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Four Misunderstandings That Are Killing Your Benefits Design

In China, as in many other countries with growing economies, employee health management is a relatively new concept. This presents an exciting opportunity to create something new—but also leaves generous room for error.

A superior benefits program meets the diverse needs of active employees and retirees while aligning with the company’s business development and talent strategies. Although these dual goals may seem straightforward, it’s easy for the human resources department to get sidetracked along the way.

Have you steered clear of these four pitfalls?

Misunderstanding 1: Benefits are just for brand-building

Benefits design commonly goes through three phases: foundation-laying, boasting and returning to fundamentals.

Young technology companies have a tendency to get stuck in phase two, coming up with fun, innovative and even newsworthy benefits. These less traditional benefits programs have several advantages, including supplementing basic benefits and enhancing the program’s overall appeal. They can also help tech companies with a predominately young workforce connect with millennial talent.

For example, some Chinese companies offer an online shopping platform similar to Amazon through which employees can order household goods and other items to be delivered straight to their homes. Others focus on tokens of appreciation at stressful or eventful times of the year. An e-commerce company might buy movie tickets for their employees and families after the hectic November 11 shopping festival—an online shopping bonanza that keeps e-commerce employees busy round the clock—to show gratitude for their hard work.

Although such niche benefits are attractive in the short term, they have little long-term effect when applied on their own. It is important to be careful not to get swept up in creativity at the expense of sound basic benefits. Companies can organize a race for charity to show commitment to employee health as well as social good, but if an employee can’t be helped through a serious illness, how can an organization claim to care about the well-being of its workforce?

The biggest health management challenge for Chinese businesses is staff turnover. New programs take time to launch, so little effect will be seen if the turnover rate is high. Investing in core benefits design yields more consistent results and helps retain employees, whereas short-term benefits solutions rarely build the brand.

Benefits design commonly goes through three phases: foundation-laying, boasting and returning to fundamentals.

Misunderstanding 2: We don’t need to design our own benefits program—we can just copy our competitors

Thoughtful design is by far the most important aspect of a successful benefits program for both basic and innovative offerings. Many companies focus on copying competitors’ designs or best practices. After all, benefits design is time consuming and complicated; why not save on resources by leveraging on an existing program?

This line of thinking is dangerous. A benefits plan that works for one company, no matter how similar it seems, may not work for another. Employee needs, business development goals, budget and future plans (in terms of costs and talent retention) must all be taken into account. It’s up to HR to look deep within the organization and ask fundamental questions: How much budget is available? Whom is the benefits program aimed at? What are the needs of the target employees and the corresponding risks?

Caring for employee welfare means taking the time to customize a benefits program while taking into account the firm’s resources and priorities. Organizations with limited budgets profit from analyzing employee health data from biomedical screenings, medical claims and health risk assessments to identify the primary health challenges of target employees and design an appropriate program. Note that mental health, including managing stress, is just as important as physical well-being.

Misunderstanding 3: Our benefits are so great, they speak for themselves

According to Mercer’s 2015 Benefits Communication Trend Survey of HR managers in China, more than 70 percent of employers think benefits communication is important. Yet only 17 percent of organizations have a specific role for employee benefits communication, and nearly 70 percent have little or no budget for benefits communication.

Assuming that benefits programs will self-promote is a mistake. Even if the benefits are good, busy employees may not have time to learn about them and may misunderstand or underutilize them—substantially lowering a company’s returns.

Effective communication of benefits programs can:

  • Improve employee retention and engagement
  • Boost morale
  • Improve employees’ health conditions and productivity
  • Enhance employee trust
  • Build the employer brand

Note that organizations with high employee benefits satisfaction are the ones that effectively communicate the value of their benefits.

Misunderstanding 4: All aspects of our benefits program must show returns

Return on investment (ROI) is a key performance indicator for many businesses. And with good reason—why invest in a project before ensuring a sound return on the investment? Although ROI is an excellent indicator of performance, not all benefits programs can be evaluated with numbers. When paired with comprehensive core benefits, health management programs and nontraditional benefits can have an underlying effect that is even greater than their immediately measurable impact. For many people, the feeling that their employer cares about their well-being means more than the money in their paycheck.

The ongoing effectiveness of any benefits program ultimately depends on corporate culture: how an organization measures the value of benefits management, how it treats employees and whether it’s willing to put employee feedback into practice.

Health management and benefits program design are still relatively new to Chinese companies, which tend to attach little importance to their employees’ health. But employee health is the foundation of an organization’s long-term success, and it requires investment in kind. In addition, in a high-growth economy with booming businesses, companies need to identify ways of attracting and retaining top talent.

By avoiding these four pitfalls and focusing on tying programs to their firms’ long-term strategies, Chinese companies can enjoy the benefits of a healthier and more engaged workforce.

This piece first appeared on the Mercer website.

Catherine Li

CEO of Mercer China

Catherine Li is CEO of Mercer China. She has 15 years of experience consulting with large employers in the U.S. and China on a wide range of health care and group benefits issues, including benefit strategy, design and implementation and M&A integration. You can find her on LinkedIn here.

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