- More than half of EMEA companies surveyed (53%) now offer benefits choice
- Spanish respondents are most likely to provide benefits choice (84%) followed by UK (74%) and Poland (67%)
- Number of companies offering flexible benefits (22%) expected to double over next two years
A new EMEA wide survey by Mercer Marsh Benefits has found that many companies perceive the increased financial burden on their employee benefits budget as the key barrier for implementing employee choice programmes (82%). In reality however, nearly two-thirds of respondents who had implemented such a programme, stated that they experience either no extra cost (23%) or in fact a cost reduction (43%). According to Mercer Marsh Benefits, this disconnect should prompt companies to undertake cost-benefit analysis of their current benefit programme.
The information from the 2014 EMEA Employee Choice Survey in Benefits examines the role that employee choice plays in organisations’ health and group benefits programmes across the region and analyses responses from 636 employers across 17 countries. The information allows companies to benchmark their benefits programme against other organisations as well as understand the benefits and challenges of implementing employee choice.
The survey also found that, overall, employees are satisfied with their benefits choice programmes, with 76% of respondents reporting a positive employee response to a programme’s introduction. Interestingly, Eastern European respondents report a 90% satisfaction rate from their employees, the highest of all the regions surveyed.
According to David Levey, Senior Partner and EuroPac leader of the Mercer Marsh Benefits business, “More and more companies are experiencing the virtues of offering employees a choice of benefits and the potential long term cost savings to the company. However, some companies are still deterred by the perceived high cost involved despite evidence to the contrary; it is up to HR directors to conduct a review of their benefits system to ensure they are not missing out on potential savings.
“We can see from the responses that nearly three-quarters say that offering choice is helping them meet their organisational objectives and a similar number say that their employees have responded positively to benefits choice. It is therefore no surprise that over half of the respondents without choice programmes say they will implement in the next two years. Our expectation is that this trend will continue to accelerate, and that we will also see the proportion of smaller companies providing benefits choice catch up with their larger counterparts.
Challenges and drivers of employee benefits choice
When asked about the challenges of implementing an employee choice programme, respondents across all countries were most likely to cite “cost” (82%) and “complexity of administration” (81%) as either “significant” or “very significant”. The benefits however, can be seen to outweigh the perceived cost with 72% of companies reporting that their overall choice programme has met organisational objectives - this is a 10% increase from the figures reported in 2011.
“Remaining competitive in the market place” is cited as the most significant driver for offering choice in employee benefits (56%) followed by “improving employee engagement” (55%) and “retaining employees” (54%) (see fig.1). Financial drivers have either remained as important or increased in importance over the last three years: “Reducing/controlling company contribution to cost of benefits” has been cited by 11% of respondents in both 2011 and 2014, whilst the number of respondents citing “taking advantage of specific local tax and/or social security exemptions” as important has increase from 38% to 40% over the same period.
Employee choice provision by region
More than half (53%) of respondents are now providing some form of choice in the benefits they offer to their employees. The actual take-up varies greatly between local markets, with flexible benefit* offerings being the most popular option for Eastern European respondents and voluntary benefits preferred by Western European and Middle Eastern respondents (see fig. 2). Choice in benefits is most common among companies in Spain (84%), followed by UK (74%) and Poland (67%). Respondents in the Middle East, where employee choice is in its infancy, are least likely to offer employees choice (31% offer some choice in benefits) whereas those in Western Europe are most likely (60%). The larger the organisation, the more likely it is to provide some degree of employer choice: 73% of those with 5,000 or more employees provide choice, compared with 37% of those with 250 employees or fewer.
The current economic climate has little impact on companies’ benefit choice programmes, with 65% saying it has not affected the design of their employee choice plans and 13% saying they have added a greater degree of choice.
David Levey adds, “Cultural, historical factors and the role of the state have huge influence on how benefits are provided in each country, so a level of difference is to be expected. For multinational companies though, the most important consideration is balancing cost management with improving employee engagement. As the economy across Europe picks up, attraction and retention of employees is more important than ever and providing a choice of benefits is a proven effective way of achieving this.
Future trends and programme design
In many markets the idea of offering employees a choice in benefits is still in its early stages, highlighted by the fact that almost a third of respondents (32%) have implemented a choice programme in the last two years. This rate of increase is set to continue as another 32% of companies are considering offering some form of choice over the next two years. Almost a quarter of these expect to implement voluntary benefits whilst 12% a comprehensive flex programme. This could result in over twice as many companies offering comprehensive flex in two years’ time.
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Notes to editors
*What constitutes choice varies by country. For the purposes of this report, “employee choice” is defined as employees being able to control the benefits they receive through voluntary benefits (products, insurances, and services that they can buy with their own money at discounted prices), through benefit choices (ie. exchanging some or all of their existing employer-provided benefits for other benefits or an increased level of cover in an existing area) or comprehensive flexible benefits programmes (usually a programme combining core employer-paid benefits with optional employee-paid benefits such as allowing staff to reduce their core benefit provision in return for additional take-home pay).
Mercer is a global leader in talent, health, retirement, and investments. Mercer helps clients around the world advance the health, wealth, and performance of their most vital asset – their people. Mercer’s more than 20,000 employees are based in 43 countries and the firm operates in more than 130 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy, and human capital. With over 55,000 employees worldwide and annual revenue exceeding $12 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. For more information, visit www.mercer.com. Follow Mercer on Twitter @MercerInsights
About Mercer Marsh Benefits
Mercer Marsh Benefits provides clients with a single source for managing the costs, people risks, and complexities of employee benefits. The network is a combination of Mercer and Marsh local offices around the world, plus country correspondents who have been selected based on specific criteria. Our benefits experts located in 135 countries and servicing clients in more than 150 countries, are deeply knowledgeable about their local markets. Through our locally established businesses, we have a unique common platform which allows us to serve clients with global consistency and locally unique solutions.
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