While global benefit strategies continue to evolve, many of those in charge are not watching closely. Seven out of 10 global or regional benefit managers at multinational companies have limited or no access to timely financial information related to current employee benefit spending, according to Towers Watson’s 2014 Current and Emerging Global Benefit Themes research.
“It is striking that global and regional benefit managers at many multinationals — sometimes spending hundreds of millions of dollars on employee benefits annually — do not have this vital information,” says Steven Yu, Asia-Pacific Director of the International Consulting Group, Towers Watson.
“Nowhere else within their businesses would such a lack of management information be acceptable,” he adds. “However, we also see more advanced multinationals deploying solutions to address this issue so they can use information to identify risks and opportunities, make decisions, and prioritise their activities to increase return on their investments.”
The Towers Watson research also shows that two-thirds of multinationals are still in the early stages of developing their global benefits strategy and management approach. This means they are either just getting started or narrowly focusing on a single global benefit management area.
The research further confirms that companies continue to be focused on the management of financial risk, the optimisation of benefit spend, and the effective handling of merger and acquisition transactions. However, multinationals continue to shift their focus from defined benefit pensions to a more balanced view across a broader range of benefits, in particular, defined contribution retirement plans and health care.
“The relentless corporate mandate – do more with less – means the organisational and operating models of the benefits function must evolve to reflect and achieve this goal,” says Yu. “Traditional methods of decentralised benefit management are increasingly outdated, and even have the potential to hinder progress toward more cost-efficient and effective global benefit solutions.
“Review and refinement of the global benefit organisation and its processes, programmes and strategies lead to better outcomes for organisations and their employees,” he adds. “Multinationals that focus on answering the most business-relevant questions are typically the companies that achieve the greatest value from their employee benefit programmes and investment.”
The neglected benefit
Companies have always been concerned about their employees’ medical health, as there is a clear correlation with work productivity. Unfortunately and usually, the perception tends to stop there and the important area of dental healthcare ends up being neglected.
“Most companies provide medical benefits to staff,” says Andrew Wai, business development manager of dental care administrator, DontiaCare. “However, many do not offer dental benefits as part of their compensation and benefits plans for staff.”
According to a survey on the Provision of Dental Healthcare Benefits to Employees by the Singapore Dental Health Foundation, the majority of workers (68%) in Singapore would visit a dentist if their companies paid for it. Eighty-one per cent of them stated they would go for regular visits even if they were not in pain, if they had corporate dental benefits.
HR also agrees that dental benefits can be used as a differential strategy for employee retention, with nearly half (42%) of the HR professionals surveyed saying so.
An employee’s wellbeing is indeed dependent on both their dental and medical health. “For example, research has shown that poor oral hygiene increases an individual’s risk of heart problems,” says Wai.
One way HR can provide dental benefits to staff is to work with a third-party dental care administrator, such as DontiaCare. These organisations facilitate dental care for staff and serve as a liaison between them and a network of dental care providers.
In addition, DontiaCare offers in-office dental screenings and regular dental health talks to improve the general oral health of employees.
“Privileges are also extended to the employee’s immediate family at no additional costs, meaning the value of your company’s dental benefits programme is stretched and the staff retention strategy is enhanced,” Wai explains. “We believe a healthy and happy employee is a productive employee.”
All companies want the best for their employees at the lowest cost, as part of their recruitment and retention strategies. While there are various options to lower costs, the common problem faced by HR practitioners is that they have no viable means to identify whether clinical practitioners are proficient or not, says Wai.
The outgoing Administrator of the Centers for Medicare and Medicaid Services in the US Donald Berwick, told the New York Times that 20% to 30% of healthcare spending was “waste”. He listed five causes for this:
- Overtreatment of patients
- The failure to coordinate care
- The administrative complexity of the US healthcare system
- Burdensome rules
“We recognise these facts and we shape our programmes to mitigate the said causes, help companies improve employees’ dental health while reducing dental care expenditure,” Wai says.
Employee benefits trends 2015
Each year, organisations commit extensive resources to providing and financing benefits for active and former employees, delivering benefit plans and, increasingly, implementing frameworks to oversee, manage and govern benefits globally. Annual benefit costs can go up to hundreds of millions of dollars, with past commitments of several billions of dollars.
Findings from Towers Watson’s seventh annual Current and Emerging Global Benefit Themes research show that:
Opportunities to drive more value from employee benefits are on-going
Some multinationals are just beginning to gather data, and others have evolved their global benefit management practices over many years. In either case, companies need to continually refine or reengineer their organisation, processes, programmes and strategies to deliver more value for both employees and the business. Whatever their level of global experience, companies that benchmark against their peers and systematically review their activities move more quickly, avoid pitfalls and distractions, and achieve greater efficiency and effectiveness.
Multinationals have significant opportunities to raise their global game
Many opportunities are missed — or fail to be realised — when companies don’t systematically manage global benefits as well as they could. To raise their success rate, leading companies have employed key financial management information, benchmarking, local benefit resources and the effective use of third parties — to name a few game-raising opportunities.
Benefit and pension focus is shifting
Some themes are current, or short-term; others are more enduring, such as managing financial risk, benefit cost optimisation, and effective handling of mergers and acquisitions. Organisational and operational models need to evolve alongside shifting priorities while meeting the relentless corporate mandate: Do more with less. Effective sequencing of priorities and thoughtful use of third-party support can help global and regional benefit managers respond to these challenges.
Civil servants receive higher dental benefits
Beginning early last year, Singapore civil servants have enjoyed an increase in subsidies for their dental bills.
The government now subsidises 85% of dental bills, up from the 50% prior to the change. The annual cap has also risen from $70 to $120, which is closer to market practices.
Under the changes, employees who used to pay $35 for a $70 dental bill now only need to pay $10.50. The annual dental reimbursable limit has also been increased from $70 to $120.
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