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In the current cost-aware era, optimising employee benefits without compromising quality requires a strategic and data-driven approach.
This article is brought to you by Howden.
The workplace is evolving rapidly, driven by digital transformation forces such as remote work, reskilling, and automation. These trends are pushing companies to be more strategic about how they attract, reward, and retain talent. Meanwhile, employees value both pay and non-financial rewards to keep them engaged. A 2024 survey of 19,500 workers in 14 territories across APAC finds the “3Fs” that are most in-demand – financial rewards (77%), fulfilment (69%), and flexibility (64%), pointing to differing needs along differing demographics.
Evidently, a talent shake-up is underway. The challenge for many people leaders lies in crafting competitive employee benefits packages that fulfil the diverse needs of employees while supporting business goals. Yet, most often, leaders come up against common challenges, such as: keeping benefits up to date and aligned with the needs of employees; managing their cost efficiency and designing holistic and sustainable benefits programmes.
This task becomes even more complex in a cost-conscious setting, where rewards leaders must effectively demonstrate the value and return on benefits. So how can we balance these aspects to maintain a competitive edge and ensure employee satisfaction and loyalty? Let’s find out.
Optimising the cost of employee benefits
In the current cost-aware era, optimising employee benefits without compromising on quality requires a strategic and data-driven approach. A one-size-fits-all approach to employee benefits no longer works. To create effective and sustainable benefits packages, companies need deep expertise and thorough analysis.
To understand more on how this can be achieved, we speak to Jacklyn Tan, Regional Director, Employee Benefits, Howden, who brings 18 years of experience in designing and implementing employee benefits programmes.
She notes that the first step to attract & retain top talent is to conduct regular benchmarking to compare your benefits offerings against industry standards and competitors. This, she says, helps in identifying areas where you can enhance value without incurring additional costs.
“This gap analysis shouldn’t just be limited to individual countries,” she says. For example, Howden has started conducting an annual regional consolidated advisory for its regional clients, by studying benefits offered across Asia, so as to offer clients a long-term and holistic viewpoint.
Another critical strategy is for benefits leaders is to leverage economies of scale through regional or global pooling arrangements. Jacklyn elaborates: “By consolidating benefits programmes across multiple countries, companies may negotiate better rates with insurers. Embracing flexible benefits plans, where employees can choose the benefits most relevant to them, can also optimise costs by avoiding underutilised services.”
Most importantly, she says, fostering a strong relationship with your benefits provider or broker is crucial.
"Collaborate with them to explore innovative solutions and tailor-made plans that align with your budget constraints while meeting employees' needs."
Now that we have thought mindfully about the optimisation of employee benefits costs, it is time to ponder how technology will make the journey smoother.
Ways in which benefits leaders can leverage technology
“HR technology can play a pivotal role in designing and managing a sustainable and cost-efficient employee benefits package,” affirms Jacklyn.
An employee benefits programme that is driven by technology will ideally include: telemedicine; efficient methods to manage administrative tasks including a HR portal and e-claims that reduces paperwork; easy access to medical benefits such as through an app; insightful analytics to forecast benefits usage and identify potential cost-saving opportunities; and sustainability checks to ensure longevity and effectiveness of the programme.
“Utilising HR systems or benefits platforms can streamline benefits administration, reduce administrative costs, and minimise errors. These tools can also provide valuable data analytics, helping HR teams identify trends, assess utilisation, and make informed decisions about benefits offerings,” Jacklyn adds.
Implementing benefits management platforms, such as MediHub, that offer self-service capabilities can enhance employee experience and reduce administrative burdens. Says Jacklyn, “Employees can easily access information, make selections, and manage their benefits online, leading to higher engagement and satisfaction.”
Measuring the ROI of employee benefits
You’ve established a cost-optimised benefits portfolio backed by technology – then, how do you ensure your investment is generating the returns and employee satisfaction that you had predicted in the business case stage? Milestones and measurements can certainly help. “Measuring the ROI of employee benefits involves evaluating both quantitative and qualitative metrics,” Jacklyn says, as she goes on to outline examples of each type.
Some of the key quantitative metrics include:
- Cost per employee: Total cost of benefits divided by the number of employees, helping assess the financial investment in benefits.
- Claims ratio: The ratio of benefits claims paid out to premiums paid, indicating the efficiency and effectiveness of the benefits plan.
- Utilisation rates: The percentage of employees using specific benefits, showing which offerings are most valued and used.
- Employee turnover rates: Tracking changes in turnover rates before and after benefits changes can help measure the impact of benefits on retention.
- Absenteeism rates: Reductions in absenteeism can indicate improved employee health and wellbeing, attributable to the benefits package.
Qualitative metrics, on the other hand, provide softer but equally insightful measures of the impact of benefits. These include:
- Employee satisfaction and engagement: Surveying employees to gauge their satisfaction with the benefits package and its impact on their engagement and morale.
- Recruitment and retention rates: Monitoring how benefits influence the company’s ability to attract and retain top talent.
- Employee health and wellbeing: Assessing improvements in overall employee health and wellness, which can correlate with reduced healthcare costs and increased productivity.
At the end of the day, impact boils down to identifying how well the benefits align with overall strategic goals.
- Do the benefits encourage positive behaviour?
- Does the portfolio address diverse needs?
- Is the offering competitive and comprehensive enough to attract and retain talent?
- Do we remain cost-effective?
- Are your benefits easily claimable?
The above, Jacklyn says, represents a dynamic and adaptable philosophy that can be achieved through regular reviews and updates to the benefits strategy in response to market trends and employee feedback.
"Conducting employee surveys and focus groups can provide valuable insights into what benefits are most valued, ensuring the package remains relevant and supportive of employee engagement and retention goals."
Aligning benefits with business goals also involves integrating them into the broader HR and corporate strategy. As shared by Jacklyn, this can be achieved through regular communication and collaboration between HR, finance, and executive leadership to ensure the benefits package supports the company's long-term objectives and financial health.
Optimising relationships with solution providers
Completing the ecosystem of competitive employee benefits is the relationship that HR decision makers have with their benefits solution providers. This requires a collaborative and proactive approach.
Jacklyn affirms: “Selecting a provider with a strong track record is crucial as a first step. Establish clear communication channels with your provider and regular check-ins to ensure ongoing alignment and responsiveness to changing needs.”
“Experienced brokers can offer insights and best practices based on their experience with other clients, helping design effective programmes that address common health issues and promote overall wellbeing.”
Finally, Jacklyn reminds HR leaders to regularly review the performance of their benefits programme and make adjustments based on feedback and data analysis. This will help ensure that the relationship with the provider remains focused on long-term sustainability and preventive care.
Find out how you can partner with Howden to take your employee benefits strategy to the next level.
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