Engaging Your Talent Without Breaking the Bank

HCLI Research
Published 3 November 2017

“When people go to work, they shouldn’t have to leave their hearts at home.” – Betty Bender. This may seem like an obvious premise for developing an employee value proposition (EVP), but it is not always that easy. With the resurgence of the global economy, companies — especially in Asia-Pacific — are looking not just to hire but to retain their talent.

Although companies tend to follow the market on pay, the benefits side of the equation is where they can differentiate their employer brands. Amid increasing complexity in the workplace, changing employee demographics and ever-evolving labour laws across the region, how do HR leaders win over the hearts of their employees with a differentiated EVP that does not get shot down by the CFO? And just how do HR leaders cope with the added pressure of the “cool Silicon Valley”-type benefits being lauded by employees on social media?

Let’s examine the four key drivers of change for employee benefits programmes:

Evolving Legislation Across Asia-Pacific

According to Mercer’s recent Mercer Benefits Monitor 2017 Survey, 42% of companies are making changes to their employee benefits programmes as a result of changing regulations in their respective markets.

An aging workforce, although not as pronounced in Asia as it is in developed economies, is certainly an issue of growing concern for businesses. Japan, Hong Kong, South Korea, Singapore and Thailand all have a median age of well over 40 years. Governments across Asia-Pacific are looking at ways to strengthen their social security provisions, pulling at different levers, such as increasing the retirement age and old-age medical care. Medical benefits provisions have always been difficult to address given the persistent year-on-year increase in medical costs across the region.

Governments must also balance care for marginalised populations with a more egalitarian approach to healthcare financial support. Governments in Asia continue to explore greater institutional support for retirement while improving the infrastructure for old-age medical care. Businesses, on the other hand, may not have the capacity to support additional retirement programmes, as traditional programmes are expensive. Progressive companies are therefore looking into new ways to support employees’ financial wellness by offering specific programmes aimed at improving employees’ own budgeting and saving skills — from the moment they join the organisation.

As societies shift away from multigenerational households and as women’s participation in the workforce increases, one key area in which regulations have evolved is employer-provided parental leave. With increasing attention on gender diversity, governments recognise the need for companies to provide parental leave coverage as well as childcare support and work-life balance programmes. India, Japan, the Philippines, and Singapore have recently expanded the scope of parental leave coverage to include adoption while increasing both maternal and paternal childcare leave provisions. A word of caution, however: No matter how much maternity leave you provide in competing to be the “best,” if your return-to-work policies fail, both employees using extended leave and coworkers who stand in for them will become disengaged, and a programme once labeled “the best” will fail.

Governments have also been working on improving regulations for nontraditional workforce segments such as contract workers. Legislation has been strengthened around overtime and working hours for the white-collar workforce while, for the first time in the region, we see recognition of mental health issues and burnout rates. As we saw recently in Taiwan, workplace inspections have resulted in some companies being fined for having even senior employees work beyond the stipulated number of hours.

The ‘Costs’ Effect

Although Asia may be driving much of the growth in the global economy, companies in Asia-Pacific have begun to shift their focus from topline growth to profitability. And with this shift in strategy, coupled with recent softening of global trade, comes increasing attention on cost. Gone are the days of blanket approvals for hiring the talent needed to support growth at any cost and offering market premiums for key roles. HR leaders are expected to deliver differentiated propositions to attract, retain and engage needed talent with tighter budgets.

This “new normal” for business in Asia-Pacific, coupled with steep increases in medical inflation, has resulted in 32% of HR leaders surveyed in the Mercer Benefits Monitor 2017 Survey citing cost-optimisation as the key driver for changes to their employee benefits programmes. This means employers need to focus on the sustainability of benefits programmes and project benefits costs for at least the next five years. Nothing is more painful or damaging for the employer brand than having to take away certain benefits or having to manage five different “grandfathered” employee benefits schemes — often a reality for companies operating in countries like the Philippines.

Having unique or innovative benefits helps strengthen the employer brand in a tight talent market, especially for skills with a significant demand-supply gap.
The Rise of the ‘Voice of the Employee’

Two additional drivers are intrinsically linked. Limited flexibility on pay offered once a company has determined its competitiveness has meant employee benefits programmes become the primary instruments to differentiate EVPs. Having unique or innovative benefits helps strengthen the employer brand in a tight talent market, especially for skills with a significant demand-supply gap. Thirty-eight percent of survey respondents therefore regard “market competition for talent” as a key driver of benefits programme changes.

The Asia-Pacific region is home to more than four billion people. With 35% of this population currently active on social media and year-on-year growth of more than 27%, social media has become pervasive in the lives of employees. As a result, employees, especially millennials, are increasingly vocal about their opinions. Employees are quick to applaud unique or innovative benefits being offered by their employers and even quicker to criticise a lack of benefits offered to peer communities at their own workplaces.

HR leaders now deal with an unprecedented volume of feedback on employer brands that surfaces through the social listening channels being developed by their marketing departments. This voice of the employee, whether current, past or prospective, adds yet another trigger for HR leaders as they tweak their benefits programmes and gauge the impact of those changes on the perception of employer brands in the talent marketplace. We strongly recommend that HR professionals actively yet carefully monitor sites such as Glassdoor, where current and ex-employees can share their views on the company. New hires will typically use these sites to make “informed” joining decisions, as these sites are starting to offer ranking systems for each of their EVP components.

Where progressive companies, especially in the technology and financial services industry, may have set the pace with offering unique benefits, other industries have not followed suit. This has led to a lot of angst being expressed online by disenchanted employee groups in the more traditional sectors, such as manufacturing, especially as it relates to parity in medical benefits and leave allowances. One argument often heard is that new hires deserve the same amount of leave as existing employees — and why shouldn’t they? After all, this new generation likely needs to work well beyond the current retirement age.

Going Beyond Medical (Benefits)

What can HR leaders do today to develop an overarching benefits strategy that helps attract, retain, and engage their talent while creating a positive impact on their employer brands?

The default option has always been to look at the most sizeable area and increase medical coverage for employees or their dependents. With the rising cost of healthcare, that may not always be feasible and certainly is not sustainable as a long-term approach.

It is time HR leaders explored a few unconventional approaches. Traditionally, benefits have been linked to salary bands, but essential medical coverage should always be viewed through an egalitarian lens, and differentiation based on hierarchies is no longer useful to the younger workforce. Thus, we recommend standardisation of essential medical benefits delinked from roles or salary bands and increased flexibility on the optional or additive elements of these benefits. Dependent coverage and copayment options should be the levers used, based on market conditions, existing legislation, and the company’s rewards philosophy. One question to ask is whether an employee in a lower rank should automatically receive less medical coverage in case of serious illness than a director should, especially if the employee does not have the means to afford additional medical coverage.

‘Cool’ is not Always Right

In their quest to offer differentiation, HR leaders tend to follow the large technology companies, often with huge cost implications but little discernible impact on their ability to attract and retain talent. The flaw lies in how these “cool” benefits are rolled out. Sad stories abound regarding well-intended benefits that touch the hearts of employees — family care leave, for example. However, when introduced, a number of terms and conditions are attached to the benefit, defeating the aim of putting trust in employees and leaving behind a negative feeling. It is the default roll-outs, not the benefits themselves, that become cost-prohibitive or ineffective. With advances in workforce analytics, HR leaders can now leverage data to be much more precise in their benefits decisions, using evidence to administer changes to employee segments or even micro-segments that most need or are likely to most appreciate the “cool” benefits.

Find and Communicate the One – Then Communicate Some More

The need to comply with changing regulations and to provide a certain combination of mandatory and flexible medical benefits means the budget available to offer a unique bouquet of benefits is fairly limited for most companies. Rather than attempting to do too much and build a laundry list of unique or innovative benefits — or worse, trying to be “market median” for all and standing out nowhere — HR leaders are better served focusing on that one unique benefit that most of their employee segments will appreciate. For example, most employees in a manufacturing company are likely to appreciate a free snack bar over a souped-up cafeteria.

Often overlooked, communicating new benefits by leveraging the digital workplace can make a meaningful difference to the success of any new benefits programme. Because of the omnipresence of video and mobile in daily lives, communications that are not mobile-enabled and video-led may not get employees excited about the new benefits.

We see a large number of companies using mobile-enabled gamification experiences as a way to drive adoption and engagement around new benefits. Gamification, almost a natural order for the millennial workforce, is becoming increasingly popular among other demographics as well, and it allows for HR leaders to introduce incentives where behavioural change is needed. For example, smoking cessation or wellness programmes that are offered by an increasing number of companies today may find more takers if the employees are persuaded through a gamified user platform. Finally, appointing “champions” or “ambassadors,” employees who help drive adoption through employee advocacy, can have a considerable impact on the pace of adoption. Having a few influential early adopters can even be game changing for how a new benefit is perceived both within and outside the organisation.

No Silver Bullets, No Free Lunches

In summary, despite attention-grabbing headlines that may accompany new employee benefits being offered, organisations should not consider every benefit that is out there — even if they can afford to. Good evidence-based decisions around employee benefits are cast in employee segments and behavioural data coupled with cost-impact simulations reflecting market and business conditions. Every company has its own unique culture, and any innovation in benefits should not only embody that culture but enrich it.

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