detroit Grand Rapids Honolulu Houston Irvine
Kitchener-Waterloo Los Angeles Memphis Miami Minneapolis
Montral New York Paramus, N.J. Philadelphia Phoenix
Portland Rochelle Park, N.J. St. Louis San Diego San Francisco
Santa Clara Seattle Stamford Tampa Toronto Vancouver
Washington, D.C.
watsonwyatt.com
September 2009