Jakarta, 12 May 2015 – Indonesian 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). However this is a common finding in Asia Pacific. A total of 1,145 organisations across 20 countries in Asia Pacific participated in the survey making it the most comprehensive benefits trends survey conducted in the region.

Findings from the Towers Watson’s 2015 Asia Pacific Benefit Trends survey illustrate the challenge for employers. Benefits are increasingly seen as an integral part of an Employee Value Proposition — a reward lever to help attract, retain and engage employees. Seven out of ten employers in Indonesia surveyed said that attraction and retention of key talent is the major focus of their benefit strategies.

At the same time, benefit costs, already represent a significant percentage of payroll. 65% of employers in Indonesia said that they spend more than 20% of payroll on benefits, and almost a third (29%) of employers spend upwards of 30% of payroll on benefits, making Indonesian employers the second biggest spenders on benefits in the region as a percentage of payroll.

Furthermore, 57% of employers in Indonesia said that regulatory change was a key challenge they face in delivery their benefits strategy (compared to 28% in the region). As the current changes to social security in Indonesia are imposing significant additional costs on employers, this concern is understandable.

Worryingly, almost a fifth (16%) of employers across in Indonesia said they didn’t know how much they are spending on benefits (compared to 22% across the region).

“This apparent lack of awareness about their benefits spends suggests that employers are struggling with benefits governance, whilst juggling multiple systems, vendors and administrative platforms,” said Mark Whatley, Director, Benefits, Towers Watson, South East Asia. “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.”

Despite the material spend on benefits, only 19% of Indonesian employers think they are highly valued by employees.

Across Asia Pacific, an increase in spend did not necessarily correlate with an increase in perceived value. However, perceived value of benefits increased when employee insights were taken into account by employers. Similarly, perceived value of benefits increased when employee life events were handled effectively and benefits were effectively communicated.

Introducing more flexibility into the benefits program is one way that employers are looking to address the benefits value gap. For organisations that already offer flexible benefits, the majority felt that their programs had been successful in promoting employee understanding and appreciation of benefits (67%), recognise diverse needs of workforce (66%) and improving attraction and retention (59%). Currently only 10% of employers in Indonesia offer some form of flexibility or employee choice compared to 19% in the Asia Pacific region.

“Flexible benefits continue to be an effective way of delivering benefits and improving their perceived value to employees,” said Santhi Devi Rosedewayani, Director, Benefits, Towers Watson, Indonesia. “Besides recognising the diverse needs of employees, offering flexible benefits necessitates regular communication to enable employees to make choices and puts 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.

Download the Towers Watson’s 2015 Asia Pacific Benefit Trends survey report.