HONG KONG, June 3 2013 — Four in 10 employers are spending upwards of 20% of their payroll on providing employee benefits, according to a recent survey by Towers Watson (NYSE, NASDAQ: TW), a global professional services company. However, despite this significant spend, only slightly more than half said that their benefits were valued sufficiently or highly by employees — and 15% said that benefits were not valued at all.

Figure 1. Organisations’ spend on benefits in the last fiscal year

  Less than 20% of payroll 20% to < 40% of payroll More than 40% of payroll Don't know
Region  39%  37%  3%  21%
China  38%  33%  7%  22%
Hong Kong  39%  46%  1%  14%
Indonesia  29%  43%  7%  21%
Malaysia  34%  45%  4%  17%
Philippines  34%  44%  3%  19%
Singapore  42%  33%  3%  22%
Taiwan  40%  34%  1%  25%
Thailand  35%  33%  4%  28%

The 2013 Asia Pacific Employee Benefit Trends survey, which was conducted between February and March 2013 among 1,066 employers in the region, also found that employee value perception does not necessarily increase as spend increases. That is, those employers who are spending more on benefits are not necessarily going to see a corresponding increase in value perception.

“It is apparent that benefit strategy now plays a more important role in employers’ eyes when addressing key business objectives such as improving attraction and retention. We found that 81% of employers now have a documented benefit strategy to guide their on-going benefit decisions, compared to 66% in 2009,” said Matthew Jackson, Director — Benefits Optimisation, Asia Pacific. “However, our survey raises troubling questions about the effectiveness and value derived from these strategies — particularly given the investment in them in the current competitive business environment and the war for key talent that we are seeing in the region.

“We found that some employers are responding to the gap between actual cost and employee value perception by adding to the number of benefit programmes in their portfolio — but rather than help, this may only widen the gap. As workforces continue to diversify, a “one-size-fits-all” benefits portfolio is rarely the best solution. These employers would likely achieve a similar or better result by reviewing and adjusting their existing portfolio of benefits, and introducing employee choice, rather than adding more programmes for everyone,” added Jackson.

The Towers Watson survey found that the number of employers planning to either introduce or increase flexibility in their benefit plans is expected to double in the next year: 32% will increase flexibility in their benefits next year (compared to 15% who are doing so this year), and 23% will introduce flexible benefits (compared to 12% this year).

When it comes to benefits communication, the survey found that almost a third (31%) still does not communicate with employees on benefits (although high, this number is an improvement from 55% of respondents in 2009). The survey also found a strong correlation between effective communication and benefit value perception — companies that communicate effectively tend to see higher employee value attached to benefits.

“It is crucial that employers recognise the diversity in their workforce and that different segments of employees have different needs. Flexible benefits are a great way to do this, as it enables employees to pick and choose those benefits that appeal to them,” said Andrew Heard, Managing Director, Asia Pacific Benefits, Towers Watson. “However, this is only part of the picture. Without a strong communication and administration strategy, much of this effort would be wasted. Employers should take a holistic look at their benefit design and overall portfolio to optimise their benefit spend and increase employee value perception.”

The full Towers Watson report is available here.

About the survey

The 2013 Asia Pacific Benefit Trends survey was fielded between February and March 2013, and includes responses from 1,066 employers around Asia Pacific — making this survey one of the most comprehensive in the region. The report includes regional data, as well as select country-specific data for China, Hong Kong, Indonesia, Malaysia, Philippines, Singapore, Taiwan and Thailand and is the third in the Towers Watson Asia Pacific Benefit Trends survey series.

About Towers Watson

Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services company that helps organisations improve performance through effective people, risk and financial management. With 14,000 associates around the world, we offer solutions in the areas of employee benefits, talent management, rewards, and risk and capital management.