India, China lead the region in having a corporate benefits strategy in place: Watson Wyatt survey
Over 40 percent of employers in the Asia Pacific region think that their employees do not appreciate the value of benefits provided for them, according to a survey on employee benefits trends by Watson Wyatt, a leading global consulting firm.
The survey of employers conducted across 12 countries in Asia-Pacific in July, highlighted a significant gap between the value of benefits provided by the employer and their perceived value by the employees.
This represents a key challenge that employers face in the design, implementation and communication of their benefits programmes.
In India – almost 25 percent of employers perceive that their employees are unable to understand or fully value their benefits programmes.
Interestingly, India boasts of the highest number of firms at 79%, after China (84%), that have put in place a well-defined corporate benefits strategy.
For almost 40% of the companies surveyed, benefits administered are being determined globally.
“Given the gap in the value of benefits provided and the perceived value by employees, there is substantial wastage in the benefits component of the total compensation budget. Additionally, the growth in benefit costs also remains in the double digits and shows no signs of easing. Companies that are managing costs only by containing salaries could be completely missing the mark here,” said Andrew Heard, Asia-Pacific Benefits Practice Director of Watson Wyatt.
“While India and China lead the region in having a benefits strategy in place, there are more companies in India saying they provide less than 10% of payroll than the average norm in Asia Pacific. More than 55 percent of the employers in China think that employees undervalue the benefits provided to them. This is in contract to India, where employers are more positive about the value employees associate with benefits; only about one-fourth think that employees undervalue the benefits given to them” said Kulin Patel, Head of Benefits Practice, Watson Wyatt India.
The survey also found that over one-third of the companies in Asia-Pacific have not reviewed their benefits strategy in the last 12 months.
This number varies across countries in the region. Close to half of the companies in Thailand and China have not reviewed their benefits strategy. In contrast, companies in Hong Kong are 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 of cost is compounded by the financial crisis. Cost-cutting measures are already underway in many businesses, regardless of size.
Those that are managing well are the ones that are exercising prudence in all areas of their operations.
“With benefits costs facing a double digit growth, cost containment is a major challenge for organisations. Especially since the cost of benefits could form anywhere between 10 to 40 percent of the total compensation package,” added Mr.Patel.
The research also showed an increasing interest in adopting employee choice programmes. Of the companies surveyed, 6 percent are in the process of implementing it and 15 percent are considering implementing it. A flexible benefit scheme which empowers employees to pick and choose how they want to utilise their benefits dollars, has the potential to overcome the limitations of a fixed benefits plan. It provides better control over costs, improves employee perception of benefits and thus contributes toward furthering employees’ total reward satisfaction and engagement.
“It is time for companies that are offering a fixed benefits plan to explore alternatives such as a flexible benefits approach as it has a strong advantage in helping employers build a more engaged workforce that will be ready to drive competitive success as the economy recovers,” said Mr Heard.
About Watson Wyatt
Watson Wyatt (NYSE, NASDAQ: WW) is the trusted business partner to the worlds leading organizations on people and financial issues. The firms global services include: managing the cost and effectiveness of employee benefit programs; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial services companies; and delivering related technology, outsourcing and data services. Watson Wyatt has 7,500 associates in 33 countries and is located on the Web at http://www.watsonwyatt.com.
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