Given the choice, employees worldwide tend to select benefits that offer immediate gratification rather than those that potentially deliver value over the long term, according to a Mercer survey of 10,400 workers in ten key markets around the world.
In fact, an extra week of paid time off was among the top-three employee choices in seven of the ten markets surveyed.
Underscoring this trend of “immediacy” over longer-term benefits, employees selected a salary increase over all benefit offerings listed in the survey (except in Canada where paid time off edged out a salary increase).
These preferences underscore the challenge faced by employers worldwide in empowering employees to make more of their own benefit choices while encouraging them to strike the right balance between the shorter and longer-term value of the benefits they choose.
This insight is just one of many revealed by the new "Mercer Making Smart Benefit Choices" survey of workers in ten key markets (US, UK, Ireland, Canada, Brazil, Spain, France, Italy, China and Hong Kong) during July and August 2012. The survey sought to measure the perceived value employees place on various employer- and employee-paid benefits.
“Employers worldwide are asking their employees to make more and more decisions for themselves when it comes to their benefit programs,” said Dave Rahill, President of Mercer’s Health & Benefits business. “Employees valuing more time off and increased pay in the current stress-filled economic environment may be understandable, but there are other benefits that have the potential to create more income protection through health benefits and income replacement through retirement and savings vehicles. This challenge puts even more pressure on employers to deeply understand and communicate the value of various benefits to their employees so they can make smart choices.”
The "Making Smart Benefit Choices" survey also asked employees to rank the kind of benefits they are willing to pay for themselves, often referred to as “voluntary” or “flexible” benefits.
These benefits are usually paid for by the employee out of pocket or through an employer’s flexible benefits plan. These company-run programs can offer employees discounted prices compared to the open market.
Responses reflected a broad split between markets in which a wider range of health benefits are provided publicly and/or by employers and those where health benefits are not as accessible.
In the former, benefits that provide additional insurance are the most popular (e.g., US, UK, Ireland, Canada), while in the latter (e.g., Brazil, China) offerings like additional retirement/savings rank highly. In some markets where the state is the primary provider of health care (e.g., Ireland, Spain, Italy) supplemental private medical insurance is popular as a voluntary or flexible benefit.
“More and more employers are under pressure to offer a broader range of benefits to their employees,” says Amy Laverock, Mercer’s Global Health & Benefits Strategic Solutions Leader.
“Reasons range from gaps in the public health care systems to competing firms making creative and innovative benefits available. However, it is increasingly difficult for employers to simply add core benefits with the costs of these benefits outpacing inflation. Voluntary or flexible benefit offerings can often bridge this gap while empowering employees to chose benefits that match their particular needs and lifestyles.”
With concern about successful retirement a global issue, the survey also included questions on perceived retirement readiness among employees.
In most markets, the percentage of respondents who feel very or fairly concerned about retirement ranged between two-thirds and three-quarters. This concern is well founded; in markets outside of Asia approximately 75% are saving less than 10% of their total compensation towards retirement.
"Employers need to enhance the perceived value of the benefits they offer to employees to ensure the investments they make in these programs generate more strategic, long-term advantages,” says Fergal McGuinness, Mercer’s Global Defined Contribution Leader. “In this respect, the survey results illustrating the high levels of anxiety that exist around retirement readiness are particularly important. Employers taking simple steps to help employees understand and plan for their retirement needs can expect a return in the form of enhanced engagement, loyalty and motivation."