Employers in the emerging markets of Asia Pacific continue to face the challenges of significant economic growth as well as increasing employee health risks and rising demand for services. They are increasingly aware that the health of their employees is key to their ongoing success and competitiveness and that there are huge costs associated with not having a healthy and engaged workforce.
Asia Pacific firms experience high rates of turnover and absenteeism with increased employee stress and growing talent gaps in most industries. With more than three-quarters of employers concerned with the continuing war for talent, firms are increasingly looking to evolve a broader employee value proposition, beyond compensation to use their healthcare and choice programs to gain competitive differentiation. But at the same time employers are constrained in what they can offer employees due to rising healthcare inflation.
Mercer’s Asia Pacific Total Health and Choice Benefits 2011 Survey Report of almost 900 employers (of which 87% were multinationals) provides an exclusive insight into how employers are using health and choice to cope with this demanding landscape. This year’s survey represents the first time that the intertwined issues of health and choice have been brought together to review the current state of employers’ health and wellness programs, what choices they offer and future plans for their programs.
Key findings include:
? 81% of companies were concerned about the current and future health of their employees
? Health benefits costs as a percentage of payroll are increasing. 35% indicate they are spending more than 6% of payroll on the provision of their health benefits package, while 10% of respondents are spending more than 15%
? The top three drivers for promoting health and wellness in their organizations are productivity, performance and talent retention
? More than half the respondents are looking to increase their health and wellness programs in the next three years although most larger organizations are looking to share these costs with employees
? 81% currently do not provide choice in their benefits program, and only 19% offer some degree of choice. The three key industry sectors that offer choice include financial services (24%), hi-tech & technology (23%) and professional & other services (29%)
? 59% of respondents that don’t currently offer “choice” plan to do so within three years with the BPO/Call Centre and financial services industries heading the list at 76% and 65% of respondents
? Market competitiveness (21%), meeting diverse employee needs (20%) and moves toward a total rewards program (17%) are the top three reasons for respondents who had implemented a choice program’
? Respondents reported that their choice program had strong or significant impact on meeting diverse employee needs (43%), employer branding (35%) and total rewards strategy (34%)
? Complexity continues to be a key challenge to employers in offering choice in their benefits programs. Despite this, an overwhelming 97% will continue with the existing employee choice program
“The survey highlights the importance of differentiating and positioning your organization for continued growth in Asia Pacific while containing the rising cost of healthcare. Many employers are coming to us for cost-effective and innovative choice and wellness programs to help manage their talent and employee healthcare issues,” said Michael Hilton, Mercer’s Asia Pacific Benefits Consulting Leader, Health & Benefits.
Health and wellness under the spotlight for employers
The vast majority of employers across Asia Pacific do not have an integrated or strategic approach to health and wellness management but more than half of respondents indicated a desire to implement more programs. Most employers provide well above the statutory health requirements.
The appetite for more health and wellness programs is being driven by employers who are increasingly recognizing the value of having a healthy, happy and engaged workforce.
The most popular health programs were annual employee health checkups (84%), biometric screening tests (59%) and health talks/health fairs (49%). Firms want to invest in more innovative and interventional programs in the next two years through expanded use of health risk assessment questionnaires (47%), stress management (46%) and chronic disease management (43%).
In general, employers are recognizing the value of including families in their policies to be a key differentiator and a highly regarded benefit for employees. Fifty-two percent of the companies surveyed provide health management programs to their employees’ children, while 40% cover employees’ spouses. 13% provide programs to parents and 5% to retirees
Christine Owen, Mercer’s Asia Pacific Health Management Leader, Health & Benefits, said, “An increasing number of employers are placing greater importance on the value of an integrated health program with a prime focus on its impact on employee health, retaining key talent, containing costs and improving productivity.”
The top drivers for promoting health and wellness by employers were varied. More than 60% cited improvements in productivity and performance while 52% stated that health and wellness plans were important in attraction and retention and 40% believe such policies are important to promote protection and well being. While more than half of survey respondents are looking to increase their current health and wellness programs in the next three years, many employers are looking to share these costs with their employees.
“Employers are finally making the linkage between health, productivity and cost,” said Mr Hilton.
Employers see choice in benefits programs as a key way to attract and retain diverse groups of employees
Choice of benefits is still seen by employers as a potential lever to pull when addressing the economic challenge of cost containment, especially given the high rate of medical inflation in many of the countries participating in this survey. However, choice alone is now being recognized as but one dimension of the challenges arising from the provision of employer health benefit programs.
Respondents currently not offering choice
Across the region we continue to see a range of levels of participation in “choice,” although 39% of employers today continue to offer more traditional benefits, with a “one-size-fits-all” approach, while another 42% do vary their benefits program by employee grades but still without choice.
? 59% of those who don’t current offer choice indicated their intent to provide choice within three years.
? 61% indicated support in providing some form of choice. Respondents from the BPO/Call Center industries (77%) and pharmaceutical & healthcare (73%) were followed by the usual financial services (69%) and hi-tech & technology (62%) industry sectors.
? 37% of respondents who don’t offer choice today (but indicated support in providing some form of choice) cited “attract and retain talent” as the top driver for wanting to do so
Respondents with choice
19% of employers allowed some degree of choice in the benefits their employees are receiving: all employees have some choice (11%); only certain employees have choice (6%); all employees have a great deal of choice (2%).
Medical and life insurance are among the most common benefits offered. Dependent benefits, lifestyle and wellness perks are also typically included within a flexible or wellness spending account in employee choice programs to address the needs of Gen Y employees who are more focused and interested in these benefits, such as gym membership, health and fitness programs, vacations and personal development.
20% of respondents in China do provide some form of choice in employee benefits, followed by Singapore (19%), Hong Kong (17%), Taiwan (16%), India (15%), and the Philippines (12%).
Cost management, market alignment, market differentiation, benefit harmonization, benefit enhancement, better communication of the value of benefits to employees and global/regional initiative do not appear to be key drivers for respondents wanting to provide employee choice.
81% agreed that their choice programs have met their original objectives. 81% also reported strongly positive or positive response from their employees toward the choice program. There were no negative employee responses reported. However, they would like to see changes in the future: increase choices and flexibility (40%), simplify plan design (10%), and simplify administration rules and processes along with lowering cost (each 9%).
Organizations typically monitor and measure their success using employee participation, engagement surveys and by measuring improved understanding and appreciation of benefits
According to Yoke Fun Chow, Mercer’s Regional Flex Consulting Leader, Health & Benefits, “The strong positive response from employees is a good validation of the impact choice programs have and the advantages and benefits they offer. 97% of those with an employee choice program indicate they will continue with their existing program.”
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