HONG KONG, 22 April 2015 - Hong Kong companies are seeing a major gap between the amount of money they spend on employee benefits and the value they get from them, according to new research by leading global professional services company Towers Watson (NASDAQ: TW). A total of 1,145 organisations across 20 countries in Asia Pacific participated in the survey making it the most comprehensive Asia Pacific Benefits Trends survey conducted.
Benefits are increasingly seen as an integral part of an Employee Value Proposition — a reward lever to help attract, retain and engage employees. As such, two-thirds of Hong Kong employers surveyed said that attraction and retention of key talent is the major focus of their benefit strategies.
At the same time, benefit costs, which already represent a significant percentage of payroll costs, continue to rise and the management of benefit costs is cited as the top challenge to employers. Whilst more than a quarter of employers said they spend more than 20% of payroll on benefits, only 10% think the benefits are highly valued by employees.
In addition, Hong Kong companies that communicate their benefits effectively believe that their benefits were more highly valued by employees than those that do not communicate effectively.
“Given the significant spend on benefits across Asia Pacific including Hong Kong, companies are facing a constant challenge of balancing benefit costs management and focusing on the long-term benefit objective of attraction and retention. In addition, many employees are not seeing the value of their benefit programs,” said Jack Mak, Senior Consultant, Benefits, Hong Kong at Towers Watson. “The gap between spend and employee perceived value could be closed by engaging employees more in their benefits — for example, by taking into account their opinions when determining which benefits to offer, or communicating with them regularly and effectively about the benefits that are available to them.”
Benefit spend continues to rise
In Hong Kong, 42% of companies said that their benefits spend has stayed the same and 37% of companies said that they have increased. Worryingly, almost 30% of employers in Hong Kong said they didn’t know how much they were spending on benefits.
“This apparent lack of awareness about their benefits spend suggests that employers are struggling with benefits governance, whilst juggling multiple systems, vendors and administrative platforms,” said Elaine Hwang, Director — Benefits, Hong Kong at Towers Watson. “If employers are finding it hard to put a number on their benefits spend, then it is perhaps no surprise that employees have low awareness of the value of their program. A benefits program that is aligned with employee needs, communicated clearly and delivered on one platform is likely to see better value attached from employees.”
Introducing more flexibility into the benefits program is one way that employers are looking to address the benefits value gap. Almost one-third (29%) are looking at increasing flexibility over the next 12 months, whilst 14% are planning to introduce flexible benefits.
For organisations that already offer flexible benefits, the majority felt that their programs had been successful in recognizing employees’ diverse needs (59%), improving attraction and retention (59%) and promoting employee understanding / appreciation of benefits (53%).
“Flexible benefits continue to be an effective way of delivering benefits and improving their perceived value to employees,” said Hwang. “Besides recognising the diverse needs of employees, offering flexible benefits necessitates regular communication to enable employees to make choices and put values on the various benefit items included in the program. These aspects help increase the value employees attach to their benefits.”
About the survey
The 2015 Asia Pacific Benefits survey is the fourth in our survey series. The survey tracks trends in Asia Pacific-based employers’ benefits plans and strategies, with a particular focus on cost and value perception. It continues to be one of the most comprehensive surveys of its kind, reflecting responses from 1,145 employers across 20 countries.
The full survey report for Asia Pacific can be downloaded here.