Almost two-thirds (64%) of Hong Kong employees do not agree that their benefits package meet their needs while, conversely, about two- thirds (65%) of employers feel employees highly value their benefits package, according to a new survey by Willis Towers Watson.
The main reason for this gap is employers’ lack of awareness of its existence. When asked about what challenges they face in delivering benefits programmes over the next three years, “poor employee understanding of benefits programme” was ranked the least challenging among all the options, with only 11% of Hong Kong employers citing it. In contrast to the 78% of employers that think employees have a very good understanding of their benefits package, only 53% of employees agree with this statement.
“If 64% of employees in Hong Kong are unhappy about their benefits while their employers are not even aware, then this is very worrying, particularly as benefits cost continues to soar,” said Royston Tan, Head of Health & Benefits, Hong Kong at Willis Towers Watson. “The gap shows the need for an effective employee communication strategy that gets regular feedback from employees and shows a genuine effort to listen to their needs, and hence improves levels of effectiveness and appreciation.”
Surging benefit costs the most pressing challenge
The top challenge cited by Hong Kong employers when delivering benefits programmes over the next three years is the rising benefit costs. More than four-fifths (83%) of Hong Kong employers expressed concern about these rising costs, well above the regional average (67%).
“This is largely due to the fact that Hong Kong has one of the region’s highest medical inflation rates thanks largely to a rapidly aging workforce, high incidence of chronic disease, and the over-burdened public health system that’s driving employees to private healthcare,” said Tan.
The second most pressing challenge cited by just over half (53%) of Hong Kong employers is “insufficient financial support to make necessary benefits changes,” compared to a regional average of 46%. Following that is “lack of data to measure plan outcomes or changes in member behaviour,” citied by 34% of employers, close to the Asia Pacific average (35%).
“Tepid economic growth and high business operating costs have both played a part in making employers cautious in any increase to their benefits spending. This is particularly so since the longer term trends point to cost pressures in the fast-changing business climate,” added Tan.
Trends in benefits design: a focus on well-being, flexibility
As employers look inward and realize that needs are diverse, many look to design packages that go beyond traditional benefits.
While traditional benefits are here to stay and will continue to be the most prevalent in Hong Kong in the next three years, employers are looking beyond health benefits to non-traditional ones with a particular focus on well-being. This doesn’t just refer to physical well-being; currently, 51% of employers in Hong Kong are offering activity-based well-being programmes, and 65% plan to do so over the next three years. As well, there are a growing number of programmes for behavioral and emotional health, with 64% of employers planning to offer it over during the same timeframe.
“This shows employers’ recognition of the need to move away from a one-size-fits-all mindset as they recognize that employees come from increasingly diverse backgrounds, have different lifestyles and different needs,” said Royston Tan. “For example, while millennials would probably value a gym membership benefit, baby boomers may be more concerned about the rising cost of chronic medication.”
Another piece of the puzzle is flexibility. Currently, only 29% of Hong Kong employees think their benefits package offers a wide range of choice to meet their needs. This is essentially lower than the regional average (40%).
Employers do recognize the advantage of flexibility though. As much as 78% of Hong Kong employers believe offering flexibility in their benefits package can demonstrate the company’s recognition of employees’ diverse needs, and 69% believe it promotes employee understanding and appreciation of benefits.
According to Tan, what lies between recognizing the need and actually introducing more flexibility are costs and complexity.
“Employers are wary about the implementation fees, on-going administration costs, as well as the possibility that the plan may be overly complicated and ultimately fall short of achieving the objectives.”
Yet looking forward, about 30% of employers in Hong Kong are considering to provide increased flexibility for employees in their benefits packages, either in expanding choice in benefit levels, flexibility in allocating money, or options to buy additional voluntary benefits.