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.
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
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.
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.
the other hand employers have not fully leveraged benefits programmes to
meet employees’ expectations or needs.
result, they miss out important opportunities to maximise the benefits
dollars and rethink the benefits allocation decisions in order to
strengthen employee engagement.
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
Lastly, employees look to the workplace for education, guidance and advice
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.
Emerging Benefits Strategy
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
because sole (usually male) breadwinner families are no longer typical.
|Generation X (Age 30-48 years
|Generation Y (Age <30 years
|Baby Boomers (Age >48 years
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
|Comparable with others
|Not as good as competitors
|Better than other competitors
|Best in industry
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.
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
|Personal Financial Planning
(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
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.
Integrated Value of Benefits
Finding the Right Fit
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
|Baby Boomers > 30%
|Generation X >30%
|Generation Y > 30%
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:
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
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.
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
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
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.
Consequently, a high level of employee
engagement can bring about the following outcomes:
Increased productivity levels
Reduced turnover rates
Employer of Choice branding
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.
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.
Benefits can Boost Productivity
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
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.
are usually part of the Employee Assistance Programme that we will discuss
in section 5.4.
Key Concerns on 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.
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
for Rising Healthcare Costs
|Higher GP Fees
|Increased Frequency of GP
|Higher Specialist Fees
|Increased Frequency of
|Higher Inpatient/H&S Claims
|Higher Frequency of H&S
|Increase in Dependants'
(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.
to Control Medical Claims
|Introduction depends on claim
|Planning to introduce
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
Comparison of Medical Cost Level and Cost Contributing Factors
Medical costs of total annual salary
|Less than 1.5%
|1.5% to 2.0%
|2.1% to 3.0%
|More than 3.0%
(Multiple answers recorded)
HiFeGP - Higher GP Fees, InFrGP - Increased Frequency of GP
- Higher Specialist Fees, HiFeH&S -Higher Inpatient/H&S Claims,
InFrH&S - Increased Frequency of H&S Claims, Aging -
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.
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,
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
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).
Connecting Work & Life Priorities
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
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
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.
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
|On-site Health Seminars
|On-site Exercise Classes
|Stress Management Programme
|Newsletter/Column on Health Topics
|Weight Management Programme
|Corporate Gym Rates
|Quit Smoking Programme
5.4 Employee Assistance
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.
(Percentages are based on organisations offering Employee Assistance
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
|Supplementary Retirement Scheme (SRS)
|Subsidise Annuity Premiums
|Section 5 Scheme
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
Role of Education
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
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
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
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.
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.