How to create a benefits program tailor-made for employees? In this article, Catherine Li, CEO of Mercer China, advises HR professionals of four misconceptions that surround this issue.
According to Catherine’s view, employee benefits can be studied from three perspectives:“First, health - meaning benefits programs that care about the wellbeing of your workforce; second, wealth - meaning benefits program targeted at retirees or employees held back due to serious illness; third, choice – comprehensive benefits package to choose from.” As an expert who specializes in a wide range of healthcare and group benefits issues, Catherine insists a superiorbenefits programs should align with the company’s business development and talent strategies, while finding the balance between your own budgets and benefits package to meet the diverse needs of employees. Only in this way is it possible to avoid pitfalls and to maximize the results.
Companies which lack of sound basic benefits tend to come up with fun, innovative and even newsworthy benefits. Although it may enhance the program’s appeal in the short run, such benefits program will not serve the company’s long-term goal of brand-building.
It’s common for benefits design to go through three phases: foundation-laying, boasting and returning to fundamentals. However, caution against getting swept up in creativity at the expense of sound basic benefits. This is why in Mercer’s benefits programs, insurance which is easily neglected yet the most fundamental protection has taken the highest percentage.
Thoughtful design is by far the most important aspect of a successful benefits program for both basic and innovative offerings. Many companies focus on copying competitors’ designs or best practices. However, this line of thinking is dangerous. A benefits plan that works for one company may not work for yours. Employee needs, business development goals, budget and future plans (in terms of costs and talent retention) must all be taken into account.
According to Mercer’s Benefits Communication Survey of HR managers in China, more than 70% think benefits communication is important. Yet only 17% of organizations have a specific role for employee benefits communication, and nearly 70% have little or no budget for benefits communication.
Catherine insists that companies should effectively communicate the value of their benefits so that employees will gain a better understanding of the offerings. This will help improve employees’ satisfaction, and is the initial step to improve ROI.
Return on investment (ROI) is a key performance indicator for many businesses, and with good reason—why invest in a project before ensuring a sound return on the investment? While ROI is an excellent indicator of performance, it does not apply to all programs.
Not all benefits programs can be evaluated with numbers. “What difference it would make if you give your employees 100 yuan more, nothing can be quantified. When it comes to HRM, the effect can be long-term and underlying rather than immediately measurable,” said Catherine. Because some companies performed well without paying too much attention to employee benefits, it does not follow that investment in benefits is not important.
While ROI is an excellent indicator of performance, not all benefits program can be evaluated with numbers.