Engaging Employees Through Benefits
Singapore Benefits Study (2010/2011) Edition

Table of Contents

 1.0  Executive Summary
 2.0  Emerging Benefits Strategy
   2.1      Need for Change
   2.2      Competitiveness of Benefits Programme
   2.3      Benefits Programme Objectives
 3.0  Integrated Value of Benefits
   3.1      Finding the Right Fit
   3.2      Flexible Benefits
   3.3      Benefits as an Agent of Engagement
   3.4      Benefits can Boost Productivity
 4.0  Key Concerns on Costs
   4.1      Healthcare Costs
   4.2      Current Cost Containment Measures
 5.0  Connecting Work & Life Priorities
   5.1      Work-life Harmony
   5.2      Health, Wellness and Employee Assistance
   5.3      Wellness Programme
   5.4      Employee Assistance Programme
   5.5      Retirement Concerns
 6.0  Role of Education
   6.1      Building Awareness through Education
 7.0  Communication Plan
   7.1      Driving Communication
   7.2      Tapping on Technology
   7.3      Reaching Out to a Media Savvy Workforce
 8.0  Conclusion



1.0       Executive Summary

The objective of this benefits study is to assess how companies in Singapore during this period of economic growth after a short but steep contraction, can utilise benefits to engage employees in order to increase productivity on top of attracting and retaining key talent.

NGA Benefits Singapore,[1] part of NorthgateArinso in partnership with Remuneration Data Specialists (RDS) surveyed 252 companies across 19 industries in the third quarter of 2010 on their employee benefits strategies and offerings.

This report presents the key findings of the survey and highlights areas of interest that companies may find useful when reviewing and enhancing their benefits plans. The central theme is on the role of Benefits in Employee Engagement to produce a higher level of Productivity.

Over the years, Flexible Benefits has positioned itself as a contender in providing a solution to track the changing employee demographics and meet the varying needs of the workforce. Concurrently it tackles the cost issue through a longer term strategy of moving to a shared responsibility model.

This strategy emphasises freedom of choice and individual responsibility. It provides the individual with the autonomy to choose the level of wellness for oneself and for one’s family.

On the other hand employers have not fully leveraged benefits programmes to meet employees’ expectations or needs.

As a result, they miss out important opportunities to maximise the benefits dollars and rethink the benefits allocation decisions in order to strengthen employee engagement.

In this report, we also examine in detail a key concern of HR practitioners, namely escalating healthcare benefits costs. Using disincentives such as co-payments/deductibles and insurance cost sharing is a common response by employers in an attempt to manage cost quickly.

A more wholistic approach to healthcare benefits cost management goes beyond using disincentives. It involves engaging employees in an effective health and wellness programme to promote work-life harmony and healthy lifestyles.

Lastly, employees look to the workplace for education, guidance and advice about benefits

whether these benefits are employee-paid or employer-sponsored. They now have a greater appreciation for workplace benefits after public health threats such as Severe Acute Respiratory Syndrome (SARS) and flu pandemic, the 2008-2009 downturn in the economy as well as the possible contagion of economic uncertainty in the West. However, this appreciation can be easily eroded by poorly thought out or implemented benefits communication strategy. This report aims to fill this vital gap.



2.0       Emerging Benefits Strategy

2.1       Need for change

There is a need to change and customise benefits programmes to address today’s complex workforce issues — presented by the generational mix in employee profiles (see table below) — with more flexible solutions. Traditional employee benefits plans typically are out of sync with the needs of today’s diverse workforce and lifestyles. Homogeneous benefits programmes risk being irrelevant and poorly perceived by employees[2] because sole (usually male) breadwinner families are no longer typical.

Employee Demographics

Gender Companies
Male 52%
Female 48%
Age Groups
Generation X (Age 30-48 years old) 61%
Generation Y (Age <30 years old) 20%
Baby Boomers (Age >48 years old) 19%

2.2       Need for change

Majority (72%) of the participants have indicated that they only need to be comparable with others. Whilst only 10% of the participants strived to be better than their competitors in the benefits programme, 28% of Financial and Banking sector participants deemed it critical to be better than their competitors. Participants from the Financial and Banking sector also ranked highly benchmarking competitor programme as a factor when reviewing benefits. This finding is not surprising given the intense competition for talent in the Financial and Banking sector.

Competitiveness of Benefits Programme

Competitiveness Companies
Comparable with others 72%
Not as good as competitors 12%
Better than other competitors 10%
Not sure 6%
Best in industry 0%

There are many factors to consider in a benefits programme whilst ensuring it meets the employer’s objectives. As far as the benefits programme’s talent attraction and retention objectives go, the more clearly decision-makers can pinpoint where their benefits are and where they want them to be, relative to their competitors, the better chance they have of achieving their goals.

2.3       Benefits Programme Objectives

Today’s competitive business environment requires employers to know what other employers of the same size or in the same industry or region are offering in terms of employee benefits as well as understand the approach taken by plan sponsors or decision-makers towards benefits policy-making. Age, gender, life stage and family status are all factors affecting employee desires and decision-making. The objectives of our participants’ benefits programmes are as follows:

Objective of Benefits

Objective Companies
Productive Practices 60%
Work-life Balance 56%
Wellness Programme Participation 34%
Personal Financial Planning 7%
(Multiple answers recorded)

Productivity came up as the top key objective of benefits. Productivity is a major concern in labour-intensive industries such as Construction, Engineering and General Manufacturing with a headcount of under 100. In section 3.4, we will describe how benefits may be used to increase workforce productivity.

And not surprisingly, work-life balance is ranked next (56%) by HR practitioners as a key objective of benefits. This is especially prevalent in companies with more than 500 headcount and companies with less than 100 headcount. The hospital/healthcare sector also ranks work-life balance high on their agenda.



3.0       Integrated Value of Benefits

3.1       Finding the Right Fit

Workplace demographics influence employee choices and aspirations. However, demographic data has not been fully harnessed in ensuring the most relevant type of benefits offerings for the company. For example, if a company has a significant proportion of Generation Y employees in its workforce, its benefits offerings should lean towards a flexible structure. Conversely, if there is a significant proportion of Baby Boomers in the workforce, the company would find a fixed benefits structure more relevant. As the saying goes, being different is not always better. It is more crucial to be relevant.

Comparison of Age Demographics and Benefits Programme Types

Age Groups Fixed Benefits Flexible Benefits Hybrid Flexible + Hybrid
Baby Boomers > 30% 68% 5% 27% 32%
Generation X >30% 69% 7% 24% 31%
Generation Y > 30% 70% 0% 30% 30%

To investigate if participants of this study tailored their benefits offerings according to their workforce demographics, we selected companies that report at least 30% of their workforce are (i) Baby Boomers (age >48), (ii) Generation X (age 30-48), (iii) Generation Y (age <30). We then examined the type of benefits offerings of each selected category of companies. Our findings are as follows:

The benefits offering distribution (about 70% fixed; 30% a mixture of flexible and hybrid) remains the same whatever the demographics of the workforce. This suggests a clearly missed opportunity by companies to engage their employees by using employee demographics data in their benefits offerings.

As the workforce continues to age and new retirement laws are passed, it is clear that many Baby Boomers and Generation X employees will continue working past 62 years old. Hence the workforce will continue to be more multi-generational. HR practitioners will increasingly need to rely on employee demographic data to ensure that their company’s benefits programme policies cater to and meet the needs of all employees.

3.2       Flexible Benefits

The fundamental principles of Flexible Benefits address choice, flexibility and equity issues. Employees can tailor their benefits consumption according to their individual needs and wants. For example, singles with no dependants can use the “credits given to fund their lifestyle or retirement planning needs instead of medical coverage for dependants. Such employees will appreciate the benefits provided by the company due to a better fit between their benefits and their chosen lifestyle needs especially as singles often feel they are subsidising their colleagues with spouses and children. Lastly, choice in “credit” utilisation leads to greater engagement and hence less wastage. On the other hand, an employee who values the core benefits that the employer provides can use the “credits” to top up his/her consumption of such benefits.

More often than not, organisations are deterred by the initial start-up costs that come with implementing a flexible benefits programme. However these are costs that will be spread over the years and shifting of costs into a shared responsibility framework is a major milestone that will reap significant benefits in the future. As for the remaining challenges of the need to set up an infrastructure and establishing the right parameters to effect administrative flexibility, access and deliverables of suitable options, they can be mitigated by inviting qualified external providers for support.

When it comes to meeting the diverse needs of a diverse workforce within financial constraints, flexible benefits is one of the more cost-effective methods of doing so in the longer run. There are various models of flexible benefits; for those companies that are not ready to embark on a full scale, they can start by adopting a health and well-being approach in benefits planning first.

3.3       Benefits as an Agent of Engagement

Employee engagement is a tactical business management strategy that enhances an employee’s commitment and dedication towards work responsibilities, often going beyond the call of duty.[3] Consequently, a high level of employee engagement can bring about the following outcomes:

-   Increased productivity levels
-   Reduced turnover rates
-   Employer of Choice branding
-   Reduced absenteeism
-   Reduced presenteeism

Workforce engagement is especially critical for companies operating in mature economies such as that of Singapore as it no longer enjoys the low cost advantage in the face of global competition. It is our view that benefits can and should be used as a tool to increase employee engagement.

Indeed, the strain on today’s workforce comes from having to juggle a full-time day job that sometimes also requires attention after working hours, global competition, personal commitments, cost of living, health concerns and family obligations. Benefits if designed and used intelligently can help to play a key role in managing the stress level of the individual employee which in turn assists in drumming up productivity for the company.

3.4       Benefits can Boost Productivity

Benefits that facilitate work-life balance, such as flexible working hours, telecommuting or provision of other progressive on-site services such as childcare services can substantially reduce absenteeism, unnecessary stress of scheduling and conflict. Likewise, benefits can minimise presenteeism by keeping personal problems and worries away from the workplace and allowing employees to give their total concentration and commitment at work. This will be the path towards a more productive working environment.

Volatile economic conditions not only pose challenges to companies at the business front, it also affects the employees’ personal financial status. The loss of productivity caused by employees on the job worrying about household finances can become a serious distraction. Therefore, there are tremendous opportunities to reduce productivity loss from individuals distracted by such worries by establishing on-site support centres.[4]  These are usually part of the Employee Assistance Programme that we will discuss in section 5.4.



4.0       Key Concerns on Costs

4.1       Healthcare Costs

Escalating healthcare costs is fast becoming a political and economics issue around the world. Governments that are providing state-sponsored universal healthcare are grappling with higher and higher proportion of their countries’ Gross Domestic Product (GDP) spent on healthcare. In countries where healthcare is dominated by the private sector, sweeping reforms are necessary to address a large segment of the population who cannot afford healthcare.

In Singapore, healthcare is supplied and funded by a hybrid of public and private involvement with an emphasis on individual responsibility. Nonetheless, healthcare costs are increasing despite the modest medical inflation rates published in official statistics.[5]  This is because an aging population, medical advances, treatment trends and more sophisticated consumers have contributed to higher utilisation of healthcare services. As a result, a long term trend of increasing medical costs has emerged. This is clearly evidenced in our participants’ response summarised below.

Reasons for Rising Healthcare Costs

Reason Companies
Higher GP Fees 49%
Increased Frequency of GP Visits 44%
Aging Workforce 33%
Higher Specialist Fees 26%
Increased Frequency of Specialists Visits 23%
Higher Inpatient/H&S Claims 23%
Higher Frequency of H&S Claims 21%
Increase in Dependants' Claims 6%
Non-Restrictive Medical Benefits 6%
(Multiple answers recorded)

To the extent healthcare costs are funded by the companies for their employees and their dependants, cost escalation is a major concern. In fact as shown in the table below, more than one third of our participants either are considering or have introduced cost containment measures to tackle escalating healthcare costs.

Measures to Control Medical Claims

Measure Companies
Not introducing 33%
Introduction depends on claim level 23%
Considering introduction 18%
Planning to introduce 17%

According to the participants whose medical benefits costs were capped at 2% of total annual salary, higher fees and increased frequency of visits to general practitioners are the top reasons for their increases in medical costs.

Comparison of Medical Cost Level and Cost Contributing Factors

Medical costs of total annual salary

HiFeGP InFrGP HiFeSP HiFeH&S InFrH&S Aging
Less than 1.5% 59% 55% 27% 19% 22% 3%
1.5% to 2.0% 65% 55% 28% 24% 21% 33%
2.1% to 3.0% 30% 55% 30% 55% 55% 70%
More than 3.0% 35% 12% 59% 53% 18% 65%
(Multiple answers recorded)
HiFeGP - Higher GP Fees, InFrGP - Increased Frequency of GP Visits, HiFeSP - Higher Specialist Fees, HiFeH&S -Higher Inpatient/H&S Claims, InFrH&S - Increased Frequency of H&S Claims, Aging - Aging Workforce

In contrast, participants whose medical benefits costs were more than 2% of total annual salary pointed out that their increasing healthcare costs was primarily due to an aging workforce. It can also be observed that this same group also identified higher specialist fees, higher inpatient medical fees and increased frequency of inpatient claims as major factors that contributed to their rising costs.

4.2       Current Cost Containment Measures

Companies that provide high annual limits on their medical benefits are likely to see more reported ‘‘abuse’’ than companies with low annual limits because employees when given a high limit have no incentive to ration their healthcare consumption. Whilst the logical thing to do is to reduce the annual limit,[6]  companies often find this step a major insurmountable hurdle due to the expected negative reactions of employees. Some companies predictably use measures like deductibles or co-pay schemes and per visit limits to manage consumption behaviour.

Deductibles and co-pay schemes raise awareness of health costs. Per visit limits particularly for non-panel clinic visits encourage employees to support structures such as panel clinics that control costs via various mechanisms and arrangements.

The common practice in Singapore in containment of medical costs are co-payments and deductibles. For some companies that face very high medical costs, HR practitioners inform employees about the costs of their healthcare benefits and how their consumption patterns affect cost. Some have explored using “Total Rewards Statements” to offer transparency to the cost of providing benefits. All these strive to make employees aware of the costs of their medical benefits in the hope that employees would take into account cost when making a decision to consume healthcare funded by the company.

We believe the current cost containment measures adopted by companies focus on using disincentives to change consumption behaviour. Others have tried moral-suasion but its effectiveness may be limited. Managing healthcare costs calls for a multi-pronged approach. Thus, more can be done with regard to using incentives to induce a change in behaviour. There is strong economic sense in promoting healthy lifestyles among employees as a more pro-active measure to manage healthcare costs (See section 5.2 and 5.3).



5.0       Connecting Work & Life Priorities

5.1       Work-life Harmony

The rapid and sometimes drastic changes in both the workplace and at the home front these days often result in disharmony and conflicts in employees’ lives. Benefits can be used creatively to restore or promote work-life harmony.

We recognise the importance for companies to honour legacy commitments to benefits provisions, but it should not simply mean just taking small steps to fine-tune benefits programme designs or just merely broadening the range of available choices to address workplace realities. It requires taking a bold step to ensure the benefits programme and services are tailored towards generational and demographic realities of the workforce.

5.2       Health, Wellness and Employee Assistance

In general, the correlation between health and productivity is well-documented and employers are keenly aware of the importance to keep employees healthy. Unfortunately, many companies’ response to employees’ health concerns is limited to the provision of health benefits in the form of health insurance. However, what employers and employees want and need is health assurance.[7]

Being covered by a health insurance policy only provides protection from potential financial difficulties arising from illnesses and injuries. It does not ensure that people stay healthy, which means that it often does not target the root causes of rising medical costs.

Unlike health insurance, health assurance focuses on enhancing a person’s health condition not preventing it from worsening. Health assurance seeks to understand the state of one’s well-being and health and puts concrete measures in place to maintain or to enhance it. As a large part of an individual’s day is spent at work, employers can do more to address their employees’ health needs.

5.3       Wellness Programme

Wellness programmes aim to promote the health and well-being of employees by encouraging healthy diets and healthy lifestyles. It has been acknowledged that healthy employees are happier and more productive at work. Besides higher productivity, healthy employees take less sick leave and submit fewer medical claims.

It is heartening to note that majority of the participants have on-site health seminars, on-site health screening and vaccination programmes. On the other hand, it is a concern that whilst there is a clear and established link between smoking and health problems, only 12% of the participants have quit smoking programmes for their employees. As regards the other forms of wellness programmes such as on-site exercise classes, sustained participation by employees is a challenge. For such programmes to be sustainable, top management support in the form of personal participation will go a long way in encouraging and sustaining employees’ participation. In other companies, incorporating wellness programme participation within the work schedule has proved to be effective.

Wellness Programme Benefits

Wellness Programme Companies
On-site Health Seminars 67%
On-site Screening/Vaccination 66%
On-site Exercise Classes 33%
Fruit/Juice Bar 31%
Stress Management Programme 25%
Office Sanitisation 20%
Newsletter/Column on Health Topics 19%
Weight Management Programme 17%
Corporate Gym Rates 16%
Nap/Break Room 13%
Quit Smoking Programme 12%
(Multiple answers recorded)

5.4       Employee Assistance Programme

A benefit that is gaining popularity and acceptance amongst employers is the Employee Assistance Programme (EAP) that is designed to provide employees with referral services. Services vary by employers, but may include assistance with chemical dependency, psychological, financial, legal, family and career counselling. These are usually offered by expert third party service providers which are bound by the necessary level of confidentiality. Typically, participation is voluntary unless a mandatory referral by the management is made. Amongst the participants who offer EAP, the Financial and Banking sector is a clear leader.

Financial planning in the form of seminars and talks is the most prevalent form of EAP amongst our participants. Such activities are useful in raising awareness, developing financial planning skills and changing behaviours in the area of financial planning. Seminars and talks on financial planning are preventive actions to financial problems but what if there are already financial problems amongst employees? We would also encourage companies to consider expanding Financial Planning EAP to professional credit counselling in light of increasing concern over credit card debt amongst the Generation Y employees and mortgage debt amongst the Generation X employees.

Employee Assistance Programme

EAP Companies
Financial Planning 69%
Career Counselling 36%
Will Writing 27%
Family/Marital Counselling 21%
Legal Counselling 10%
Bereavement Counselling 9%
Estate Planning 4%
(Multiple answers recordered)
(Percentages are based on organisations offering Employee Assistance Programme (EAP)

5.5       Retirement Concerns

There is increasing concern that Singaporeans have insufficient savings upon retirement and are likely to face financial difficulties. Outliving one’s retirement savings is a real threat as people are living longer. The issues are serious enough for a new national annuity scheme, CPF Life Annuity, to be instituted by the government to address the problem. However, for many, CPF Life Annuity is insufficient to allow them to live their desired retirement lifestyles. Thus, more have to be done pre-retirement. For this study, participants were asked if they offered alternative retirement benefits. The findings are summarised below:

Retirement Benefits Table

Retirement Benefits Companies
Not Applicable 85%
Supplementary Retirement Scheme (SRS) 9%
Subsidise Annuity Premiums 2%
Section 5 Scheme 1%

Singapore has made a deliberate and economically wise choice to institute portable defined contribution pension plans (in the form of the Central Provident Fund (CPF)) rather than defined benefit pension plans. However, given the many roles that CPF savings play in addition to being a form of retirement savings, with lengthening lifespans, employees increasingly cannot enjoy the luxury of relying solely on their CPF to fund their retirement years.

Thus a significant opportunity exists for companies to offer retirement benefits to their employees judging by the fact that 85% of the participants have no retirement benefits. We would hasten to add that retirement benefits that we are advocating are not defined benefit pension plans of the old and which severe under-funded status presents financial liability on the sponsoring companies. Neither are we advocating the reduction of personal responsibility in one’s retirement planning. Instead, we believe companies can create incentives in their benefits offering such that employees do plan for their retirement. Co-funding SRS contribution or annuity premiums for their employees are tangible ways companies can differentiate themselves from their competitors in their benefits offering. Companies can also support educational initiatives that promote the importance of early financial planning.



6.0       Role of Education

6.1       Building Awareness through Education

Education is a vital component of communicating benefits scheme to employees. Very often communicating a benefits programme to employees is limited to informing them of their entitlements and various claims adjudication and eligibility rules. We believe employees would like and have to understand the purpose and rationale of the benefits made available to them by the company. To increase the buy-in level of employees with regard to their benefits, which in turn increases the value perception, companies can do more to communicate how the benefits programme is shaped by the company’s corporate and HR values.

Engaging employees in their benefits programme is a good way of emphasising how companies are rewarding talents. Compared to compensation which is only negotiated or discussed during recruitment or in some cases promotions, benefits communication takes place at least once a year. This is a good way to maximise the rate of return on companies’ investment in benefits since benefits packages tend to be under-appreciated by employees.



7.0       Communication Plan

7.1       Driving Communication

The importance of effective communication cannot be emphasised enough. A good communication plan when properly executed will have a significant influence on employees’ appreciation of the benefits programme that the company has painstakingly put together in collaboration with external vendors, not to mention the financial resources that the company has committed to the benefits plan.

Sadly, effective communication is often the weakest link in benefits delivery. Even the savviest organisations are challenged when it comes to effectively reaching out to their employees. This is compounded by the more and more diverse generations (Generation Y, Generation X, Baby Boomers) and multicultural backgrounds (workers are more mobile than before). Each group’s communication style may be different. Effective communication is about managing expectations and perceptions, uniquely branded with customised internal marketing and outreach.

7.2       Tapping on Technology

Organisations can embrace new technology in its employee benefits communication strategy.

E-learning is a targetted online communication tool to reach out to a large audience quickly and effectively throughout the employment lifecycle from recruitment to retirement. These self-paced modules overcome geographical barriers, accommodate multiple learning styles and ensure a consistent message is given to all users. E-learning may be tailored to different audience by running different modules based on certain demographic characteristics of the user such as age, gender, life stage. The delivery may be different too. For example, e-learning via a computer game is the module for Generation Y whilst the conventional voice-over presentation slides are for Baby Boomers.

7.3       Reaching Out to a Media Savvy Workforce

An effective benefits communication strategy also means accessible benefits information. This requires a platform to coordinate and push out relevant information by the preferred medium and channels. There has to be an effective interface of technology, design and services. Hence whether it is by email, traditional mail, telephone or “Applications” on smart phones, communication delivery is only successful if employees receive information that is meaningful and relevant.



8.0       Conclusion

In the course of completing this study, what struck us was the magnitude of benefits decisions weighing on the minds of those who have to make difficult choices on behalf of the workforce.

In today’s fast-changing and competitive environment, employee benefits decision-makers will have to be more attentive than ever, and quickly adapt in order to continue to meet the objectives of benefits and redefine its business value. Constant reviews and keeping abreast with market developments and innovations will assist decision-makers to find the optimal mix of benefits that complement the corporate strategy.

A strategic shift in benefits will require pragmatism and planning as well as a vision for putting the right policy in place.  To be able to communicate the need for change in a way that motivates action will play a key role in enlisting the right partners for this movement.



[1] NGA Benefits Singapore is formerly Convergys Benefits, part of Convergys HR Management.
[2] Butler,Kelley M.,et al. “Changing Faces, Changing Benefits: A Six-part Series.” Employee Benefits News, July-November 2007.
[3] K Scarlett, What is Employee Engagement?, Scarlett Surveys International, 2010, retrieved 8 September 2010, <scarlettsurveys.com/employee_engagement.cfm>.
[4] A White Paper on American Workers Struggle to Attain Financial Security. Alliant Credit Union, August 2008
[5] Singapore Department of Statistics, Monthly Digest of Statistics, November 2009.
[6] Some companies set high annual limits in the past because the expectation was employees would not utilise such high limits but the assumption has turned out to be erroneous.
[7] “Health Insurance Premiums Rise 6.1 Percent in 2007, Less Rapidly Than in Recent Years but Still Faster Than Wages and Inflation.” Kaiser Family Foundation, September 11, 2007